Acquisition and Maintenance of Trademark Rights

WHAT IS A TRADEMARK?

A trademark is a sign that serves the specific purpose of identifying the goods or services of a producer or service provider and allowing the consumers to distinguish these goods or services from those of others.

WHAT CAN BE REGISTERED AS A TRADEMARK?

The sign may be composed of words, devices, letters, numerals, three-dimensional signs (shapes), combinations of colours or any combinations of the above. Before May 1^st 2014 (date of entry into force of the newly revised Trademark Law) the sign must be visually perceptible. The New law has deleted the word "visual", and gives an example of a non-visual sign : "sound, etc.,". It seems that in theory, other kind of trademark, like smell mark, are also acceptable, but in practice, it is not yet stipulated in the implementing rules.

WHO CAN APPLY FOR REGISTRATION OF A TRADEMARK?

Any individual person, legal person or “other organisation” in the course of its production or business operation, can apply for registration of a trademark. Applications may be made individually or jointly by two or more persons or even collectively. In the latter case, it is registered in the name of an organisation and is used by the members of the said organisation in their business with a view to indicating their membership of such an organisation.

ON WHAT PRODUCTS OR SERVICES CAN A TRADEMARK BE REGISTERED?

The products and services the trademark is designated to can be classified into 45 classifications according to the latest Nice Classification.

WHICH TRADEMARK CAN BE REGISTERED?

In order to be registered, trademarks must comply with two different sets of requirements, commonly designated by the terms "absolute grounds (of refusal)" and "relative grounds (of refusal)". In China, when examining a trademark application, the CTMO verifies both grounds; the absolute and the relative. In addition, the New law introduces the concept of good faith : "the application and use of trademarks shall be made in good faith" (article 7)

ABSOLUTE GROUNDS

1. LEGALITY

Illegal signs are those that are identical with or similar to

l  the Chinese State name, the national flag, the national emblem, national anthem, the military flag or medals of the People’s Republic of China, and those identical with the name or the symbol of the central organisations of the State or Party, as well as the name of specific places where authorities of the Central Government are located or any name or design symbolising such places or buildings;

l  the names of other States, their national flags, emblems or military flags;

l  the names, flags, emblems of international organisations;

l  official symbols or inspection marks indicating control or guarantee of quality (such as ISO, etc.);

l  the Red Cross or the red Crescent;

l  have a discriminative content against a nationality;

l  that are deceptive, that are likely to mislead thepublic to misidentify the quality or other characteristics or place of origin of the goods; (this is a new provision, which replaces the old reference to "fraud and exaggeration in advertising");

l  that are detrimental to socialist morals or customs, or having other unhealthy influences. There is no legal definition of the term “unhealthy influences”. However, it could be compared to the concept of “public order”, used in Western countries.

The geographical names of administrative divisions at or above the county level and the foreign geographical names well known to the public shall not be used as trademarks, except for geographical terms that have other meanings or are a part of collective marks/or a certification marks.

2. NON-FUNCTIONALITY

This requirement applies, in particular, to three-dimensional shapes that cannot be registered as trademarks if they originate only from the nature of the goods/services or exist necessarily for achieving a certain technical effect or enabling the goods to acquire their substantive value.

3. DISTINCTIVENESS

Distinctive means that the signs must be distinguishable and capable of distinguishing the goods/services of one person from those of another person. The basic principle is that lack of distinctive features prevents the registration of a sign as a trademark.

In particular, this requirement is not fulfilled by signs that are exclusively composed of generic names, designs or models describing the goods or the services, or that contain exclusively a direct reference to the quality, the main raw material, the function, the use, the weight, the quantity or other features of the goods or services, and lack distinctive features. However, the above-mentioned “lack of distinctive features” may be overcome if the trademark can be proved to have become easily distinguishable and acquired distinctiveness through practical use.

RELATIVE GROUNDS

4. NO CONFLICT WITH PRIOR RIGHTS

Such prior rights of another person are: an identical or similar prior trademark (i.e. a trademark already registered or a trademark not yet registered but already preliminarily approved by the China Trademark Office (CTMO) of the State Administration of Industry and Commerce (SAIC), or a trademark already filed at CTMO on the same day but used before, or a well-known trademark (see below) for the same or similar class of goods or services). Prior right may also be a copyright; a design; a personal name; a company name, etc.

