By Johnson Jiang Li and Justin Tao Jiang
China Trademark Legal Framework
China’s legislation governing the registration and protection of trademarks comprises:
• the Trademark Law and its Implementing Regulations;
• the Rules for Trademark Review and Adjudication;
• the Provision for the Establishment and Protection of Well-known Trademarks; and
• other related provisions promulgated by the State Administration for Industry and Commerce under which the Trademark Office and the Trademark Review and Adjudication Board (TRAB) are established.
China is a signatory to all major international treaties regarding registration and protection of trademarks, including:
• the Paris Convention for the Protection of Industrial Property;
• the Madrid Agreement concerning the International Registration of Marks;
• the Madrid Protocol; and
• the Nice Agreement.
Right to use unregistered marks
The holder of an unregistered mark has the right to use a trademark, no matter whether it is registered. However, if a mark is to be used on tobacco products, it must be registered.Use of an unregistered mark in an extensive manner can give a descriptive mark acquired distinctiveness and thus make it eligible for registration.
Right against registration
Well-known unregistered marks and other prior used unregistered marks can serve as grounds to challenge the registration of a later filed trademark. The Trademark Law provides that an unregistered right, including unregistered trademarks, can be the basis of an opposition/invalidation to a trademark application/registration if:
• the trademark infringes upon the prior unregistered right;
• the trademark has already been used by another party and enjoys a certain reputation;
• the trademark was filed by the mark owner’s agent or representative without authorisation; or
• the trademark is identical or similar to an unregistered mark previously used by another party on identical or similar goods, and the trademark owner knew of the existence of the unregistered mark through a contractual, business or other relationship.
Right against use
As a general rule in China marks should be registered in order to prevent them from being used by other parties. Unregistered marks receive only limited protection unless they are well known. The owner of an unregistered but well-known mark can prevent others from registering or using a mark on goods or services that are identical or similar to those bearing the well-known mark if the mark at issue is a reproduction, imitation or translation of the well-known mark and likely to cause confusion. ‘Well-known trademarks’ are trademarks that are well known to the relevant public. The determination and protection of well-known marks depend on numerous variables. When determining whether a mark is well known, the following factors could be considered:
• extent of the relevant public’s awareness of the trademark;
• duration of use;
• duration, extent and geographical scope of any publicising work for the trademark;
• protection records of the trademark as a well-known trademark; and
• other factors concerning the mark’s popularity.
Any natural person, legal entity or other organisation can file and own a mark in the course of its production or business operations.
Documents required for trademark application
For non-Chinese applicants, a power of attorney signed by its authorised representative to appoint a Chinese trademark agent and the applicant’s certificate of good standing (or passport) are required for trademark applications. Usually, photocopies of these documents without notarisation and legalisation are sufficient for filing trademark applications in China.
Any mark consisting of words, devices, letters, numbers, three-dimensional marks, combined colours and sounds or a combination of these factors, which can distinguish the goods of a natural person, legal entity or other organisation from those of others, can qualify as a trademark.
The following signs shall not be used as a trademark:
• those identical or similar to the name, flag, emblem, song or medals of China or its army, and those identical to the name or the symbol of the central government as well as the place or symbolic building thereof;
• those identical or similar to the state name, national flag or emblem, or military flag of any foreign country, except with the approval of the government concerned;
• those identical or similar to the name, flag or emblem of any international organisation, except with the approval of the international organisation concerned or where the mark is unlikely to mislead the public;
• those identical or similar to the official sign or inspection mark indicating control and guarantee, except where official authorisation has been granted;
• those identical or similar to the symbols or names of the Red Cross or the Red Crescent;
• those that discriminate against people of any nationality;
• those that are deceptive and which are likely to mislead the public to misidentify the quality or other characteristics or place of origin of the goods; and
• those having an adverse social impact.
Geographical names for administrative divisions at or above county level and foreign geographical names that are well known to the public shall not be used as trademarks, unless that have other meanings or serve as a component of a collective mark or certification mark.
None of the following marks qualify for trademark registration:
• marks made up solely of the generic names, designs or models of the goods on which they are used;
• marks which refer only to the quality, main raw materials, function, use, weight, quantity or other features of the goods in respect of which they are used; and
• marks lacking any distinctive features.
