Comparative Guide to Trademark Law

Mr. Xiaoming Liu and Ms. Haoyu Feng, Chofn IP, China

1. Legal framework

1.1 What is the statutory or other source of trademark rights?

The Trademark Law of the People’s Republic of China

1.2 How do trademark rights arise (ie, through use or registration)?

Through registration.

1.3 What is the statutory or other source of the trademark registration scheme?

The Trademark Law of the People’s Republic of China;
The Regulation on the Implementation of the Trademark Law; and
The Trademark Review and Adjudication Rules and the Trademark Examination and Adjudication Guidelines published by the China National Intellectual Property Administration.

2. What constitutes a trademark?

2.1 What types of designations or other identifiers may serve as trademarks under the law?

Any sign that is capable of distinguishing the goods of a natural person, a legal person or any other organisation from those of others – including a word, device, letter, numeral, three-dimensional symbol, combination of colours or sound, as well as a combination of the above – may serve as a trademark for registration application.

2.2 What are the requirements for a designation or other identifier to function as a trademark?

The trademark for registration:

must be distinctive for easy identification;
may not be prohibited under the Trademark Law; and
may not conflict with any prior legal rights acquired by others.

2.3 What types of designations or other identifiers are ineligible to function as trademarks?

The following types of designations are ineligible to function as trademarks:

marks that are devoid of distinctiveness, such as those that consist only of:

o the generic names, devices or model numbers of the goods concerned; or

o a direct representation of the quality, primary raw materials, functions, intended purposes, weight, quantity or other characteristics of the goods concerned;

marks that are prohibited under the Trademark Law, such as those which:

o are identical or similar to the name, flag or emblem of China or another foreign countries or international intergovernmental organisation; or

o are deceptive, with the potential to easily mislead the public regarding the quality or origin of the goods (see question 3.8); and

marks that conflict with the prior legal rights of others, including trademark rights, copyright, trade names, personal names or even commercialisation rights.

3. Registration procedure

3.1 Which governing body (ie, trademark office) controls the registration process?

The China National Intellectual Property Administration.

3.2 What fees does the trademark office charge for an application, during prosecution and for issuance of a registration?

Only an application fee.

3.3 Does the trademark office use the Nice Classification scheme?

Yes.

3.4 Are ‘class-wide’ applications allowed, or must the applicant identify the specific goods or services for which the mark will be used?

‘Class-wide’ applications are not allowed; the relevant goods and/or services must be specified.

3.5 Must an applicant have a bona fide intention to use the trademark for the goods or services identified in the application in order to apply for registration?

No. However, a bad-faith application for trademark registration for a purpose other than use shall be rejected according to Article 4 of the Trademark Law.

3.6 Does the trademark office perform relative examination of trademark applications (ie, searches for earlier conflicting marks)?

Yes.

3.7 What types of examinations does the trademark office perform other than relative examination?

Distinctiveness and public policy (see question 3.8)

3.8 Apart from confusion with a senior mark, descriptiveness and genericness, are there other grounds under which a mark is ineligible for registration, such as public policy reasons?

Yes. The grounds for refusal of registration regarding public policy include the following:

The mark is identical or similar to the name, national flag, national emblem, national anthem, military flag, military emblem, military anthem or decoration of China; or is identical to the name or symbol of a central state organ, the name of the specific place where it is located or the name or design of its landmark building;
The mark is identical or similar to the name, national flag, national emblem or military flag of a foreign country, except as permitted by the government of that foreign country;
The mark is identical or similar to the name, flag or emblem of an international intergovernmental organisation, except as permitted by the organisation or unless it would not generally mislead the public;
The mark is identical or similar to an official sign or an inspection mark which indicates control or provides a guarantee, except as authorised;
The mark is identical or similar to the name or sign of the Red Cross or the Red Crescent;
The mark incorporates aspects that constitute ethnic discrimination;
The mark is deceptive and would easily mislead the public regarding the quality or origin of goods; or
The mark would be detrimental to socialist morality or mores, or would have any other adverse effect.

3.9 Is there a separate or supplemental register on which descriptive marks may be registered?

No. However, if a descriptive mark has obtained distinctiveness through use and can be easily identified, it may be registered as a trademark by filing use evidence to overcome rejection due to descriptiveness.