TRADEMARKS IN THE CHINESE LANGUAGE

Chinese consumers are likely to find a Chinese name for foreign trademarks either by way of translation or by way of transliteration (sound alike). It is therefore advisable to register a Chinese version of a foreign trademark. Indeed, the registration of a trademark in roman characters does not automatically protect the trademark against the use or registration of the same or similar trademark written in Chinese.

There may be several possible ways to write a “roman” trademark in Chinese, by way of translation or by way of transliteration and, in particular for the transliteration, there may be several available characters that sound alike and could be used.

This is why, unless the foreign word has a direct and only one translation in Chinese, the registration of the foreign word in roman characters is not enough to protect a Chinese equivalent, which is not just a translation!

If such a Chinese version already exists in another Asian country, in order to avoid confusion it is advisable to ensure that the Chinese version is the same.

ORDINARY PROCEDURE TO REGISTER AND MAINTAIN A TRADEMARK

Ordinary procedure means that the registration procedure proceeds smoothly, without obstacles. A trademark can be applied for either through the national way which means directly applying to the CTMO, in accordance with the Chinese Trademark Law (National Way) or through the international way which means applying to the World Intellectual Property Organisation, pursuant to the Madrid Arrangement and/or Protocol for the International Registration of Trademarks (International Way)

NATIONAL WAY

If companies apply to register a trademark directly at CTMO, they should do in accordance with the following procedure.

Application

The involvement of a trademark agent for the filing of the trademarks at CTMO is advisable for all companies, particularly new entrants to the Chinese marketplace, and mandatory for foreigners without habitual residence or place of business in China.

Since May 1st, 2015, it is possible to file one application for the registration of a trademark in several classes of products or services. This is one of the changes introduced by the new law. This is, nevertheless, not particularly recommended because, once the trademark is registered, it is not possible to divide it into several and distinct registrations, which becomes a problem if the trademark needs to be partially assigned to a third party. There is an exception, however, to this non-division rule when a trademark application is only partially approved for registration (see below). The trademark can be filed by electronically:

http://sbj.saic.gov.cn/wssq/

In any event, it is necessary to carefully list, for each class, the goods or services for which the trademark is to be protected. (The examiners refuse trademark applications that simply refer to all the products of a class as stated in the Nice Classification. It is necessary to actually reproduce the items of such list, and if certain goods or services are not included in the Nice Classification, a description of the same should be added.)

Select a trademark agent from the official list

Pay the fee

The cost of the application depends on the number of goods mentioned in the application. The official fee is RMB 600 per application covering 10 goods/services. If the number of goods/ services exceeds 10 in one application, an additional fee of RMB60 is charged for each item.

Provide the following documents

One copy, printed on smooth and clear paper, or replaced by photographs not larger than 10x5 cm; if colour is claimed, one copy in colour and one copy of the black and white design. For a three-dimensional or a colour-combination trademark, a specific statement indicating that the shape or the colour combination is claimed as a trademark, together with a literal description. For a collective or certification trademark, a statement and a certificate stating the relevant qualifications and/or regulating the use of the trademark. If the trademark is in a foreign language, or contains foreign language, a translation must be provided.

If the same trademark has already been filed in another country of the Paris Convention or WTO (and this is the first application for the trademark concerned), less than six months prior to the application in China, a declaration claiming priority should be made together with the trademark application.

The applicant should provide, within three months of the date of application (failing which it is deemed not to have requested the priority right), a duplicate copy of the relevant trademark certificate, certified by the relevant trademark authority, and indicating the application date and the application number.

If the same trademark has been used or displayed on the same goods in an international exhibition sponsored or recognised by the Chinese government that took place less than six months before the application, it is also possible to claim priority and make a specific declaration to that effect.

Formal examination

Where the formal requirements of the application are fulfilled and the application form filled out according to the relevant rules, the CTMO will accept the application and notify the applicant in writing.

Where the formal requirements are not fulfilled or the application form not filled out according to the relevant rules, the CTMO will not accept it, and it shall notify the applicant in writing and explain the reason.

Where the formal requirements are basically fulfilled or the application form filled out basically according to the relevant rules, but amendments are required, the CTMO shall notify the applicant to make the amendments and require him to do so according to the contents prescribed and re-submit it within fifteen days from the date on which he receives the notification.

