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China trade marks: Best practices in trade mark prosecution




With the recent revisions to the PRC Trade Mark Law that took effect on May 1 2014, it's helpful to review some best practices in China trade mark prosecution, particularly in light of changes in TMO practices following the revisions to the law. Trade mark squatting in China remains rampant, and for companies big and small, it often is a matter of time before your brand is pirated. Filing trade mark applications is usually less expensive than filing trade mark oppositions or buying brands from pirates. So it's best to file early, and well before launching a brand in the PRC.

If there are no plans to sell in China, but there are plans to produce there for export to other markets, registration can help avoid the risk of interruptions in supply created when a pirate registers the mark.

When filing, it is also best to include a broader range of goods and services than you might in other countries. This will again help to preempt pirates from filing for goods of lesser concern, and save costs that would otherwise be spent filing oppositions.

Under China's first-to-file regime, trade mark owners are permitted to apply for as many goods or services as they wish.

POAs and certificates of incorporation

The PRC Trade Mark Office recently amended its policies in two key ways.

First, each application must be accompanied by a separate power of attorney (POA). By contrast, under prior practice, local agents could submit a simple copy of an original.

To minimise the administrative burdens and delays in filing, applicants can give their local IP lawyer a general POA authorising them to execute POAs on their behalf for each application.

The TMO also recently began requiring foreigners to submit documentation at the time of filing confirming their existence. This requirement has always existed in law, but was not enforced against foreigners.

In the case of companies, this will normally be the certificate of incorporation or certificate of good standing. In the case of individuals, presenting a copy of a passport or other government-issued identification can satisfy the requirement. Simple copies are sufficient, and there is no need for notarisation or legalisation.

Multi-class applications – worth trying?

Applicants are now allowed multi-class trade mark applications (one application covering multiple classes). In other countries, multi-class applications allow for reduction of costs and administrative hassles. However, it has now become clear that the cost of first-filings and renewals for multi-class applications remains the same as under the prior law.

Further, the revised law does not allow applicants to divide multi-class applications except when applications are partially rejected during prosecution. Consequently, if a multi-class application is partially opposed after gazettal, it is not possible to request division of the application in a manner that would allow for prompt registration of the mark for goods and services not targeted in the opposition. Thus, an opposition would result in substantial delays in protection–at least one year, if not longer.

The regulations also do not provide for division of a multi-class trade mark in cases where the owner wishes to assign a portion of the mark to another party.

On August 20 2014, the TMO issued a notice suggesting that new regulations may eventually be issued to permit the division of multi-class trade marks for oppositions and assignments. However, it remains unclear when, if ever, these regulations will be issued. Thus, for now, brand owners should consider these potential risks before deciding whether to file multi-class applications.

Chinese-language trade marks

China has a vast consumer market and the native language of these consumers is Chinese, not English or another foreign language.

China's consumers will more frequently refer to foreign brands by their Chinese name. If the brand owner does not supply a Chinese name, local distributors and consumers themselves will in most cases invent one – or possibly more – Chinese equivalents. In some cases, pirates or the brand owner's own distributor will register the Chinese brand, thereby requiring the trade mark owner to either purchase the mark or pursue expensive oppositions or cancellations. It is therefore advisable to develop, register and use a Chinese-language brand early on.

There are many options for developing Chinese trade marks. They can be a direct translation of the foreign brand, a transliteration approximating the sound, a word that corresponds to the logo used with the foreign word mark, or none of these. The process of developing a Chinese brand is a creative one.

Regardless of the mark selected, the candidate should be cleared not only to ensure the mark is available for registration, but also to ensure that its pronunciation in the main Chinese dialects does not carry a bad connotation. These dialects include Mandarin, Shanghainese, Cantonese and Fujianese.

If the brand owner has not yet adopted a Chinese brand, it is advisable to first conduct searches of trading platforms, such as Taobao.com, to verify if distributors are already using a Chinese brand. Consideration could be given to adopting that brand (assuming it is suitable and not already registered by others). Or, if it is not deemed desirable for any reason, a new version can be introduced, with efforts then taken to ensure unauthorised resellers adopt it.

Pre-existing unregistered marks

The latest amendment to the PRC Trade Mark Law explicitly allows parties that have used a particular mark to continue doing so even though another party later registers the mark for conflicting goods. Specifically, Article 59 provides: "[w]here, before a trade mark registrant applies to register a trade mark, another is already using in respect of the same or similar goods a trade mark that is the same as or similar to the registered trade mark and has a certain influence, the registered mark's exclusive rights holder has no right to prohibit such user from continuing to use the trade mark within the original scope of use, but may request that the user add an appropriate distinguishing mark."

It remains unclear for now just what limitations will be imposed on the prior user of an unregistered mark, for example whether it may be required to refrain from selling products outside its current geographic scope, beyond the current quantities.

It also remains unclear whether the owner of a trade mark registration can require the addition of a "distinguishing mark", given that Article 59 only gives it the right to "request" this.

The above uncertainties merely underscore the importance of filing for trade marks early.

However, Article 59 offers trade mark owners that have been selling in China but whose marks have been pirated some solace that they may continue selling. As such, Article 59 may give victims of piracy some additional ammunition when negotiating purchases of their rights back from pirates.

Joshua Miller Troy Rice

SIPS Hong Kong

Cyberport 1 - 1010
100 Cyberport Road, Pokfulam
Hong Kong SAR
China
mail@sips.asia
Tel: +852 2866 6400
Fax: +852 2866 6408


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