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China: Trade marks: Protecting retail services

The PRC Trade Mark Office (TMO) has had a long-standing policy prohibiting class 35 service mark coverage for "retail services" and similar descriptions. This policy has been directly and indirectly challenged through recent changes in the Nice Classification, judicial decisions and comments by many Chinese legal scholars. But for the time being, the policy remains largely intact.

That said, there are strategies available to maximise protection for retail services in China that need to be considered given the high levels of piracy and infringement in the country.

Nice Classification changes

Since 1992 (the 6th edition Classification), the services description closest to "retail services" has been "sales promotion for others". The TMO placed this description into a similarity subgroup the heading for which was "sales (contract) agency", but is now "sales promotion for others" (subgroup 3503).

In 2006 (9th edition Classification) a new description skirting retail services was added: "presentation of goods on communication media, for retail purposes". The TMO accepted this with effect from January 1 2007 and placed it in the similarity subgroup for "advertising" (subgroup 3501), an item that the TMO deems prima facie dissimilar to "sales promotion for others" (subgroup 3503). Clearly, advertising is only one aspect of retail services, not sufficiently broad enough effectively to provide coverage for retail services.

In 2013 (10th edition Classification, 2013 version) a new description was added: "retail or wholesale services for pharmaceutical, veterinary and sanitary preparations and medical supplies", which the TMO adopted with effect from January 1 2014. At last, retail services of some kind were registrable in China – but only for these narrow industry fields. A new similarity subgroup was created (subgroup 3509), into which this description was placed.

However, the majority of retail businesses are not focused on preparations and medical supplies in the pharmaceutical, veterinary or sanitary products industries, so the inclusion of this item in the Classification has not had a significant impact on the TMO's policy or practice in regard to retail services coverage for businesses.

As far as the TMO is concerned, this is the extent to which retail or retail-like services can be covered.

Judicial decisions

Although there are not many influential cases that have been decided in respect of retail services-related issues, PRC courts have dealt with this mainly in the context of whether (1) a party engaged in such services could be found to have infringed a registration for a similar mark that covered "sales promotion for others", and (2) use evidence of actual provision of retail services could be effective evidence to defend against a non-use cancellation. Some courts support the idea that the description "retail services" is roughly equivalent to "sales promotion for others", while others have rejected the concept.

In a 2016 case, the Beijing High People's Court (BHPC) ruled that use of marks in conjunction with the operation of retail shops (for example store signage, contracts and commercial invoices) does not constitute "sales promotion for others" such that a registration covering that item of services could survive a non-use cancellation.

Drawing from the 8th edition Classification's Explanatory Note for class 35, the BPHC's decision concluded that the services in class 35 include mainly services rendered by persons or organisations principally with the object of: (1) help in the working or management of a commercial undertaking, or (2) help in the management of the business affairs or commercial functions of an industrial or commercial enterprise; and that class 35 does not include, in particular: the activity of an enterprise the primary function of which is the sale of goods, that is of a so-called commercial enterprise. The mark at issue in that case was registered back when the 8th edition Classification was in effect.

However, an important change was made to the Explanatory Note when the 9th edition came into effect on January 1 2007 (which has remained through to the present): the exclusion of commercial enterprise activity was removed. The Supreme People's Court picked up on this in a 2007 case (Fengyang Industrial v Xinjiang Pacific Department Stores) involving a Taiwanese-owned chain of department stores operating in mainland China, indicating that it could be inferred from the removal of that exclusionary language that retail services were intended to be included within class 35.

With the split between various courts, the issue of whether class 35 should cover retail services awaits ultimate resolution. One of the BHPC judges responsible for the 2016 decision has written separately to express support for legislative reform aimed at granting protection to retailers by allowing registration of retail service marks in class 35, a sentiment that is echoed by many legal scholars in China.

Madrid practice

The TMO will typically reject applications to extend international registrations to China that contain retail service descriptions.

However, the TMO has accepted the following description which clearly comes closer to covering retail services than is permitted under the TMO's own index of "standard" descriptions: "The bringing together, for the benefit of others, of a variety of goods (excluding the transport thereof), enabling customers to conveniently view and purchase those goods."

This is not a standard Nice description, but one the TMO has accepted.

The language itself is taken from the Class 35 Explanatory Note. Notably, that Note includes the following additional language that, if included in an international registration extended to China, would very likely result in rejection by the TMO: "such services may be provided by retail stores, wholesale outlets, through mail order catalogues or by means of electronic media, for example, through web sites or television shopping programmes" (emphasis added).

While this truncated description stops short of covering retail services per se, it could still provide a stronger basis for attacking in a Chinese court pirates using a mark for retail services.

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