Where the application is amended and re-submitted to the CTMO within the time limit, the date of filing shall be retained. Where the application is not amended within the time limit, the application shall be deemed to have been abandoned, and the CTMO shall notify the applicant in writing.

Substantial examination

CTMO next verifies whether the trademark application is in conformity with the Trademark Law, which includes verification of legality, distinctiveness and non-functionality (absolute grounds of refusal); whether the trademark application is identical or similar to other trademarks that have already been registered, or preliminarily approved (but not yet registered), or that have been applied for (but not yet preliminarily approved). During the examination process, the CTMO may require the applicant to provide a description (for example, of the designated goods) or to make amendments (some goods may pose a problem with regards to previous trademarks).

Preliminary approval and Publication

If the examination reveals that the trademark application is in conformity with the Law and that there is no other prior trademark, the CTMO examiner will preliminarily approve the trademark application and the trademark will be published in the Official Gazette. The examiner may consider that the trademark should be partially approved, i.e. for some of the designated goods only. In this case, partial refusal is notified to the applicant and the trademark is published as partially approved. It is, then, possible to divide the trademark application in order to continue the procedure, if necessary, by filing an application for review for the non-approved goods.

Registration

If no opposition (see below) has been filed after the expiration of the three months from the date of the publication, the registration is approved, a certificate of trademark registration is issued and the trademark is published. The period of validity of a registered trademark is ten years, counted from the date of approval of the registration.

Renewal

Where the registrant intends to continue to use the registered trademark beyond the expiration of the period of validity, an application for renewal of the registration needs to be made within twelve months before the said expiration. Where no application therefor has been filed within the said period, a grace period of six months may be allowed. If no application has been filed at the expiration of the grace period, the registered trademark is cancelled. The expiration of period of validity of each renewal of registration is ten years. Any renewal of registration is published after it has been approved.

License and Assignment

A registered trademark may be licensed to a third party. There are three kinds of license agreements: ”exclusive license“, where the licensor himself is prevented from using the trademark in the agreed territory, ”sole license“, where the licensor retains the right to use the trademark in the territory, and “ordinary license”, where the licensor may grant other licenses to others in the territory.

Attention should also be paid to the necessity to stipulate in the agreement that the licensor has the right to control the quality of the goods produced under the trademark. This distinction between the various types of licenses is used in particular when determining who has the right to act against infringers. The trademark license agreement (but not necessarily a duplicate copy of the entire agreement) should be filed for the record with the CTMO. This is not a substantive requirement for the validity of the agreement: the recordal is mainly for the information of third parties.Recordal is also recommended in order to arrange for the transfer of funds relating to royalties.

A trademark, whether at the application stage or already registered, may be assigned and the assignment must be recorded at the CTMO. They should also be published by CTMO.

Renunciation

The trademark registrant has the right to renounce its trademark. They may choose not to renew the trademark when it comes to its expiration date. Furthermore, the trademark registrant may also apply for the removal of their registered trademark or the registration of the trademark in respect of a part of the designated goods when they think it necessary, even if the trademark has not reached the expiration date. The registrant shall send an Application for Trademark Renunciation and return the original Certificate of Trademark Registration to the CTMO.

INTERNATIONAL WAY

This possibility is only available to nationals of a state that is a party to the Madrid Arrangement or the Madrid Protocol. China is a member of the Madrid Arrangement (from 1989) and of the Madrid Protocol (from 1995).

Requirements

For those who are members of the Madrid Arrangement, but not members of the Madrid Protocol, the application must be based on a trademark already registered in the state of origin, whereas for those which are members of the Madrid Protocol, the application may be based on a simple trademark application.

Procedure

Upon receipt of the application for extension of protection, the World Intellectual Property Organisation (WIPO) issues a certificate, publishes the trademark in the International Trademark Gazette and notifies the Trademark Authority of the state concerned. During a period of three months, starting on the 1st day of the next month of reception of this Gazette, oppositions against the trademark can be made in China.

If no objection is made by the CTMO, within a period of one year to 18 months (one year for Madrid Arrangement, 18 months for the Madrid Protocol) from the trademark record in the International Register, the trademark is considered registered in China, as from the date of the certificate issued by the WIPO.