However, any such marks can be registered if it can be shown that they have acquired distinctive features as a result of use and thus become distinguishable.Device marks that are in a shape that originates from the nature of the goods, or is necessary to achieve a technical effect or to enable the goods to keep substantive value, are not registrable as three-dimensional trademarks.
The timeframe for the Trademark Office to examine a trademark application is nine months from the receipt date of the application. After the trademark is filed, the Trademark Office will first examine its formality. If the office considers that the formal requirements have been met, but that amendments are necessary, it will ask the applicant to amend the application within 30 days of receipt of the notification of amendment. After the amendment is accepted by the Trademark Office, it will issue an official filing receipt to the applicant. The Trademark Office will then proceed with the substantive examination of the trademark application. If the trademark is found to lack distinctiveness, be prohibited or be identical or similar to a third party’s prior trademark application or registration for the same or similar goods, the office shall refuse the application and will not publish the mark in question.
Applications that have passed examination will be published in the Trademark Gazette for three months for opposition. A prior rights holder or an interested party that deems that the published trademark violates its prior rights, or any person who deems that the published mark is prohibited or lacks distinctiveness may raise an opposition before the Trademark Office within three months of the publication date. After an opposition is filed, the Trademark Office shall make a decision on the opposition within 12 months of the expiration date of the publication period, although an extension of six months is available. If the opposed party is dissatisfied with the Trademark Office’s decision, it may file an application for review with the TRAB. If the opponent is dissatisfied with the Trademark Office’s decision, it may not file an application for review, but can file an invalidation request after the trademark is registered.
A mark will become registered if there is no opposition filed against its registration or it is found that the opposition filed is not justifiable.
Removal from register
Non-use cancellation: If a registered mark is not used in China for three consecutive years without justification, it becomes susceptible to a non-use cancellation action. Upon receipt of such an application, the Trademark Office will notify the mark owner to submit, within two months, either:
• evidence of use of the mark in the three years prior to the date of the application for cancellation; or
• justified reasons for its failure to use the mark.
If the registrant fails to submit sufficient evidence or acceptable reasons, the Trademark Office will cancel the registration. ‘Use’ of a mark refers to affixing trademarks to commodities, commodity packages or containers, commercial documents, advertisements, exhibitions and other commercial activities to distinguish the origin of the commodities by the trademark owner or authorised licensees.
Cancellation of generic marks
Distinctiveness is essential for registration. A mark is considered to lack distinctiveness if it becomes the generic name or figuration of the goods for which the mark is to be registered. If a registered trademark has become the generic name of the goods, any party may file a cancellation application against it with the Trademark Office. Consequently, rights holders should ensure that they use the mark in a proper way to prevent it from becoming generic.
The Trademark Office shall declare a registered trademark invalid if it finds that it is a prohibited mark or lacks distinctiveness, or if the registration was acquired by fraud or other unfair means. Any other party may request the TRAB to invalidate such a registered trademark. If a registered trademark violates the prior rights of another party, the prior rights holder may, within five years of the registration date of the said trademark, apply to the TRAB to invalidate it.
After registration, a trademark should be renewed every 10 years. If the registrant fails to proceed with the renewal procedure upon expiry of the grace period, the trademark shall be cancelled.
Infringement of a registered trademark is subject to administrative action, customs measures and civil litigation, which are the three main channels for enforcing trademark rights in China. In serious cases, trademark infringements may be subject to criminal penalties and the persons directly responsible may be prosecuted for criminal liabilities and be subject to imprisonment. An unregistered well-known trademark is also protectable by administrative action and civil litigation. However, much more evidence must be produced to prove the mark’s reputation than for a regular registered trademark.
Local Administrations of Industry and Commerce (AICs) are the government authorities in charge of administrative actions and may carry out on-site investigations, take raid actions, seize infringing products and impose fines on infringers within their jurisdictions. Local customs offices can take customs actions ex officio or based on a request to prevent infringing products’ entry into or exit out of China. The Chinese court system comprises courts at four levels: the Supreme Court on the top, higher courts in each province and municipality, intermediate courts at city level and district courts at district or county level, as well as IP courts established in Beijing, Shanghai and Guangzhou in late 2014. Many intermediate courts and a few district courts have established IP tribunals. Accordingly, a trademark infringement case initiated by a trademark owner should be brought before an IP court or IP tribunal of the court that has proper jurisdiction.
