China: SAIC's 2017 Revisions to Trademark Examination Criteria To Further Protect Prior Rights and to Curb Malicious Trademark Squatting

Last Updated: 22 August 2017
Article by Lexfield Law Offices

The State Administration for Industry and Commerce (SAIC) revised its Trademark Examination and Adjudication Criteria ("the Criteria") on January 4, 2017 to adapt to the third round of revisions to the PRC Trademark Law.  The revised Criteria are expected to strengthen the protection of prior-right holders and curb malicious trademark squatting.

The Trademark Office (TMO) and the Trademark Review and Adjudication Board (TRAB) have already been using the revised Criteria in their examination practice. The revised Criteria also apply to trademark cases filed before January 4, 2017.

Major revisions to the Criteria are summarized as follows:

1. Standards for application of Paragraph 2, Article 15 of the Trademark Law

1.1 Paragraph 2 of Article 15 of the Trademark Law provides: "Where the mark of an application for registration is identical/similar to a third party's unregistered mark previously used on identical/similar goods and the applicant and the third party have a contractual, business or other relationship not specified in the preceding paragraph, the application shall not be approved for registration if it is opposed by the third party."

1.2 Determination of "prior use"

The "prior use" in Paragraph 2 of Article 15 means that before the filing date of the application of the disputed mark, goods bearing the mark have been sold or promoted in the Chinese market, or preparation activities have been made for the launch of the goods in the Chinese market. There is no need to prove the high fame of the mark.

1.3 Determination of contractual, business and other relationship

- A contractual/business relationship refer to a relationship other than representation and agency, usually including: sale-purchase, commissioned fabrication, franchising (trademark licensing), investment, sponsorship, joint activities, business investigation, negotiation, advertising agency, etc.  Such a relationship can be proven by contracts, correspondence regarding the contracts/business dealings, transaction and procurement documents, etc.

- "Other relationships" refer to those other than business dealings, including kinship, subordination (such as ordinary employees other than legal representatives) and so on. These facts can be proven by such evidence as payrolls, employment contracts, social insurance, medical insurance, household registration certificates, etc.  [LexField: according to the PRC Supreme People's Court's judicial interpretation on the adjudication of trademark administrative lawsuits in 2017, adjacency in the business addresses of the trademark applicant and the prior user is also such an "other relationship".]

LexField's Comments: Paragraph 2 of Article 15 was added to the Trademark Law in 2014.  Its purpose is to curb malicious trademark squatting. The revised Criteria now provide details on how to apply this article, list what relationships are included and evidence that can be used to prove the relationships, and make it clear that the cited mark does not need to be well known.  It shows TMO and TRAB's willingness to further protect prior rights and curb unfair competition.

2. Application of paragraph 4, Article 19 of the Trademark Law

The revised Criteria provide that trademark agencies cannot apply for trademarks on services other than agency services and such existing applications shall be rejected.

LexField's Comments: this provision is expected to prevent some bad-faith agents from squatting others' famous trademarks.

3. A new type of office action during examination

TMO may issue an office action if it believes that the trademark application under examination does not comply with the Trademark Law but could meet the requirements of statutory exceptions. The applicant should file an explanation or amend the application within 15 days.  If the explanation or amendment satisfies the statutory exceptions, preliminary approval shall be granted. Situations where such office actions can be issued include: trademarks having acquired distinctiveness through use, trademarks being identical with or similar to a foreign country name but having the consent of the government of that country, etc.

LexField's Comments: This practice gives applicants a chance to amend the application or provide explanations before the final rejection, and thus could reduce the risk of rejection.  It may help save the applicant's time and cost from unnecessary review proceedings. This new type of office action was added to the Trademark Law in 2014, and has not been frequently used. With the promulgation of the revised Criteria, we may see more of this type of office actions in the future.

4. Criteria for the determination of "interested parties"

Interested parties who are authorized to file oppositions and invalidation actions as stipulated in Articles 33 and 45 of the Trademark Law shall include: licensees, legal successors and pledgees of the prior trademark right and/or other prior right.

LexField's Comments:  The above criteria provide clear guidance on who can be an interested party in opposition and invalidation proceedings. In addition, it clarifies that, even if a person did not have any interest at the time of application, as long as he has an interest at the time of adjudication, he should be regarded as an interested party.

5. Criteria for Article 50 of the Trademark Law

The revised Criteria for Article 50 of the Trademark Law state that where a trademark is revoked (except for three-year non-use cancellations), invalidated or expires, within one year from the revocation/invalidation/expiration, the trademark can be cited to reject later filed marks that are identical or similar. 

LexField's Comments: The purpose of this provision is to avoid the situation that when the goods / services of the invalid trademark have not yet retreated from the market, goods / services of the new registrant entered into the market, which likely would cause confusion among the public.  This one-year "quarantine period" does not apply to marks revoked due to three-year non-use cancellation, because these marks have not been used for three consecutive years, which has satisfied the legislative purpose.

6. Criteria for examining sound trademarks

The revised Criteria list the major elements for both formalities and substantive examination of sound marks.

LexField's Comments: sound trademarks are a new type of trademarks added to the Trademark Law in 2014. The revised Criteria provide important guidance to sound mark applicants and are expected to help reduce office actions and refusals.

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.

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