The subsequent procedures, such as renewal, modification, license or assignment can also be done through the international way.

COMPARISON BETWEEN NATIONAL AND INTERNATIONAL WAY

Need for a trademark agent

The use of a local trademark agent is compulsory for a Chinese national application from foreigners without habitual residence or place of business in China, but not compulsory for an international application.

Language

An international application can be made in English or French while national applications can only be made in Chinese.

Cost

The international application may cover more than one country at the same time and at the same cost, and the basic fee covers up to three classes of goods or services. As mentioned above, the new law provides that trademarks filed directly in China may also cover several classes.

Speed

The duration of the national registration procedure (9 months + 3 months for the oppositions) is, now, equal to the Madrid arrangement procedure (12 months) and shorter that the Madrid Protocol procedure (18 months).

Duration of protection

According to the Madrid Arrangement, international trademarks are protected for a (renewable) period of 20 years, whereas national registrations are protected for 10 years (renewable). However, since the duration of protection provided for in the Protocol is 10 years, fees must be paid in two installments. Hence, for practical reasons, an international trademark should be regarded as due for renewal every 10 years.

Trademark Certificate

Theoretically, there is no difference between an international and a national trademark registration. However, a Chinese language registration certificates is only issued for a national registration. Given the fact that most enforcement actions are taken via the Chinese Administration of Industry and Commerce, throughout the Chinese territory, it is in fact much easier to prove the existence and scope of a trademark and to “motivate” a local bureau of the Administration of Industry and Commerce by producing a Chinese registration certificate. Therefore, it is necessary to request the CTMO to certify an international registration, which may take up to three months, and this may affect the speed of an enforcement action.

SPECIAL PROCEDURE TO REGISTER, MAINTAIN OR CHALLENGE A TRADEMARK

Special procedure refers to situation where there is an obstacle to the registration of a trademark.

REFUSAL

Whether the trademark has been applied for through the WIPO or directly at the CTMO, it may be refused. In the case of refusal, the CTMO notifies its decision to the applicant or (in the case of a foreign applicant) to its agent.

Within 15 days, the applicant may file an application (through its agent) with the Trademark Review and

Adjudication Board (TRAB), under the State Administration for Industry and Commerce, which operates as a “court of appeal” for all decisions of the CTMO. The TRAB is located at the same address as the CTMO.

Although the 15-day period is extremely short, no extension is possible. It is therefore particularly important to maintain close contact with the agent in charge of conducting the procedure. The new law imposes a time limit for the TRAB to make its decision: 9 months, with a possible extension of 3 months.

OPPOSITION

The right to oppose a trademark is open to:

l  Any person, if the opposition is based on an "absolute ground" ;

l  Only a prior right owner, if the opposition is based on a "relative ground" (owners of a prior right). Since the new law, other persons without any of the above rights，are no longer allowed to file an opposition.

Prior rights include the owner of a registered trademark; the holder of a preliminarily approved trademark; the owner of an unregistered well-known trademark (if the goods are identical or similar); the owner of a well-known trademark registered for non-identical or non-similar goods; the owner of a trademark, already used although not registered, which has acquired a certain influence when the other trademark applicant is using unfair means (the term “a certain influence” relates to trademarks that would not qualify for the status of “well-known”, but never the less are considered to deserve special protection in their field, provided bad faith is proven); the holder of another property right, such as right of name, copyright, portrait. It is possible to file a

partial opposition against some of the designated goods only.

The procedure is handled by a registered trademark agent.

Chinese trademark agents usually provide a watch service for their clients. It is highly recommended that this service be subscribed to, if only because some trademarks that should be opposed are in Chinese and the assessment and advice as to the opportunity of an opposition should be entrusted to Chinese-speaking professionals. Furthermore, it should be noted that “pirate” trademark applicants are becoming increasingly sophisticated in their attempts to escape the attention of trademark examiners and trademark owners. They might file applications for “half” designs, and then use them together, or file designs that do not appear to constitute a risk of confusion, but that, when transformed in actual use, become obvious infringements.

Oppositions to the application may be filed at the CTMO within three months of the date of publication of the trademark application in the official Trademark Gazette. In this case, it is necessary to prepare a defence. Alternatively, the trademark registrant may find out, by checking the Trademark Gazette, that others are attempting to register trademarks that are similar to its own registration (or application), and that it has to file an opposition against such attempt.

