Precis: China' Trademark Law provides no guidance for the suspension or coordination of dependent cases, although there are provisions in the rules of certain procedures. Fabio Giacopello of HFG shines a light onto this murky area and provides actionable advice.
While there are no formal provisions set out in the Trademark Law – probably in order to keep the system ssimple – suspensions are occasionally issued
However, even then such suspensions are not officially declared with a formal (even if provisional) decision
Therefore trademark practitioners in China must become adept at interpreting the CNIPA's moves and should consider cut thorough searches before filing an application in order to spot and attack prior marks in advance
It sometimes feels that I am continually asked one question: why does CNIPA not suspend trademark procedures in cases of pending prejudicial procedure? The conundrum can be illustrated with an example: a trademark application is filed, and then it is preliminarily rejected because of a prior similar mark; the applicant then files a non-use cancellation against the cited mark and an appeal against the preliminary refusal.
In this scenario one would expect the CNIPA to rule on the appeal only after the non-use cancellation has been decided. Yet in actuality, it often hears the appeal before the non-use cancellation.
This begs the questions: why is the appeal not suspended while the prejudicial non-use is pending? Does such a suspension exist in the Chinese trademark system? Neither the Trademark Law and its implementing regulations nor any other lower-level regulations have any general provisions for the suspension and/or coordination of dependent cases.
Nevertheless, such suspensions are not totally unknown and do take place in the following procedures:
- trademark examination;
- invalidation of a registered trademark;
- appeal against a preliminary refusal;
- appeal against an opposition decision; and
- trademark infringement.
In all of these procedures there are rules that explicitly mention (or implicitly make reference to) the suspension.
Two points have been relatively certain until now.
First, that suspensions exist in the Chinese trademark system but appear to be infrequently and/or insufficiently used.
Second, the provisions that regulate suspensions are both scarce and fragmentary.
In order to explain what is (probably) going on, it is helpful to take a step back. Until 2013 and 2014, when the 2001 version of the Trademark Law was still in force, the Chinese Trademark Office was much slower at processing trademark procedures, despite the fact that there were far fewer annual trademark filings than there are today.
In the years between 2006 and 2010 it took around 30 months to implement a trademark examination, while an appeal against preliminary refusal lasted one or even two years. In such an environment it was normal to coordinate pending prejudicial procedures.
At that time, one of the biggest complaints against the trademark system was the length of the procedures and indeed, in a very welcome move, the Trademark Law 2013 introduced time limits. The acceleration of trademark procedures was (and still is) seen as a crucial element of a modern and efficient trademark system.
Since the 2013 version of the Trademark Law came into force, it has been the daily concern and the ultimate target of the Trademark Office to accelerate examination times. The gap between trademark procedure times in China and the United States and Europe had to be closed, and now the current average examination time at the CNIPA is just over four months, although often under three months.
Between 2014 and 2020, the CNIPA accelerated examination timeframes for trademark procedures and dramatically reduced fees from Rmb 1,000 (approximately $160) to Rmb 500 (approximately $80) and then to Rmb 300 (approximately $50). These cuts – together with other popular policy changes – have helped to push the the popularisation and nationalisation of intellectual property in China, which had previously been seen as an imposition from foreign countries.
Today intellectual property is a key national interest at the centre of the political agenda. Developing innovation and brands (and therefore IP protection tools) has been a significant target in recent years and will probably remain so for the foreseeable future.
All this is consequential and relevant because it is largely behind the current sacrifice of the suspension of trademark procedures.
Having prejudicial pending cases decided before their dependent cases would slow down the system and require another level of managerial complexity. It appears that rationalisation and dependency among cases have thus been abandoned for speed.
Further, the reduction of fees has necessitated a simplification of how procedures are managed. This is a problem because suspension and dependency are complex to handle, especially with the 70% budget cut. Evidence of this can be found in the iconic Article 37 of the 2019 version of the Trademark Law, which states that: “Applications for trademark registration and for review shall be examined without delay.”
Turning to the details and bibliographic data, while these might at first appear dull, they hide pearls of knowledge. Although there is no substantial part of the Trademark Law devoted to the suspension of administrative trademark procedures, this is mentioned in several of the law's provisions and occasionally appears in practice – even though it can be difficult to identify the exact underlying provision.
The Trademark Law and implementing regulations do not dedicate a single line to the possibility of suspending a trademark examination. However, (at least from Article 11.5 of the Implementing Regulations to the Trademark Law) they do imply that it can happen.
Article 11.5 provides that: “The following periods of time shall not be counted in the time limit for the examination or the trial of trademark matters: (5) The time of waiting for the results of another case involving prior rights upon request of the applicant in the process of examination or trial.”
Very occasionally, agents representing trademark applicants do receive unsolicited notices from the CNIPA asking whether the applicant wishes to suspend the examination. The background to such notices is usually that the CNIPA intends to reject the application on the basis of a prior right, but because the prior right is being challenged by a procedure, the applicant is invited ex officio to decide whether to request a suspension of the examination or proceed with it and face a possible rejection.
If the applicant wishes to proceed, it needs to submit a written request for a stay of the examination procedure. The legal ground for such notices is Article 11.5 of the Implementing Regulation to the Trademark Law.