3.10 Can a third party object to registration of a mark before the application has been published (eg, by letter of protest to the trademark office)?

Normally no. However, it is possible to submit a letter of protest to the trademark office if the mark has been filed in bad faith.

3.11 Must the applicant use the trademark commercially in order to obtain a registration?

No. There is no need to file use evidence or a statement of intent to use to have a mark registered.

3.12 How much time does it typically take from filing an application to the first office action?

Around three months to receive notification of amendment, if the goods or services are not acceptable.

Around five to eight months to receive notification of refusal.

3.13 How much time does it typically take from filing an application to publication?

Around nine months.

4. Appeals

4.1 If the trademark office refuses registration, can the applicant appeal? If so, to what body and by what procedure?

Yes, the applicant is entitled to file an appeal against the rejection before the China National Intellectual Property Administration (CNIPA) within 15 days of receipt of the notification.

4.2 What is the procedure for appealing a trademark office refusal?

The applicant must file an appeal with CNIPA against the rejection within the specified deadline. It is possible first to file an appeal with outlined arguments before the deadline and then supplement this with detailed arguments and evidence in the following three months.
The CNIPA will issue an official filing receipt if the documents satisfy the formality requirement.
The CNIPA then makes an appeal decision.

4.3 Can the reviewing body’s decision be appealed? If so, to what body and by what procedure?

Yes. The applicant is entitled to file a lawsuit with the Beijing Intellectual Property Court within 30 days of receipt of the decision.

5. Oppositions

5.1 Can a third party oppose a trademark application?

Yes.

5.2 Who has standing to oppose a trademark application?

A prior rights holder or materially interested party has standing to oppose a trademark based on prior rights (relative grounds).

Anyone has standing to oppose a trademark based on public policy and/or lack of distinctiveness (absolute grounds).

5.3 What is the timeframe for opposing a trademark application?

Within three months of the preliminary publication date of the trademark.

5.4 Which body hears oppositions?

The Trademark Office of the China National Intellectual Property Administration (CNIPA).

5.5 What is the process by which an opposition proceeds?

The opponent files an opposition with CNIPA within three months of the preliminary publication date. It is possible first to file an opposition with outlined arguments before this deadline and then supplement this with detailed arguments and evidence in the following three months.
The CNIPA will issue an official filing receipt if the documents satisfy the formality requirement.
The CNIPA will then issue one set of filing documents to the trademark owner for response within 30 days of the date of receipt. It is possible to supplement this response with further arguments and evidence within the following three months.
The trademark owner’s response (if any) will not be served on the opponent for review and rebuttal.
The CNIPA will issue its opposition decision based on the opponent’s arguments and the trademark owner’s response (if any).

5.6 Can the decision on the opposition be appealed? If so, to what body and by what procedure?

If the opposed mark is approved for registration in the opposition proceedings, this decision cannot be appealed.

However, if registration is refused in the opposition proceedings, the trademark applicant is entitled to appeal this decision with the appeal department of the CNIPA within 15 days of receipt of this decision.

6. Rights of registered and unregistered marks

6.1 What, if any, protection is afforded to unregistered trademarks?

An unregistered trademark can be protected:

in respect of identical or similar goods or services based on the Trademark Law, if it has achieved well-known status; or
under the Anti-Unfair Competition Law, if it is also a famous product or service name.

In practice, however, it is difficult to prove that a trademark has achieved well-known status in mainland China.

If the trademark owner has used its trademark in mainland China without registering it prior to the application date of a third party’s registered trademark, and if its trademark has a certain influence, then that third party will have no right to prohibit the trademark owner from using its trademark within the original scope of use. However, the third party can require the trademark owner to add an appropriate distinguishable sign to its mark (Article 59 of the Trademark Law).

6.2 What legal rights are conferred by a trademark registration?

Exclusive use right: The trademark owner is entitled to use the registered trademark on the approved goods or services and to use the registration symbol (®). Others cannot use the trademark without the trademark owner’s authorisation.
Licence right: The trademark owner can license its registered trademark to another party by entering into a trademark licence contract.
Assignment right: The trademark owner can assign the registered trademark to others in accordance with legal procedures and conditions.
Mortgage right: The trademark owner can mortgage its registered trademark to others.
Investment right: The trademark owner has the right to invest its registered trademark as an intangible asset in accordance with legal provisions and legal procedures.
Renewal right: The trademark owner has the right to renew its registration.
Prohibition right: The trademark owner is entitled to stop others from using an identical or similar trademark on the same or similar goods or services.
Inheritance right: If the trademark owner dies, his or her legal heir will have the right to possess, use, benefit from and dispose of the registered trademark.

