China's new Trademark Law ("new law") will come into effect on May 1, 2014. For our earlier comments on the new law, click here.
To implement the new law, new regulations have been drafted, the Draft Implementing Regulations ("Draft IR"), which have since been submitted to the Legislative Affairs Office of the State Council of China (LAO) for review. Last month the LAO issued a call for public comments.
The current Draft IR is subject to LAO's review; LAO is further entitled to make additional amendments based on public comments before submitting the amended draft to the State Council for a final review. The profession have been submitting comments, and we will keep you posted on further developments.
The Draft IR details the procedures of trademark applications and reviews, and clarifies the uncertainties or ambiguities under the new law. It introduces some new systems and also further regulates the practices of trademark agents in China.
- Of note, the Draft IR tries to streamline and clarify existing procedures. This is done through detailing e-filing provisions, introducing the "division of trademark applications" for partially refused applications, allowing for settlement negotiations, and specifying circumstances where non-use of a trade mark may be justified, etc.
- The Draft IR also attempts to facilitate enforcement of trademark infringement. Key efforts include providing for calculation of illegal turnover, specifying circumstances where a seller can claim innocent infringement, and stipulating how right holders assist on verification of suspected infringing products in AIC raid cases, etc.
- Finally, the Draft IR states that assignor and assignee are jointly responsible for recording the trademark assignment with the China Trademark Office (CTMO).
We outline in detail several notable points below.
1. TRADEMARK APPLICATION REQUIREMENTS AND PROCEDURES AMENDED
a. Requirements of filings for sound marks and clarification of e-filing.
Sound mark applications
As the new law allows sound marks to be eligible for registration as a trademark, the Draft IR specifies requirements of the filing documents for sound mark applications. This includes a sound sample, explanation on how the mark is used, and a description.
The Draft IR states that e-filing applications for registration of trademarks under the new law refers to filing trademark registration applications electronically via the internet, and in a format designated by CTMO. It specifies that where the documents are submitted to CTMO/TRAB electronically:
- The date on which a party submits documents to CTMO/TRAB shall be the date on which the documents are received by CTMO/TRAB's electronic system;
- The documents submitted shall be subject to CTMO/TRAB's database records.
It also states that various kinds of documents issued by CTMO/TRAB can be served on the parties concerned by electronic means, and such documents shall be deemed duly served on the party 15 days after the date on which the document is sent.
b. Explanations/corrections upon Examiner's Advice
The new law reintroduces Examiner's Advice in the trademark application process. The Draft IR further provides for a 15-day time limit for the applicant to provide explanations or corrections upon receiving CTMO's notification.
c. Division of application
The Draft IR allows for the "division of trademark applications" for partially refused applications, allowing the preliminarily approved goods/services to proceed to registration and dealing with the rejected goods/services separately. The applicant may, within 15 days upon receipt of CTMO's partial refusal notification, request the CTMO divide the application so that the goods preliminarily approved are moved to a new application. The application on the goods preliminarily approved shall be allocated a new application number and be published with the filing date of the original application's filing date.
We understand this provision shall apply to both multi-class and single class applications, though this is not expressly stated in the Draft IR. However, the Draft IR states that the division shall not apply to international applications designating China for territorial extension. This seems to be an additional advantage domestic applications may have over Madrid applications.
2. TIME LIMITS
As the new law provides for new time limits for CTMO/TRAB's examination of cases in trademark application/opposition, invalidation and cancellation procedures, corresponding provisions/changes in this regard are included:
- The Draft IR states that the following periods are excluded
from the time limit for examination of the cases:
- The period of service of CTMO/TRAB's documents;
- The time needed for the party concerned to provide explanations or corrections where necessary and for another round of evidence exchange;
- Where different applicants apply on the same day for the registration of identical or similar trademarks in respect of the same or similar goods, the time for the applicants to submit evidence of prior use of the trademarks before applying for registration, or to draw lots;
- Where the party concerned is changed, the time needed for re-notifying the party to submit defence;
- Where in an examination/review, the involved prior rights are to be determined based on the results of another case being tried by a court or handled by an administrative agency, the period of waiting for the results of another case;
- The time of waiting for the parties to negotiate a settlement as per their application.
