The Implementing Regulations of the Trademark Law was published on April 29, 2014 and entered into force on the same day as the New Law. This article introduces the main points of the Regulations and made some comments.
On May 1st, 2014 the newly amended “Trademark Law” (the New Law) entered into force. The Implementing Regulations of the Trademark Law needed to be revised and adjusted to the new Law. In September 2013, the China Trademark Office (CTMO) and the Trademark Review and Adjudication Board (TRAB) issued a first draft and called for comments. In November 2013, the CTMO and the TRAB issued a second Draft and, after receiving comments, transferred the draft to the State Council. The final text was published on April 29, 2014 and entered into force on the same day as the New Law.
Below are the main points of the Implementing Regulations, presented according to the Trademark Law new provision for substantial (1), procedural (2), administration (3) and enforcement (4) matters. For the sake of simplification, the articles of the Implementing Regulations are quoted with the letter R, while the articles of the Law are quoted with the letter L.
- Substantial matters
One of the main changes provided in the New Law (L.8) is the adoption of “sounds, etc.” as a new type of trademarks. Article R. 13.4 explains how a trademark application for a sound should be submitted : “…(the sound) shall be described on a musical staff or through numbered musical notations, accompanied by a textual description, if the sound cannot be described on a musical staff or through numbered notation, the applicant shall describe it in words”.
Another novelty of the New Law is the possibility, opened to any person, to file an application for revocation of a trademark that has become the generic name of the designated goods (L. 49.2). Article R. 65 provides the Trademark Office shall notify to the trademark owner that an application for revocation had been made, and that the trademark owner should file his response within 2 months from the notification; the absence of response does not affect the decision of the Trademark Office.
- Procedural matters
Recipient for foreign trademark owners
Article R. 5 provides that foreigners need to designate a “recipient” in China, who will receive all the documents notified by the Trademark Office or the TRAB, for all administrative procedures related to the trademark. This measure, reflects the administration’s intention not to serve, any more, documents on parties located outside of China, and is simpler than what had been proposed in the earlier drafts.
Electronic submission of documents
Articles R. 9 and R. 10 relate to Article L.22, which stipulates that documents may be submitted to the trademark Office or TRAB in electronic format, via the Internet. They provide detailed measures to determine the exact time of service or reception of the documents, according to the manner in which they are submitted or served.
Time limits for making decisions and suspension of time
One of the main features of the New Law is to impose on the Trademark Office and the TRAB strict deadlines for examining cases and rendering their decisions (9 months for trademark examination, and 12 months or 18 months maximum, for cases according to their level of complication). In the previous drafts, the Implementing Regulations proposed that the time allotted to litigating parties to file additional arguments or evidence, should be correlatively shortened (30 days instead of 3 months). However, the final text maintains the initial time limits for the parties to complete their argumentation, and provides (Article R.11) that such time shall “not be included in the time limit for trademark examination or review”. Likewise, the same article provides that whenever it is necessary to suspend a case in order to wait for a decision determining the existence of a prior right, such time shall also be deducted.
Unfortunately, another possibility of suspension, which was provided in the drafts, has been deleted: the possibility, for the parties, to jointly ask for suspension of time while they negotiate a settlement.
Multiclass applications and separation of applications
The possibility to file one trademark application designating goods/services in several classes is provided in the New Law, which, unfortunately, limits the possibility to divide a trademark application to the situation where the Trademark Office approves the registration of a trademark, but only for part of the designated goods/services. Article R.22 gives 15 days to the applicant to file a request for separating the application in two parts, the approved (which is, then, published) and the refused part (which will be subject to a possible review before the TRAB).
The New Law (Article L. 29) brings more flexibility to the registration procedure by organising the possibility to explain or amend a trademark application, following the receipt of an “examination notice”. Article R.23 specifies that the trademark applicant shall have 15 days to file such explanation or amendment.
One of the welcome changes brought by the New Law (Article L.33) is that an opposition based on the existence of a prior right (“relative ground of refusal”) can only be filed by the owner of such a prior right. The implementation of this new rule is given in Article R.24, which provides what document the Opponent should submit with its application to the Trademark Office: the application itself, identification documents and documents “…certifying that it is the owner of an existing prior right”. According to Article R. 26, the Trademark Office may refuse (to docket) an opposition if the opposition is not in compliance with Article L.33, which means that the document justifying the existence of the prior right is a pre-requisite for the acceptance and the docketing of the opposition.
This is where there is a problem, which was pointed out in the comments made on the drafts, but without result: what if the prior right is an unrecorded copyright, or the prior use of an unregistered trademark? The existence of such kind of prior right needs a whole set of evidence that cannot be provided together with the opposition. It is a substantial issue that should be subject to the decision on the merits of the case, and not a pre-condition to accept docketing the case.
