Further to our Legal Update “China’s New Trademark Law Introduces Key Changes”, the China Trademark Office (CTMO) together with the PRC Trademark and Adjudication Board (TRAB) have jointly drafted the new PRC Trademark Law Implementing Regulations (Draft Regulations) detailing the procedures and logistics of different trademark procedures, clarifying the uncertainties and ambiguities under the new law and regulating the practices of trademark agents in China.
This update gives a quick overview of the key proposed changes put forward by CTMO and TRAB in the latest Draft Regulations.
- E-service - The Draft Regulations require e-filings to be made in a specific format designated by CTMO and expressly recognise electronic communications or service of all kinds of documents by CTMO and/or TRAB. Interestingly, for documents served by electronic means on CTMO and/or TRAB, the service takes effect on the date of actual receipt by the officials; whilst for documents served by CTMO and/or TRAB on the relevant parties through electronic means, the papers are deemed to be duly served on the date of dispatch unless the recipients prove otherwise.
- Time limits - For registration, review, opposition, invalidation and cancellation procedures, the newly introduced examination time limits will not cover the time required for certain special procedures. For example, if CTMO or TRAB has to serve any documents through publication in a gazette; if amendment or clarification of the parties’ submissions is required; if another round of evidence exchange is required; if submission of use evidence/ ballot for same day applications is called for, etc. Instead of relying on the General Principles of Civil Law and the Civil Procedure Law in China, clear rules for the computation of time limits are provided in the Draft Regulations, e.g., the first date is excluded in calculating all deadlines; for deadlines calculated in months, the deadline falls on the corresponding date on that month; in case the deadline falls on a statutory holiday, it will automatically be postponed to the next working date thereafter.
- 3D mark - For a 3D mark application, the applicant must make it clear on the application form that the mark is three dimensional, and submit drawings/ pictures of prescribed dimensions showing different views of the mark (at least from three sides).
- Sound mark - For a sound mark application, the applicant must include the sound mark clearly on the application form, using a stave divided into bars and showing the musical notes, and submit the same together with a written description and the corresponding sound sample (probably on CD or USB).
- Multi-class applications - In a multi-class application, if the application in one class is blocked by a cited mark, the applicant is entitled to apply to split the application, hence allowing the unblocked class(es) to proceed to registration and dealing with the blocked class separately.
- Same day applications for conflicting marks - As with the current rules, the Draft Regulations provide that in the event that two parties apply for the same or similar mark in the same or similar class on the same day, the applicants shall submit prior use evidence within 30 days or attempt to resolve the matter through negotiation. However, the Draft Regulations still fail to address the situation where an application is allowed for registration after submission of prior use evidence whilst the other same day conflicting application fails but is subsequently allowed for registration by TRAB upon review.
- Amendment/clarification - If amendment to or clarification of the trademark application is required, the applicant needs to attend to this within 15 days upon receipt of the notification issued by CTMO.
- Partial acceptance - The applicant will be free to apply to split the application within 15 days upon receipt of the partial acceptance notification issued by CTMO. Currently, the applicant only has the options of abandoning the refused goods/services or applying to TRAB for a review of the CTMO’s decision.
- Opposition - The period of filing supplemental evidence is changed from three months to 30 days after filing the opposition. If the opposition is filed in respect of some of the designated goods/services only, the applicant is allowed to apply to split its application within 15 days upon receipt of the Ground of Opposition from CTMO, hence allowing the mark to proceed to registration in respect of the unopposed goods/ services. Likewise, if CTMO issues an opposition decision refusing to register the mark in respect of some of the goods/services only, the applicant can also apply for a split.
- Assignment - Under the Draft Regulations, assignment recordal is no longer the duty of the assignee only. Both assignor and assignee are jointly responsible for recording the trademark assignment. The Draft Regulations expressly provide that if a mark ownership is transferred due to succession or enforcement of judicial decisions (other than by way of assignment), the transfer will be gazetted upon approval and the transfer will take effect on the date of gazettal.
- Licence recordal - Under the current practice, a trademark licence has to be recorded with CTMO within three months upon signing. Currently, however, neither the law nor the rules provide for the consequence for failing to do so. In practice, CTMO still processes the licence recordal applications so long as they have been filed within a year upon signing. The Draft Regulations, however, expressly provide that CTMO will not process licence recordal applications filed out of time; and though failure to record a trademark licence does not affect its validity, it cannot be enforced against a third party acting in good faith.
- Pledge or charge – For any pledge or charge over PRC registered trademarks, the parties should enter into an agreement and jointly record such pledge or charge with CTMO, which will gazette the same.
- Non-use cancellation - The Draft Regulations expressly provide four exceptions to non-use cancellation, namely (i) force majeure; (ii) government’s restrictions on use; (iii) non-use due to bankruptcy; and (iv) other justifications for non-use for which the mark owner shall not be responsible.
- TRAB proceedings - For a filing with TRAB, the party may be required to amend before TRAB accepts the case and must make the necessary amendment within 15 days upon receipt of the notification from TRAB (instead of 30 days under the current practice). Supplemental evidence at TRAB level has to be filed within 30 days upon filing the application or response (instead of three months under the current practice). As in the CTMO opposition proceedings, the applicant is allowed to apply for a split of its trademark application upon a partial successful review at TRAB.
- Facilitating infringement - Under the old rules, intentionally mailing or concealing, or providing storage or transport for the purpose of infringing others’ trade mark rights are considered as facilitating infringement. The ‘facilitating infringement’ provision has now been put in the new Trademark Law, and the Draft Regulations add that the provision of premises or internet services would also fall under the ‘facilitating infringement’ provision.
- AIC administrative raid - The Draft Regulations elaborate on what should be considered ‘repeat infringers’, and on serious circumstances which attract more severe penalties. They also elaborate on how retailers (without knowledge) can limit their infringement liabilities by adducing the purchase contract entered into with the supplier, the relevant purchase invoice or the product list and payment receipt bearing the supplier’s company chop, etc. The Draft Regulations expressly add that a trademark owner or its authorised representative has the duty to assist the AIC investigation and issue the verification affidavit upon examining the suspected infringing goods, covering the examiner’s name, the verification methods, the examination process, the findings, etc. Having said that, in the event that the suspected infringing goods are found in manufacturing or processing factories and the factory operators cannot show proof of authorisation, no verification is required.
- Trademark agents’ practices - The Draft Regulations expressly set out the qualifications of a Trademark Agent and a Trademark Attorney, and explain what would constitute an unfair interruption of the market order of the trademark agent industry, namely: soliciting business through false promotion, submitting false evidence, concealing facts, knowingly accepting instructions on bad faith matters, accepting instructions irrespective of conflict of interests, engaging in trademark squatting activities itself or on behalf of others, or adopting illegal means to resolve disputes or interrupt the examination of trademark cases or adjudication which disturbs the public order or threatens the public security.
At the time of writing this article, the Chinese authorities are still consulting different stakeholders about the proposed amendments made in the Draft Regulations and further changes are expected in the coming months.
It is regrettable that the Draft Regulations do not explain whether there is any transitional arrangement for the new Chinese trademark regime – which is one of the key concerns for most trademark practitioners and brand owners. Will all pending applications, oppositions and cancellations be concluded before the effective date of the new law, i.e., 1 May 2014? Will the old law or the new law apply if an opposition is filed on 30 April 2014? Will the new law apply to a trademark infringement lawsuit filed before 1 May 2014 but heard after the new law takes effect? How the authorities are going to address these issues remains to be seen going forward.