- The current 30-day time limit for the applicant to make supplements or amendments as required by CTMO/TRAB has been shortened to 15 days, and the current 3-month time limit for the applicant to file supplemental submissions in opposition or TRAB's review procedures has been shortened to 30 days.
- Clear rules for calculation of time limits/deadlines are added
in the Draft IR, which states that, unless otherwise specified in
the new law –
- the first date is excluded in calculating all time limits;
- for deadlines calculated in years or months, the deadline falls on the corresponding date of the last month of the deadline, or the last date of that last month in case there is no corresponding date in that month;
- in case the deadline falls on a statutory holiday, it will automatically be extended to the next working date thereafter.
3. CERTIFICATION REQUIREMENT CONCERNING THE IDENTITY/LOCUS STANDI OF THE APPLICANT
The Draft IR expressly confirms that when filing an application for registration of a trademark, or filing other applications (for change, assignment, renewal, opposition and cancellation etc.) of a trademark with CTMO, the applicant shall submit a copy of certification document (i.e. Certificate of Incorporation or identify certification etc.) confirming their identity/locus standi.
4. FAILURE OF THE APPLICANT TO PAY REQUIRED FEES FOR FILING TRADEMARK APPLICATIONS WILL RESULT IN CTMO'S NONACCEPTANCE OF THE FILINGS
The Draft IR clarifies that if the applicant does not pay the official fees upon filing any application, the CTMO shall not accept the application and shall notify the applicant in writing. Current regulations do not prescribe how to deal with a case where fees are not paid.
5. FORMALITIES FOR TRADEMARK ASSIGNMENT
Current Regulations provides that the assignee files a recordal of any assignment. Since there are often falsified assignments, the Draft IR states that the formalities for the assignment shall be handled jointly by the assignor and assignee or by an agent entrusted by both parties. For assignment of pending applications, the provision in the Draft IR remains the same, i.e. the applicant of the trademark application shall go through the formalities of assignment with CTMO (as is currently the case).
6. TRANSFER FOR REGISTERED TRADEMARKS
The Draft IR lists succession and others as statutory reasons other than assignment for transfer of registered trademarks.
7. RECORDAL OF TRADEMARK LICENSE CONTRACT
The new law states that an unrecorded trademark license cannot be used against third parties acting in good faith. The Draft IR therefore expressly clarifies that the recordal shall have the effect against third parties acting in good faith as of the date of the publication of the recordal by CTMO.
8. RECORDAL OF PLEDGE OF REGISTERED TRADEMARKS
The Draft IR adds an article on the recordal of pledge of registered trademarks. It states that where a party pledges the exclusive right to his/its registered trademark, the pledgor and the pledgee shall enter into a written pledge contract and jointly record such pledge with CTMO which shall publish the same.
9. OPPOSITION PROCEDURES
To implement the new law's new provisions on opposition procedures, the Draft IR includes the following notable additions/ changes:
- The Draft IR expressly confirms that the opponent shall provide certification documents concerning their identity and locus standi (i.e. Certificate of Incorporation or identify certification etc. of the opponent) when filing an opposition. This is not explicitly required in the current Regulations.
- Opponent is also required to provide relevant evidence/certification proving it is a prior rights holder or an interested party for oppositions filed on relative grounds.
- The Draft IR specifies such circumstances under which CTMO
shall not accept the opposition application, as follows:
- The opponent is not eligible for filing the opposition, e.g., it/he does not have locus standi either by being a prior rights holder or being an interested party in respective of opposing the mark on the basis of relative grounds;
- The opposition is filed not within the statuary time limit;
- The opposition does not fall under the scope of relative/absolute grounds as provided in the new law;
- Lack of specific grounds, facts and legal basis;
- The same opponent files another opposition against the same mark on the basis of the same grounds, facts and legal basis;
- The submission does not meet the language requirement (i.e. shall be in Chinese);
- Other circumstances of being not eligible for acceptance.
- The current 3-month time limit for the opponent to file supplemental submissions to an opposition is shortened to 30 days. This is one of the most unreasonable amendments as parties (especially foreign parties) will need more time to properly collect pertinent evidence to support the opposition. Instead, the Draft IR confirms that CTMO may consider the new factual evidence filed out of time during cross examination, which will likely have significant influence on the case provided the other side has a right to reply.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.