By Mr. Xiaoming Liu and Ms. Wen Peng of Chofn IP
1. Legal framework
· The Trademark Law (2013)
· The Implementing Regulation of the Trademark Law (2014)
· Madrid Agreement
· Madrid Protocol
· Nice Agreement
· Berne Convention
· Paris Convention.
· TRIPS Agreement.
In the event of a conflict, international treaties will take precedence over domestic statutes.
2. Unregistered marks
Under the Chinese Trademark Law, only registered trademarks shall be protected, whereas unregistered trademarks (i.e., the pending or not-applied-for trademarks) shall not be protected, unless it is well-known in China.
It is very difficult to establish an unregistered but well-known trademark, unless large quantity of use evidence ( there is no fixed criteria for the quantity of evidence, but usually the use evidence should cover no less than three years and most of the relevant consumers) can be collected to prove that it is widely known by the relevant public.
For unregistered trademarks that are not well-known, it is sometimes possible to get protection from other laws such as the Anti-Unfair Competition Law or Contract Law. To obtain protection from Anti-Unfair Competition Law, a substantial amount of evidence is needed to prove that the mark has a certain degree of reputation in the market.
3. Registered marks
According to article 4 of Trademark Law, any natural person, legal person and other organization can apply and own a mark. However, in practices, Chinese natural person is not qualified to apply or own a registered mark unless this person is the owner of a self-employed business. There is no such restriction for a foreign natural person.
A representative needs a POA before filing and such POA does not need to be notarized and legalized.
Any signs, including words, figures, letters, numbers, three-dimensional signs, color combinations and sounds, etc., as well as combinations of the aforementioned elements, which are capable of distinguishing the goods of one natural person or one legal person or other organization from those of another may be protected as a trademark. Other non-traditional marks which are not provided in the foregoing regulations, including but not limited to hologram mark, scent mark, motion mark and position mark, cannot be protected.
4. Procedures (for registered marks)
Pre-filing search
An official search by the Trademark Office is unavailable, but trade mark searches can be conducted online at the official webpage below. The search interface is in Chinese only. Information on newly filed applications is not available until at least 1-2 months after filing.
http://sbcx.saic.gov.cn:9080/tmois/wszhcx_getZhcx.xhtml
a) Examination procedure
The examination for a new application should be completed within 9 months of the application filing date. Usually it takes 2-4 months for the formality examination which includes examination of documents and specification of goods/services. Office action usually will be issued for amendment if a problem is noted during the formality examination. Currently there is only one chance to amend an unacceptable specification. The substantial examination takes 5-7 months.
The examiner should make a decision within 9 months on whether to grant preliminary approval or reject the trademark.
If the trademark is preliminarily approved, it will be published in the Chinese Trademark Gazette for 3 months to solicit public opinion. Opposition can be filed with the Chinese Trademark Office (CTMO) during these 3 months.
If no opposition is duly filed, the trademark will be registered. No registration fees will be charged for issuing registration certificate.
b) Opposition
The examination for an opposition should be completed within 12 months of the date of expiration of the gazette period, extendable to 18 months under special circumstances.
If the CTMO makes a decision to grant registration and the opponent is dissatisfied, it has to initiate a separate procedure by filing invalidation with the Trademark Review & Adjudication Board (TRAB).
If the CTMO makes a decision to refuse registration and the trademark owner is dissatisfied, the owner may, within 15 days, appeal to the TRAB, which shall make a decision within 12 months, extendable to 18 months under special circumstances. TRAB’s decision is appealable to the court if the trademark owner is still dissatisfied.
c) Invalidation
Ex Officio invalidation: The CTMO can invalidate a registered trademark based on absolute grounds (i.e., Articles 10, 11 or 12 of Trademark Law) or based on the fact that registration was obtained by deceptive or other improper means. The trademark owner, if dissatisfied, may submit a request for review to the TRAB. The TRAB shall make a decision within 9 months, extendable extended to 12 months under special circumstances. The TRAB’s decision is appealable to the court if the trademark owner is still dissatisfied.