Appeal against refusal
Article 11.5 also refers to appeals against refusal. Article 31 of the Trademark Trial and Appeal Rules provides that: “The Board may decide to suspend a trademark trial or appeal proceeding if it depends on the results of a prior right case under paragraph 4 of Article 35 or paragraph 3 of Article 45 of the Trademark Law or subparagraph (5) of Article 11 of the Implementation Regulation.”
In the Trademark Review and Adjudication Board's Legal Affairs Newsletter General Number 72 (June 2018), it was reported that:
Trademark refusal review cases will not be suspended in principle except for the following cases: (a) where the cited trademark has been in non-use revocation proceedings or invalidation proceedings for three consecutive years before the application for registration of the trademark; (b) where the cited trademark is in opposition (c) the cited trademark is in the change, renewal or transfer procedure.
According to the Interpretation on Trademark Registration and Facilitation Reform Policies (4) published by the CNIPA in April 2018:
The current practice of suspending the trial of appeal against preliminary refusal case: firstly, the cited trademark has not yet been approved for registration, and is pending in the process of registration review, appeal against preliminary refusal, or opposition; secondly, the cited trademark has been approved for registration but is pending in invalidation, non-use cancellation (including cancellation appeal) and other procedures. If the start time of aforesaid invalidation and/or cancellation action is earlier than the filing date of the trademark application, it will be suspended in consideration of the active exercise of the rights by the trademark applicant; Thirdly, if the cited trademark is in the process of change recordation, trademark assignment and/or renewal. Of course, the above three suspension situations also require the examiner to consider the reasonableness of each case. For example, in the case of multiple quotes, if the examiner believes that the trial results of one or more of the cited trademarks have no substantial impact on the case, the trial will not be suspended.
It may be clearer to think of opposition appeals as appeals against disapproval of registration. Article 35.4 of the Trademark Law provides that:
Where, in a review conducted according to the preceding paragraph, the Trademark Appeal Board must determine the involved prior rights based on the results of another case being tried by a people's court or handled by an administrative agency, it may suspend the review. After the cause of suspension is eliminated, the review process shall be resumed.
This article applies to the appeals against disapproval of registration, but it does not mean that the opposition trial will not be suspended if the prior rights' status is unstable in the opposition procedure. The applicant is still able to request suspension in an opposition procedure, but whether such a request will be granted depends on the examiner's subjective judgement.
Second, the premise of application for this article requires that the prior right must affect the trial of the case and be in an unstable state. In other words, if the appeal can be directly decided on absolute grounds or the prior rights are cited in other procedures, but the result does not affect the trial of the case or the trial is based solely on other prior rights that are in a stable state, the CNIPA can also make the decision directly without suspension.
Third, the law stipulates that the CNIPA “may” suspend the review, showing that it has the power to decide whether to suspend the review or not.
Article 45.3 of the Trademark Law states that:
Where, in reviewing a petition for declaration of invalidation of a registered trademark under the preceding paragraph, the Trademark Appeal Board must determine the involved prior rights based on the results of another case being tried by a people's court or handled by an administrative agency, it may suspend the review process. After the cause of suspension is eliminated, the review process shall be resumed.
The premise of this article's application is that the prior right must affect the trial of the case and be in an unstable state. In other words, if the invalidation case can be directly decided on absolute grounds or the prior rights are cited n other procedures but the result does not affect the trial of the case or the trial is based solely on other prior rights that are in a stable state, (as is the case with opposition appeals), the CNIPA can also make the decision directly without suspension.
Again, the law stipulates that the CNIPA “may” suspend the review.
Article 62.2 of the Trademark Law states that:
During the process of investigating and handling a trademark infringement case, in case that any dispute arises with respect to the trademark ownership or the right owner files a lawsuit regarding such infringement before the People's Court, the administrative department for industry and commerce may suspend the aforesaid process. As the cause for suspension is eliminated, the process shall be restored or closed.
- the suspension exists but it is rarely used – probably because the rationality of having prejudicial pending cases decided before the dependent cases has been sacrificed for speed and simplification;
- the rules under which the CNIPA grants such suspensions are fragmentary; and
- any suspension that is issued is not officially declared with a formal (even if provisional) decision.
In several instances dependent case has been decided soon after a case has been decided. We infer from this that the requested suspension was silently granted. When, on the contrary, a dependent case is decided while the prejudicial case is still pending, it appears that a suspension has not been granted. Therefore, the burden of intuition and publicity falls on attorneys who need to be able to explain that suspension – or the Chinese version of it – has in fact occurred.
Given the above considerations to a question that is being posed by clients, we would suggest that rights holders should accept a higher level of complexity when applying to register trademarks in China due to the following:
- the Chinese register contains around 30 million trademarks;
- the high likelihood of rejection of a newly filed trademark; and
- it is difficult to suspend an appeal filed against the preliminary refusal while the obstacles are removed with cancellations.
In practice, it is better to perform an in-depth search before filing an application in order to spot and attack prior marks in advance, and initiate non-use cancellation/invalidation so as to enhance the benefits of having a suspension granted. In addition, rights holders should consider refiling the original application while the appeal is pending, since suspension might not be granted and the new trademark could be a good way of avoiding judicial administrations above the appeal phase at the CNIPA.
Originally Published by WTR, World Trademark Review, on May 5th, 2022
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.