6.3 If there is a separate register for descriptive marks, what legal rights are conferred by registration therein?

There is no separate register for descriptive marks.

If a descriptive trademark has obtained a high reputation through substantial long-term use, the applicant can try to register the mark with the China National Intellectual Property Administration. However, the descriptive trademark will still initially be rejected on absolute grounds, so the applicant will have to appeal and submit evidence of substantial use to prove that the trademark has obtained distinctiveness through use. It can then be registered as a trademark.

7. Enforcement and remedies for trademark infringement

7.1 What remedies are available against trademark infringement?

China has a dual-track enforcement system for IP infringement: administrative enforcement and judicial enforcement. Judicial enforcement includes civil remedies and criminal remedies.

The remedies in administrative enforcement include:

cessation of the infringement;
confiscation or destruction of infringing articles and materials or implements used mainly to manufacture the infringing products; and
fines, which can be as high as five times the infringer’s illegal business revenue.

The remedies in civil lawsuits include:

injunctions;
cessation of the infringement;
destruction of infringing articles and materials or implements used mainly to manufacture the infringing products;
compensation for damages and legal expenses; and
elimination of influences (ie, publication by the infringer of statements acknowledging the infringement in order to counteract any negative impact that the infringement may have had on the mark’s goodwill).

Punitive damages are available, which can be as high as five times the mark owner’s losses or the infringer’s profits. Statutory damages can be as high as RMB 5 million.

The remedies in criminal lawsuit include:

fines; and
imprisonment for up to seven years, which will be increased to 10 years from 1 March 2021.

7.2 What remedies are available against trademark dilution?

Dilution applies only to the protection of well-known trademarks in China. The trademark owner may seek the remedies outlined in question 7.1.

7.3 Does the law recognise remedies against other harms to trademark rights besides infringement and dilution?

Besides infringement and dilution, the following activities are considered to constitute harm to trademark rights and are prohibited by law (mainly by the Anti-Unfair Competition Law):

using a third party’s registered trademark or unregistered well-known trademark as a trade name or enterprise name in a way that would mislead the public, which constitutes unfair competition;
trademark squatting and then filing litigation in bad faith; or
conducting other activities which may cause confusion and constitute unfair competition.

7.4 What is the procedure for pursuing claims for trademark infringement?

Filing an Administration for Market Regulation complaint against the infringer to seek administrative enforcement;
Filing a civil lawsuit against the infringer with the competent court; or
Filing a complaint or reporting clues to the police for a criminal investigation, which may lead to criminal prosecution by the competent procuratorate. The trademark owner can claim damages in some criminal proceedings, although this is rare. It is also possible to initiate a separate civil lawsuit to claim damages after the criminal proceedings.

7.5 What typical defences are available to a defendant in trademark litigation?

No likelihood of confusion;
Fair use without bad faith;
Exhaustion of trademark rights;
Invalidity of the trademark registration;
Prior and continued use of the trademark within its original scope;
Use by an original equipment manufacturer without local sales;
Abuse of the rights of squatters; or
Procedural defects such as expiration of the deadline to take legal action or objection to the jurisdiction of the courts.

7.6 What is the procedure for appealing a decision in trademark litigation?

If any party is dissatisfied with the first instance decision, it is normally entitled to appeal to a higher court at second instance. The second instance is normally the last instance and its ruling will be final (where the first instance court is the Supreme People’s Court, there is no opportunity to appeal to a second instance court). However, a retrial once a decision has come into effect is also possible under very strict conditions, such as where there are obvious mistakes in the ruling or where there were substantial procedural defects in the previous proceedings.

8. Maintenance and removal of registrations

8.1 What is the length of the initial term of registration and what is the length of renewal terms?

The initial term of registration is 10 years. The trademark may be renewed indefinitely for subsequent 10-year terms thereafter.

