China’s Trade Marks Review & Adjudication Board (TRAB) recently called for public opinion on the introduction of oral examination for review cases, signaling that this welcome addition may be on its way.

Background

The China Trade Marks Office (TMO) receives about 3 million new trade mark applications annually, overtaking the United States’ average of about half a million new trade mark applications annually since 2015, and dwarfing the European Union’s average of around 150,000 new trade mark applications annually. The large number of new trade mark applications also gives rise to increased applications for opposition, non-use cancellation, and invalidation.

Managing Quantity

Whilst the high volume of applications has been turning heads, the logistics of processing them has left many people wringing their hands. To lighten its burden, the TMO could have adopted some of the resource-saving policies of other countries e.g. by not examining new trade mark applications for relative ground objections, not examining recordals of changes of name and address as to substance, and generally by loosening formality requirements.

However, considering that China’s trade mark laws were only introduced in 1982, and most domestic users of the trade mark system were still less mature then their foreign counterparts, it was perhaps not the right time to relinquish control over the administration of registered trade mark rights, and the national priority was to maintain order in the trade marks register.

Consequently, other steps were taken to manage the ever increasing volume of applications. In mid-2014, the China Trade Marks Law was amended extensively and not only introduced statutory timelines of 9 months for the examination of new trade mark applications, oppositions, non-use cancellations and invalidations, but also imposed a requirement of locus standi for potential opponents and disallowed opponents who lost in an opposition to appeal (applicants who lost in the same opposition retained their right to appeal). Many more examiners were also hired.

Managing Quality

China’s 3 million new trade mark applications are examined for both absolute and relative ground objections by fewer than 1,000 examiners. This works out, very roughly, to 10 cases per examiner, per day, without factoring in staff turnover, training and vacation time. The imminent opening of new satellite receiving and examination coordination centers in Shanghai, Guangzhou and Chongqing, each with approximately 200 to 300 first-instance examiners, should help alleviate this burden.

However, examination by stretched or inexperienced examiners inevitably leads to inconsistent standards, and appeals (called applications for review) to the TRAB are filed in a high percentage of cases. In these review cases, the TRAB has so far leaned in favor of affirming the TMO’s decision unless new evidence e.g. a letter of consent is introduced or there are gross errors of procedure or application of the law. Although the amended China Trade Marks Law contains a provision for the oral examination of review cases, to date the TRAB has not put it into practice.

Developments

In an interesting development, the TRAB issued a request in January 2017 calling for public opinion on the introduction of oral examination of review cases. In this latest proposal:

  • The request for oral examination must be filed together with the application for review or the response to an application for review;
  • The TRAB may decide whether to conduct the oral examination based on such request or at its discretion on the actual needs of a specific case;
  • If both parties choose not to attend, the oral examination will be cancelled;
  • The oral examination will be attended by a panel of 3 examiners from the TRAB, and 2 representatives of each party;
  • In the oral examination, the parties may cross-examine the authenticity, relevance and lawfulness of the evidence, and make arguments concerning the validity and weight of the evidence, and may also be allowed to take photos or videos with the TRAB’s approval; and
  • After the oral examination, the parties may enter into a settlement agreement.

The window for submitting feedback on the proposal closed in February. Should this proposal be implemented, we expect the examination of review cases to be more robust. This may result in slightly longer examination times and higher costs at the TRAB stage, but will nonetheless be more practical than a further appeal to the specialized intellectual property courts established in Beijing, Shanghai and Guangzhou in 2014.

We also expect that in order to leverage the opportunity to cross-examine the evidence, and also to enter into a settlement agreement, trade mark owners may gravitate to agents with more experience in critical analysis and a better grasp of commercial realities.