Merits of different channels
Generally speaking, AIC actions and customs measures are less costly and faster. Many administrative actions before AICs can be completed in three months from the filing of a complaint to the issuance of a written decision. On the other hand, AICs and customs offices do not have the authorisation to award damages. In civil litigation, trademark owners can claim damages and have more control over the proceeding. For example, the trademark owner can request a preliminary injunction, evidence preservation and property preservation and settle the case if needed. Chinese civil litigation is a two-instance system: most cases at first instance can be completed within one year, while cases at second instance take a few months.
As in many other civil law countries, damages in China are used to provide compensation for losses suffered by the trademark registrant; therefore, the amount of damage shall be equal to the losses of the mark owner, which includes reasonable expenses incurred in stopping the infringement. In practice, the amount of damages is calculated using:
• the actual losses suffered by the trademark registrant;
• the profits of the infringer; or
• a multiple of the trademark royalties.
If it is difficult to establish the amount of damages based on the above methods, the court may award, at its discretion, statutory damages of up to Rmb3 million depending on the circumstances. For bad-faith infringement, compensation may be between one and three times the damages determined in the aforesaid manners.
Non-infringement defence and exemption
If a registered trademark mainly describes or directly indicates the features of the goods for which it is used, the trademark owner has no right to prohibit others from using it fairly. If, prior to the application date of the registered trademark, another person has been using an identical or similar trademark on the same or similar goods and has acquired a certain influence, the trademark owner has no right to prohibit this person from continuing to use the mark in the same manner. If the trademark owner fails to provide either evidence of actual use in the last three years or evidence that others have suffered loss in a litigation case, the defendant may be exempt from paying damages. If a seller of infringing goods can prove that the goods were obtained legitimately in good faith and discloses the source, it can be exempt from paying damages.
When a trademark registrant has evidence to prove that another party is infringing its registered mark or that such infringement is imminent, and that if such infringement is not stopped in time it is likely to cause irreparable harm to the registrant, the registrant may, prior to instituting legal proceedings, apply to the court for interim measures, including a preliminary injunction and property preservation measures. In addition, if evidence of infringement could be lost or would be difficult to obtain at a later time, the registrant or an interested party may, prior to instituting legal proceedings, apply to the court for an order to preserve evidence. After receiving an application for such interim measures, the court is required to issue a ruling within 48 hours.
Ownership changes and rights transfers
Assignment of marks
To record assignment of marks, the assignor and the assignee should jointly file an application for assignment with the Trademark Office. Both the assignor and the assignee are required to sign a power of attorney respectively and submit their valid certificates of good standing for the purposes of recordation of assignment. If the assignor has valid registrations or applications for the same or a similar mark in respect of the same or similar goods, all such registrations or applications should be assigned to the same assignee.
Recordation of licenses
Under the Trademark Law, when a trademark registrant licenses another party to use its registered mark, in addition to jointly executing an application form for recordation of licence, the licensor and the licensee must also issue a power of attorney respectively and provide their respective certificate of good standing. A trademark licence can only be used against a third party of good faith if it is officially recorded.
There are many areas of overlap between trademark rights and other rights, such as prior copyrights and trade name rights. In particular, prior rights can serve as prior basis to lodge oppositions if the opponent has no prior trademark rights in China.For instance, a logo can be protected under both the trademark law as a trademark and the copyright law as an artistic work. In one case, an applicant that owned a prior trademark registration over a logo with respect to goods in Class 07 became aware of an offending trademark application filed by a third party for the same logo but designating goods in Class 25. The applicant finally prevailed in an opposition against this offending application on the grounds that it infringed upon its prior copyright over the logo.
In China, many online infringements rely on traditional rights established offline. Therefore, although domain names are registered on a first come, first served basis, prior registered or used marks and company names still form an important basis for most actions against cybersquatting.The China Internet Network Information Centre has implemented a domain name dispute policy, which allows an interested party to apply for arbitration with the China International Economic and Trade Arbitration Commission in Beijing or at the Hong Kong International Arbitration Centre. Compared with litigation before a court, domain name arbitration is fast and economical. However, an application for arbitration in respect of a disputed domain name must be filed within two years of the initial registration of the disputed domain name. To recover an infringing domain name, the applicant must prove that a prior right to a domain name meets the following essential criteria:
• The disputed domain name is identical or confusingly similar to its brand name or mark;
• The disputed domain name holder has no right or legitimate interest in the domain name; and
• The disputed domain name was registered in bad faith.