Invalidation based on request and absolute ground: Any party can file invalidation request with the TRAB to invalidate a registered trademark based on absolute ground (i.e., Article 10, 11 or 12 of Trademark Law) or based on the fact that registration was obtained by deceptive or other improper means. The TRAB shall notify the trademark owner and specify a period of time to respond. Then the TRAB shall make a decision within 9 months, extendable to 12 months under special circumstances. TRAB’s decision is appealable to the court if any party is dissatisfied.
Invalidation based on request and relative ground: A prior right holder or a materially-interested party may, within five years (the owner of a well-known trademark shall not be bound by the limit if the trademark is registered in bad faith) of the date of registration of the trademark, file an invalidation request with the TRAB based on relative ground (i.e., the second or third paragraph of Article 13.2 and 13.3, Article 15, Article 16.1, Article 30, Article 31 or Article 32 of Trademark Law). The TRAB shall notify the trademark owner and specify a period of time to respond. Then the TRAB shall make a decision within 12 months, extendable to 18 months under special circumstances. The TRAB’s decision is appealable to the court if any party is dissatisfied.
d) Non-use cancellation
Non-use cancellation can be filed with the CTMO by any party against any trademark which has been registered for more than three years. The CTMO will then notify the trademark owner and give it two months to provide use evidence. If no evidence is provided, within two months upon receipt of the CTMO’s notice, to prove its commercial use during the past three years (counting back from the non-use cancellation filing date), or no justifications is provided, the registration shall be cancelled. If evidence is provided, the CTMO will not transfer a copy to the non-use cancellation applicant, which means the applicant does not have opportunity to check and challenge the authenticity of the evidence. The CTMO will examine whether the use evidence is valid without the non-use cancellation applicant’s opinion, and makes its decision within nine months, extendable to 12 months under special circumstances.
Any party, if dissatisfied with the CTMO’s decision, may request for review to the TRAB, within 15 days. The TRAB will transfer a copy of the use evidence filed by the trademark owner to the non-use cancellation applicant who has opportunity to check and challenge the authenticity or validity of the evidence during this procedure. The TRAB will make decision based on two parties’ opinions, within nine months, extendable to 12 months under special circumstances.
The TRAB’s decision is appealable to the court if any party is dissatisfied.
e) Renewal
Renewal application shall be filed within 12 months prior to the expiration. If it fails to do so, it can file application within a six-month grace period.
5. Enforcement
a) Enforceable right
The vast majority of enforcement cases are based on registered marks.
Enforcement of unregistered marks is very difficult in China unless it is proven to be well-known in China according to the Trademark Law or it is proven to be a famous product name based on anti-unfair competition laws. Large amounts of evidence are needed to prove the unregistered mark as a well-known mark or as famous product name.
b) Cause of action
Article 57 of the Trademark Law provides seven trademark infringing actions as follows:
1) Using a trademark identical with a registered trademark on identical goods without the registrant’s license;
2) Using a trademark similar to a registered trademark on identical goods, or a trademark identical with or similar to a registered trademark on similar goods without the registrant’s license, which is likely to cause confusion;
3) Sale of goods infringing a registered trademark;
4) Counterfeiting or the unauthorized production of the labels of another's registered trademark, or the sale of any such labels;
5) Changing a registered trademark without the registrant's consent, and selling the goods bearing such replaced trademark in the market;
6) Providing intentional conveniences allowing trademark infringement or assistance for others’ trademark infringement; or
7) Other actions causing damage to a registered trademark.
c) Remedies and Jurisdictions
Remedies can be sought through administrative, civil and/or criminal proceedings.
· Administrative proceeding
An administrative complaint should be filed in either the infringer’s domicile or the place of infringement (i.e., the infringement starting place, the infringing result place, or the place where the infringing goods are located). In general, the complaint should be filed with the lowest level (county-level or district-level) of the Administration for Industry and Commerce (AIC). The AIC is empowered to stop infringing conduct, confiscate and/or destruct infringing goods and tools, impose fines, and refer serious cases to the police.
