Opposing trade marks in China on the basis of prior unregistered
rights has, thanks to the trade mark law implemented in 2014,
become more difficult. The changes to the law, originally welcome
by practitioners and rights holders hoping they would improve trade
mark enforcement, have underlined the importance of registering
trade marks early on in a brand's lifecycle.
A right holder can rely on a number of grounds for filing
opposition against a third party mark in China. However, the
opponent must prove (at the time of filing the opposition) that
they hold prior rights over the opposed mark or that they are an
interested party qualified to use the ground relied upon. If an
opponent fails to prove this to the standards of the Opposition
Formalities Examination Department of the Chinese Trade Mark Office
(CTMO), a 'motion to dismiss' the opposition will be
issued. This discretionary power is not a new one but the
circumstances that give rise to it have been updated under the
revised law making it much harder for opponents relying only on
prior use, to oppose a mark.
The question now being asked is, how does an opponent prove that
they are a holder of prior rights or, how do they prove that they
are an interested party to avoid their opposition being dismissed?
Unfortunately, the CTMO has not yet issued any official guidelines
or practice directions to assist opponents, other than those found
in Article 26 of the Regulation on Implementation of the China
Trade Mark Law. The Article states that a motion to dismiss may be
issued if the qualification as an opponent and the reason for an
opposition do not comply with the provisions of Chinese trade mark
law or, there is no clear reason, fact or legal basis for an
opposition.
The 'qualification as an opponent' is a new requirement
and, we are told, is the primary trigger for the issuance of a
motion to dismiss. The CTMO states that the proof of qualification
must include a certificate of identity to show the opponent is a
legal entity and proof verifying the opponent has prior rights over
the opposed mark or is an interested party. The only certain way of
proving the latter is by showing the CTMO a Chinese registration
certificate. If an opponent does not own registered rights in
China, their opposition is ultimately in the hands of a CTMO
examiner, who has absolute discretion as to what other types of
evidence may be deemed acceptable.
Discussions with other Chinese practitioners and CTMO examiners
suggest that the following information must be explicitly filed
with the opposition to try and avoid a motion to dismiss: evidence
showing that the opponent is the user of the mark, the use is
commercial in nature and occurs in mainland China, the mark in use
is identical or similar to the mark applied-for and the date of use
by the opponent must pre-date the filing of the application. It is
uncertain whether proof of the manufacturing of goods for export
without a commercial presence in China is sufficient to avoid a
motion to dismiss.
If a motion to dismiss is issued, it is possible to contest the
dismissal by filing an Application for Review to the Trade Mark
Review Adjudication Board (TRAB) or by filing a law suit to the
Beijing IP Court. The purpose of both actions is to persuade the
TRAB or Court that the opponent possesses sufficient rights to
oppose the mark and, if they agree, they will order the CTMO to
retrieve its motion to dismiss and to substantively examine the
opposition.
However, it is highly unlikely that the TRAB or Court will set
aside a motion to dismiss once issued by the CTMO. A further point
to note is that whilst waiting for the TRAB or Court to review the
motion to dismiss and issue a decision, there is a high chance that
the opposed application will proceed to registration.
For clients finding themselves in this situation, it is often
preferable to wait for the subject application to achieve
registration and apply to invalidate the mark on the same grounds
previously used to oppose the mark. The invalidation action will be
decided by the TRAB, which does not have the same power as the CTMO
to dismiss an opposition without considering the evidence
first.
Businesses that use their trade mark(s) in China or manufacture
goods for export, should seek trade mark protection at an early
stage. The consequences of not doing so are considerable. China
operates a first-to-file system where unregistered rights are very
difficult to enforce. If a third party beats you to the post and
registers your mark in China, you could find yourself at the other
end of a trade mark infringement action and risk paying out large
sums of money in compensation, as well as having to re-brand. In
our previous article, we discussed a decision involving the
brand New Balance, which found itself in a similar situation and
was ordered to pay a Chinese individual approximately US$16 million
in compensation.
In order to try and avoid this, it is critical that foreign
business owners carry out clearance searches to assess whether
their mark is free for use and registration in China, and if all is
clear, that they apply to register their mark in China at an early
stage, ideally before any manufacturing or use has taken place.
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.
