Marketing of cigarettes
Alteration of trademarks
On 13 December 2021, the China National Intellectual Property Administration (CNIPA) released the Criteria for Determination of General Trademark Violations. The 35 articles of the Criteria define in detail the various types of trademark offences, with the exception of trademark infringement (which has been treated separately). This article outlines some of the most important points.
According to article 6 of the Trademark Law (TML), it is compulsory for certain goods to be marketed with a registered trademark. This is particularly the case for cigarettes (as provided in article 19 of the Tobacco Monopoly Law). The CNIPA clarifies, in article 4 of the Criteria, that this obligation applies to imported cigarettes as well.
It is, therefore, prohibited to sell imported cigarettes if their respective trademark is not registered in China.
Article 10 of the TML enumerates the types of signs that are subject to absolute grounds of refusal and may be neither registered nor used as trademarks. According to article 15 of the Criteria, if such a sign is refused but still used, the Administration for Market Regulation (AMR) should apply the penalties provided by law. Furthermore, according to article 16 of the Criteria, even if the sign has been approved and is registered as a trademark, if the AMR finds that there is a possibility that such sign violates article 10 of the TML, it should report the case to the CNIPA for disposal.
The implementation of article 15 of the Criteria is a cause for possible concern. The refusal of a trademark application by the CNIPA is often subject to judicial review, and the AMR will not be aware of such reviews because this information is not public. Enforcing this provision while the refusal decision is not final would be problematic, particularly considering that there is hardly any consensus between the CNIPA and the courts on the interpretation of article 10.
Regarding article 16 of the Criteria, the situation where a local AMR would report to the CNIPA (previously, the Trademark Office) that a registered trademark could be invalidated ex officio seems a little unrealistic in practice.
Article 49 of the TML provides that a trademark should not be unilaterally altered. If this happens, the trademark holder shall be ordered to make corrections within a prescribed time. Article 18 of the Criteria provides details about what may constitute such an alteration:
[T]he trademark registrant makes partial alteration or changes the relative position of the constituent elements of the registered trademark, such as characters, devices, letters, numbers, three-dimensional signs, color combination, and sound etc., which affects the recognition and identification of the registered trademark, but still indicates to be a registered trademark or attaches the registration symbol to it.
The concept of unilateral alteration is, in itself, arguable. Either the alterations do not "affect the identification" of the registered trademark – in which case, they are not subject to article 49 of the TML – or they do affect the identification of the trademark, and such alteration creates a new and distinct unregistered trademark. Of course, this unregistered trademark should not be passed off as a registered one. Then, it is article 52 that should apply, not article 49.
However, there are cases where trademark registrants apply alterations to their registered trademarks in bad faith, sometimes in a very subtle way, such that the altered trademark infringes a prior registered trademark. It is believed that, in such a case, the owner of the infringed prior trademark should have the right to apply for the invalidation of the original "transformed" trademark. Unfortunately, the CNIPA did not seize the opportunity to address this issue.
Article 52 of the TML provides that the AMR shall apply penalties upon persons who pass off their unregistered trademarks as registered, and articles 22 and 23 of the Criteria enumerate the various circumstances of such acts of passing off. Furthermore, article 23.2 specifies that in case there exist acts of passing off and trademark infringement concurrently, the AMR shall only investigate and deal with the case of trademark infringement.
It can be understood that the CNIPA wants to ensure that the AMR shall deal with the most serious, but more complex, offence, and shall not be satisfied with applying a simple penalty relating to passing off. However, it is possible that the AMR might drop the infringement case where the infringement is found to be really complex (eg, in cases of cross class infringement or arguable similarity). It is not clear whether the AMR could still revert to applying the penalties provided for passing off.
There might be another problem concerning passing off should this concept be strictly applied. Indeed, according to article 56 of the TML, the trademark right is limited to the approved sign and goods, and thus, where a registered trademark is used on other goods, and is claimed to be registered, such use should be considered to be an act of passing off. However, some trademarks – in general, foreign trademarks applied for through the international procedure – are applied for goods or services that do not have a standard translation in the classification of similar goods and services, and therefore are registered by the CNIPA by reference to the closest goods or services eligible for registration at the time. Unfortunately, the CNIPA does not make any exceptions for such cases.
For further information on this topic please contact Zhigang Zhu or Paul Ranjard at Wanhuida Intellectual Property by telephone (+86 10 6892 1000) or email ([email protected] or [email protected]). The Wanhuida Intellectual Property website can be accessed at www.wanhuida.com.
This article first appeared in World Trademark Review. For further information, please go to www.worldtrademarkreview.com.