8.2 What, if anything, must be submitted to the trademark office to maintain or renew a registration?

The application form for renewal, together with power of attorney and identity documentation and the renewal fee.

8.3 What are the grounds for cancelling a trademark registration?

The absolute grounds for invalidation are as follows (Article 44 of the Trademark Law):

The trademark was registered in bad faith without intent to use;
The trademark incorporates or consists of prohibited characteristics which are in violation of public policy (see question 3.8);
The trademark is devoid of distinctiveness (see question 2.3); or
The registration was obtained through deceptive means or other improper means.

The relative grounds for invalidation (Article 45 of the Trademark Law) are as follows:

The trademark infringes the prior legal rights of others, including trademark rights, copyright, trade names, personal names or even commercialisation rights.

The grounds for cancellation are as follows (Article 49 of the Trademark Law):

The trademark owner changes its registered trademark, or its name, address or other registered particulars, and fails to rectify the matter within the prescribed timeframe stipulated by the local Administration for Industry and Commerce;
The registered trademark becomes the generic name of the goods for which it has been approved; or
The registered trademark is not used for three consecutive years without a legitimate reason.
The trademark infringes the prior legal rights of others, including trademark rights, copyright, trade names, personal names or even commercialisation rights.

The grounds for cancellation are as follows (Article 49 of the Trademark Law):

The trademark owner changes its registered trademark, or its name, address or other registered particulars, and fails to rectify the matter within the prescribed timeframe stipulated by the local Administration for Industry and Commerce;
The registered trademark becomes the generic name of the goods for which it has been approved; or
The registered trademark is not used for three consecutive years without a legitimate reason.

8.4 Under what circumstances may the trademark office cancel a registration on its own initiative?

Please see question 8.3.

8.5 What is the procedure by which a third party may seek cancellation of a trademark registration?

Invalidation on absolute grounds:

Any entity or individual can file an application to request the China National Intellectual Property Administration (CNIPA) to declare a registered trademark invalid on absolute grounds at any time.
The CNIPA will serve a copy of the invalidation documents on the trademark owner along with a notification for response within a designated timeframe.
The CNIPA will issue its decision within nine to 12 months of the date of receipt of the application.

Invalidation on relative grounds:

Prior rights holders and interested parties can file an application to request the CNIPA to declare a registered trademark invalid on relative grounds within five years of registration of the trademark. However, the owner of a well-known trademark is not subject to this five-year timeframe if the registration was registered in bad faith.
The CNIPA will serve a copy a copy of the invalidation documents on the trademark owner along with a notification for response within a designated timeframe.
The CNIPA will issue its decision within 12 to 18 months of receipt of the application.

Cancellation:

Any entity or individual can file an application with the CNIPA to have a registered trademark cancelled.
The CNIPA will serve a copy a copy of the cancellation documents on the trademark owner, along with a notification for response within a designated timeframe.
The CNIPA will issue its decision within nine to 12 months of the date of receipt of the application.

8.6 What is the procedure for appealing a decision cancelling a registration?

Invalidation on absolute or relative grounds: If any party is dissatisfied with the invalidation decision, it can file a lawsuit with the Beijing IP Court within 30 days of receipt of the decision. The court will notify the other party in the trademark invalidation procedure to join the lawsuit as a third party.

Cancellation: If a party is dissatisfied with the cancellation decision, it can appeal before the Appeal Department of the CNIPA within 15 days of receipt of the decision.

The Appeal Department will issue its decision within nine to 12 months of the filing date of the appeal.

If a party is dissatisfied with the appeal decision, it can file a lawsuit with the Beijing IP Court within 30 days of receipt of the decision.

9. Licensing

9.1 Are there particular requirements, such as quality control by the licensor, for a trademark licence to be valid?

No. Although the licensor must monitor the quality of the goods on which the licensee uses its registered trademark (Article 43 of the Trademark Law), this is not a requirement in order for the licence to be valid.

9.2 Must trademark licences be recorded with the trademark office or other governing body?

No, it is not a mandatory to record the licence with the China National Intellectual Property Administration (CNIPA) or another governing body. However, a trademark licence that has not been recorded with the CNIPA is not effective against a bona fide third party (Article 43 of the Trademark Law).

9.3 Can a licensor lose its rights in a trademark by failing to comply with its obligations under the licence, such as maintaining quality control?