The good news, however, is that the available time to file additional evidence and arguments, which had been reduced to 30 days in the previous drafts, remains three months (Article R.27). This article provides in fine that it is even possible to file additional evidence at a later stage, provided the evidence was generated after the expiry date of such period of time: “…the Trademark Office may hold the evidence admissible after producing such evidence to the other party for cross-examination”. This is, of course, welcome, but it raises serious regrets and questions: why did the Implementing Rules drafters only provide for an exchange of evidence (and written arguments) at this specific point (additional evidence filed after the 3 month period)? Why didn’t they provide for a full exchange of arguments and evidence in the entire opposition procedure? This is absolutely crucial, given the fact that, according to the New Law (article L.35.2) “Where (in an opposition case) the Trademark Office decides to approve the registration, it shall issue a trademark registration certificate and shall make a publication”. Since there is only one chance to prevent the use of an undesired trademark, it is all the more important to ensure that the rules of procedure are transparent and fair.
International trademark applications
The New Law provisions concerning time limits (for the trademark Office or TRAB to make their decisions) do not apply to International Trademark applications (Article R.50). This is of no big consequence, ad far as the examination of the application is concerned (12 or 18 months instead of the 9 months now provided for domestic applications). However, whenever there is an opposition, this can be a quite significant difference, since the trademark Office or TRAB are not bound by any time limit (as opposed to the 12 or 18 months provided in the New Law for domestic applications).
Scope of review by the TRAB
When reviewing a decision of the Trademark Office to reject a trademark application, Article R.52 give to the TRAB the power to “re-qualify” the legal ground stated by the Trademark Office. Specifically, if the Trademark Office based its decision on other grounds than the “absolute grounds of refusal” (Article L.10 etc. of the Law) the TRAB may rectify and cite such absolute grounds, even if the Trademark Office did not. (This was already specified in the TRAB Rules of 2005.)
Concerning the review of decisions made by the TRAB, against a decision of the Trademark Office refusing a trademark in an opposition procedure, Article R. 53 is a relief! Indeed, in the previous drafts, the scope of review was restricted to “the re-examination request (and the) facts and grounds stated in the response of the applicant”. Any argument not repeated in the TRAB procedure was to be ignored. In Article R.53, this restriction is lifted. The TRAB is to invite the Opponent to attend the review procedure and to take account of his arguments.
Furthermore, the 3 months additional period for filing evidence and arguments (which had been limited to 30 days in the drafts) is reinstated.
The draft Article R.61 allowed the TRAB to make a ruling or a decision when the parties decide to settle the case. This was a very welcome change to the practice consisting in systematically closing a case when a settlement occurs. Indeed, when a case is closed, the previous decision (of the Trademark Office) remains in force. If the parties agreed to change it, it is necessary, for the TRAB, to do it. This draft was deleted from the final Regulations, but is inserted in the New TRAB Rules which became effective from June 1, 2014.
- Administration matters
Record of trademark license
According to Article L.43.3, in order to be opposed to third parties, the license (and not any more the full trademark license contract) needs to be recorded at the Trademark Office. Article R.69 provides precisions concerning what information needs to be recorded: information concerning the licensor and licensee, licensing period, goods/services concerned, “… and etc”.
- Enforcement matters
Article R.75 provides a useful and welcome precision concerning the act of providing services in relation to a commodity trading platform to an infringer, thus constituting the act of “intentionally providing conveniences” as stipulated in Article L.57.
Article R. 76 however, which is about the use of a sign as the name of the goods, or the decoration of the goods, is likely to create difficulties. The article refers to such act when the signs are “identical or similar” (to a registered trademark) and are used on the “same or similar goods” and specifies that such activity falls under the scope of Article L.57.2. This introduces a possible discrepancy between the Regulations and the Law. Article L.57 is divided in two parts: the first paragraph refers to the use of identical signs used on identical goods, which is considered as an act of infringement, regardless of whether there is a likelihood of confusion. The second paragraph refers to the use of a similar sign on identical goods, or the use of an identical or similar sign on similar goods, and adds the (new) condition that such use would be likely to cause confusion. Therefore, by referring to this second paragraph when an identical sign is used as the name or decoration of identical goods, Article R.76 is introducing a restriction (likelihood of confusion) which does not exist in the law (Article L. 57.1), and opens an unexpected line of defence for infringers.
Article R.78 provides details concerning the calculation of the illegal turnover, referred to in Article L.60: sales price, tag price, actual average price of the infringing products, mid-market price of the authentic products, operating revenues of the infringer and other “helpful factors”.
Article R. 79 brings precision concerning how the seller of infringing goods can prove that he had legally obtained such goods, and should not held liable (Article L.60): presence of a supply list bearing the seal of the supplier, existence of a purchase contract, invoices, etc.