The opposition is filed in two copies and should be based on clear facts, sound grounds and supported by relevant material evidence. If the opponent wishes to produce additional evidence to support its opposition with additional evidence, it should make a statement to that effect in the opposition and should provide such evidence within three months of the date of the opposition.

The CTMO notifies the applicant about the opposition in a “timely manner”, which in practice amounts to 3 months, and in some instances may be longer. The applicant should file a response within 30 days of notification of the opposition. If necessary, the applicant may file additional arguments and/ or evidence within three months of the date of the response.

The new law imposes a deadline for the CTMO to issue its decision: 12 months with a possible extension of 6 months.

Decisions made by the CTMO are, in principle, subject to appeal before the TRAB (whose decisions are, themselves, subject to appeal before the Intellectual Property Court set up in Beijing, since August 2014). However, the new law introduces a major change: the opposed trademark becomes immediately registered. The opponent needs to file, with the TRAB, an action requesting the invalidation of the trademark.

INVALIDATION

Even after it has been registered, a trademark may still be invalidated, and deemed never to have existed.

Invalidation may be decided by:

the CTMO on its own initiative (ex officio) when the trademark is found to fall under one of the absolute grounds of refusal, or when the trademark registration has been obtained by “improper means” (there is no clear definition of “improper means”; basically, this expression corresponds to “bad faith” or “fraud”; it is a case-by-case situation), invalidation is more commonly decided by the TRAB, upon request of or a third party.

Those entitled to file a request before the TRAB are:

l  If the request is based on absolute grounds or on the “registration by fraud or other improper means”, any person may file a request, and there is no time limit for filing a request based on such grounds. Here, the terms "fraud" or "improper means" refer to the general concept of public order, not to private issues relative grounds).

l  If the request is filed on the ground of a prior right, only the prior right owner may file the request. The time limit for taking such action is five years, from the date of registration of the trademark. However, if the party requesting the invalidation is acting on the ground of a well-known trademark, and can prove that the trademark to be invalidated has been registered in bad faith, the five-year limitation does not apply.

When a trademark is invalidated,

It is deemed not to have existed from the very beginning. However, when the invalidation is declared by the TRAB in any of the above-mentioned situations, any judicial or administrative decision implementing the trademark in question that have been rendered in the past remains valid. In the case of bad faith where the rights of third parties have been prejudiced, a claim may be made for compensation.

REVOCATION

Once registered, a trademark registrant should use his trademark. Use is defined as “use on the goods, packages or containers, or on trading documents, in advertising, an exhibition or any other business activities, in order to distinguish the origin of the commodities”. It does not matter whether the goods are to be sold in China or are for export only.

If the trademark is not used for three consecutive years, any person may apply to the CTMO for revocation of the trademark. When a request for revocation based on non-use is made, CTMO notifies the trademark registrant and requests him to produce, within two months, evidence of the use of the trademark prior to the date of filing of the application for revocation, or otherwise a fair 10 reason for such non-use. For the purpose of such evidence, the use of the trademark by an authorised third party is admitted as evidence of use.

In addition to the non-use, the new law introduced another cause of revocation: where the trademark becomes "generic".

Further, the trademark must be used exactly in the form in which it has been registered (in terms of style, words, etc.). If a trademark is modified in its use, the local department of the AIC may send a warning to the registrant ordering him to rectify within a certain time limit. If no rectification is made, the case may be referred to the CTMO for revocation.

Any change in the name of the registrant, its address or other registered matters must be recorded with the CTMO. The local department of the AIC may issue a warning setting a time limit for making the rectification. If such rectification is not made the case may be referred to the CTMO for revocation.

When the trademark owner or applicant of revocation is not satisfied with the CTMO decision, he can appeal to the TRAB within 15 days.

When a registered trademark is revoked, the exclusive right is terminated from the date on which the CTMO's decision on revocation is published.

JUDICIAL REVIEW

If one of the parties to the litigation is not satisfied with the decision of TRAB concerning refusal, opposition, invalidation or revocation, it may within thirty days from receipt of the notice, institute legal proceedings in the Beijing Intellectual Property Court, whose decision is subject to appeal before the Beijing High Court.