No damage can be claimed in such an AIC complaint, but an AIC complaint is very time and cost efficient when it comes to stopping infringement, as there are no official fees, no strict formality requirements for evidence, and a decision is made usually within three months.
· Civil proceeding
A trademark civil lawsuit should be filed in either the infringer’s domicile or the place of infringement. In general, the first instance of such litigation should be filed with the Intermediate People’s Court. The SPC granted special authorization to ninety lowest level (county or district level) of courts in charge of first-instance trademark infringement civil litigation.
In addition to the remedies available in the administrative proceeding, damages can be claimed in a civil proceeding. However, a civil proceeding is much more time and cost consuming than an administrative proceeding. It usually takes 6-12 months to issue a decision for the first instance proceeding, and 3-6 months for the second instance proceeding.
It is possible to first file an AIC complaint to stop the infringement, and then file a civil lawsuit to claim damages. The AIC’s seized infringing products, if any, can serve as very strong evidence in court.
Criminal proceeding
Severe trademark infringement can be considered crimes. The aforesaid Actions 1, 3 and 4 under Article 57 may be considered crimes under Articles 213-215 of the Criminal Law, when and if the infringement passes the threshold criteria detailed below according to the judicial interpretation, whereas the remaining Actions under Article 57 cannot amount to crimes.
1) Using a registered trademark on identical goods: a) turnover ≥ ¥50,000 or profit ≥ ¥30,000 against one trademark; or b) turnover ≥ ¥30,000 or profit ≥ ¥20,000 against two or more trademarks;
2) Sale of goods infringing a registered trademark: a) turnover ≥ ¥50,000; or b) value of unsold goods ≥ ¥150,000; or
3) Counterfeiting and/or selling the labels of another's registered trademark: a) volume of labels ≥ 20,000 pieces, turnover ≥ ¥50,000, or profit ≥¥30,000 against one trademark; or b) number of labels ≥ 10,000 pieces, turnover ≥ ¥30,000, or profit ≥ ¥20,000 against two or more trademarks.
Normally, a trademark criminal litigation shall be filed at the scene of the crime (i.e., the crime starting place, the resulting place, or the place where the criminal goods are located). In general, the first instance of such litigation shall be filed with the lowest level of courts.
It usually takes 8-12 months to issue a decision for the first instance proceeding, and 3 months for the second instance proceeding. The maximum criminal penalty can be seven years of imprisonment and/or monetary penalty.
d) IP Courts and IP tribunals
China has set up specialized IP tribunals to deal with IP-related cases since 1990s. A statistics in 2012 indicated that there are more than 400 specialized IP tribunals in different level of courts (there are around 4000 different level of courts in total) across China.
On October 31, 2014, the Supreme People's Court (SPC) founded three IP courts in Beijing, Shanghai and Guangzhou. Currently, the three courts only hear cases from the Beijing, Shanghai and Guangdong provinces.
The three IP courts are equivalent to Intermediate People's Courts. They will act as an appellate court for decisions made by a lower court of first instance in the Beijing, Shanghai or Guangdong provinces. If an IP court acts as a first instance court, the IP tribunals of the High People's Court in Beijing, Shanghai or Guangdong will have appellate jurisdiction.
The IP Court in Beijing has exclusive jurisdiction over decisions made by the TRAB, concerning the grant and confirmation of trademark rights.
e) Damages
Damage shall be decided in the following sequence: a) trademark owner’ actual loss; b) benefits gained by the infringer from the infringement; c) multiple of the royalty for the trademark license; or d) a statutory damage of less than ¥3 million. The plaintiff’s reasonable expenses in stopping the infringement shall also be included.
Punitive damages are available under the provision of Article 63 of Trademark Law, at not less than one times and not more than three times the figure determined using the method set forth above.
f) Interim measures
Interim measures in China include preservation of evidence and/or property, and injunctive relief. Such interim measures are available before and after litigation is initiated. For injunctive relief before the litigation is initiated, the court should make a decision within 48 hours, and the decision should be executed immediately after the decision is made.