A licensor will not lose its rights to a trademark if it fails to comply with its obligations under the licence, but it might face other legal risks and obligations. For example, if the goods of the licensee are of poor quality, the licensor’s goodwill will be affected. If the goods cause damage to consumers, the licensor might bear joint liability.

10. Protection of foreign trademarks

10.1 Under what circumstances may foreign trademarks not registered in the jurisdiction be enforced (eg, under unfair competition law)?

Foreign trademarks that have not been registered in China can be enforced in the following circumstances.

Trademark Law: According to the Trademark Law, unregistered well-known trademarks are enforceable for identical or similar goods or services. In such enforcement cases, the trademark owner must submit a large volume of evidence to prove that the alleged trademark has acquired a significant reputation and popularity in China. For instance, the trademark 拉菲 (LAFITE in Chinese) was successfully enforced in an infringement case as a foreign party’s non-registered trademark.

Anti-Unfair Competition Law: Famous product names and service names are enforceable under the Anti-Unfair Competition Law. The defendant normally operates in the same or a highly related industry and improperly uses the plaintiff’s product name or service name. WalMart’s famous brand SAM’S CLUB (in Chinese) was once recognised as a famous service name in China and protected against misleading use by third parties.

10.2 Does the trademark office permit registration of a mark based on a foreign or international (Madrid) registration?

Yes. China is a member of both the Madrid Agreement and the Madrid Protocol.

11. Trends and predictions

11.1 How would you describe the current trademark landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

Swifter prosecution: The China National Intellectual Property Administration is speeding up its examination of trademark applications. It now takes between four and six months for a trademark application to go through the formal and substantive examination.

E-filing is now possible for additional types of trademark prosecution activities, such as appeal of a rejection, submission of an application for cancellation on the grounds of non-use, oppositions and requests for invalidation.

In addition to the three IP courts in Beijing, Shanghai and Guangzhou, China has decided to establish a new IP court in Hainan in 2021.

Stronger protection: On 11 October 2019, China announced the Rules for Regulating Trademark Registration Applying Conducts, which are designed to curb abnormal trademark applications, including bad-faith filings and warehousing of trademarks, through more specific measures. These take an extremely strict approach to trademark squatting and warehousing.

On 15 June 2020, China published the Criteria to Determine Trademark Infringement, comprised of 38 rules, which aim to standardise the trademark enforcement criteria and more effectively protect the lawful rights and interests of legitimate trademark holders.

On 14 December 2020, China published the First Batch of Guiding IP Administrative Enforcement Cases, including three trademark cases and two patent cases.

On 26 December 2020, China passed the 11th Amendment to the Criminal Law, which increases the maximum penalty for trademark crimes from the current seven years’ imprisonment to 10 years’ imprisonment. The amendment will come into effect on 1 March 2021.

12. Tips and traps

12.1 What are your top tips for securing and maintaining watertight trademark protection and what potential sticking points would you highlight?

The registration of Chinese-character trademarks is vital in China. Such trademarks are easier for Chinese consumers to recognise and remember, and can help significantly with brand promotion. If there is no official Chinese brand, the Chinese media and consumers may give the brand their own name. In practice, many foreign trademark owners have suffered headaches due to their failure to register a Chinese-character trademark. For instance, the Latin-character mark LAFITE was registered in China as early as in 1996, but the Chinese version 拉菲 was only approved for registration in 2017. In the interim, Chateau Lafite Rothschild had to combat trademark applications for the Chinese version “拉菲” through oppositions and invalidations, and combat counterfeit wines bearing only the Chinese mark “拉菲” but without the Latin version LAFITE, which required it to file a large volume of evidence to prove the association between the Latin version and the Chinese version.

China also has a special sub-class system, with each class divided into different sub-classes. Goods and services are normally regarded as similar if they fall within the same sub-class, and are usually regarded as dissimilar if they fall within different sub-classes. It is thus important that a trademark falls within as many subclasses as possible to obtain the widest possible protection and prevent trademark squatting. For example, a renowned vehicle brand registered its mark for “car, car parts, etc.” in Sub-class 1202, but failed to cover Sub-class 1204 for “bicycle, etc.”. The mark was later squatted by a bad-faith party for “bicycle”.