6. Ownership changes and right transfers (i.e., assignment and licensing)
For trademark assignment, it is necessary to file assignment application with the CTMO. Only after the assignment application is approved by the CTMO, the assignee can have the ownership of the trademark. The assignor and the assignee shall jointly file an application, with a co-executed application form. The assignment agreement is not necessary for filing, unless the CTMO requests so. The documents do not need to be notarized and/or legalized, unless the CTMO doubts the authenticity of the documents and requests a notarized and/or legalized version.
For trademark licenses, the licensor shall file application with the CTMO for record-keeping and submit the relevant record-keeping materials, but there is no penalty if the licensor fails to file such application. In practice, failure to file such an application will not affect the validity of the license agreement. For filing the application, the licensor shall file with an application form co-executed by the licensor and the licensee. The license agreement is not necessary for filing. The documents do not need to be notarized and/or legalized.
The license shall be recorded with the CTMO. Failure to record the license does not affect the validity of the license agreement, but the failure cannot resist or confront a bona fide third party. The implementing regulation of trademark law clearly stipulates that the use evidence by a licensee can be used by a trademark owner to defend a non-use cancellation. In addition, in practice, it is widely regarded that the goodwill accumulated by the trademark licensee should belong to the trademark owner. The license shall be limited the registered specification and mark.
7. Related rights
According to Article 9 and 32 of the Trademark Law, registration of a trademark shall not infringe any prior legitimate rights, not limited to prior trademark rights. Sometimes, trademark rights might overlap with personal names, personal image or portrait, corporate name or trade name, industrial design, copyrights etc. In such cases of overlapping rights, the earlier legitimate right shall prevail according to the Trademark Law. For instance, Copyright can be used to protect device marks that have artistic merit as shown in the example below.
The above drawing is associated with typical case where trademark right conflicted with prior copyright. The boy, “Sanmao” (three hair) by name, is a very famous character in the comic book Wanderings of San Mao by Mr. Leping Zhang in 1936. He died in September 1993. On February 16, 1996, the copyright of “Cartoon characters of San Mao series” was registered, No. 09-96-F-002. A company Jiangsu Sanmao Group Company” (hereinafter referred as “Jiangsu Sanmao”) applied for trademark registration of this character in 38 classes from November 28, 1995 thru February 28, 1996. The successors of Leping Zhang found Jiangsu Sanmao was using “Sanmao character” on their own products, promotional materials, business cards, etc. and sued Jiangsu Sanmao based on copyright infringement. In the first instance, the Court adjudicated that Jiangsu Sanmao’s act has constituted copyright infringement and shall stop the use and pay a damage of RMB100,000. Jiangsu Sanmao appealed, but the second-instance court sustained the ruling in the end.
8. Online issues
For doing online business on big online platforms such as Alibaba, Taobao and JD, it is usually necessary to have trademark registrations. For filing complaint with such online platforms against trademark infringement, it is also necessary to have trademark registrations. To a large extent, trademark registrations are even more important for online business and enforcement than offline business and enforcement in China in this internet era.
Unfortunately, there are still no laws and regulations specifically enacted for online trademark infringement, though there is one specific judicial interpretation Interpretation of the Supreme People's Court on Application of Laws in the Trial of Civil Disputes over Domain Names of Computer Network (Fashi 2001 No.24) issued by SPC in 2001 about protecting mark owners against unauthorized use in domain names.
Nevertheless, all the laws, regulations and judicial interpretations, which cover conventional offline business and infringement, are theoretically applicable on online business and infringement. Accordingly, the AICs and Public Security Bureaus (PSBs) are empowered to enforce trademarks online as well.
There is a special DRP China Internet Network Information Center (CNNIC) Domain Name Dispute Resolution Policy (2014) regulating the ccTLD, i.e., .cn. We call CNNIC’s DRP the CNDRP. The biggest difference of CNDRP from UDRP is that it stipulates a two-year deadline to initiate domain name dispute procedure. After the two-year period, the complainant shall file a lawsuit to solve the dispute, which is much more time and cost consuming.
