With the spread of pandemic around the world, the term "quarantine" has become very ingloriously popular. Most of us have – unfortunately - experienced some period in quarantine or lockdown. Did you know that Chinese Trademark Law foresees a quarantine period also for trademark applications?
According to Article 50 of Chinese Trademark Law provides that "if a registered trademark is cancelled, declared invalid or no renewal upon expiration of its validity period, the Trademark Office shall not approve any application for registration of a trademark identical with or similar to the said trademark within one year from the date of revocation, invalidation or cancellation."
Based on the law, the Chinese Trademark Office must reject a trademark application that claim protection for a sign that was object to a prior registered trademark that has been recently (within one year) invalidated, cancelled, or not renewed.
Although this provision has existed for a long time, I found that in practice, most applicants are not very familiar with it. In the following, I will elaborate on how to understand and apply "1-year quarantine" stipulated in Article 50.
Why to set up Article 50 "1-year quarantine"
According to Trademark Examination Guidelines, the legislation purpose of Article 50 is to reduce or avoid confusion among consumers that might be generated by the co-existence of goods or services coming from two different industrial sources on the market. If the applicant of the "fresh" application is granted protection immediately after the expiration/cancellation/invalidation of prior identical trademark there will be goods bearing identical or similar trademark produced by two enterprises on the market at the same time or in very short time frame.
With the 1-year isolation rule the legislator wishes to set apart the two owner and users of identical or similar trademark. This rule might sound weird to most of you, but think only to the large quantity of copies and imitations that might become legal if such rule was not in place. Imitators and copiers might wait for companies to be – for some reason – out of the market and then try to take their place with valid trademark registrations.
How to apply Article 50 "1-year quarantine"
Article 50 specifies that if a prior trademark is cancelled, declared invalid or not renewed after its expiration, the identical or/and similar trademark shall not be approved within 1 year.
The non-renewal of prior trademark is relatively simple to understand, while the cancellation and invalidation of prior trademark need to be further explained. Not every trademark that has been cancelled or invalidated will prevent the following new trademark application.
(a) Cancellation of Prior Trademark
Firstly, the prior registered trademarks that are cancelled due to non-use for three consecutive years without justification shall be treated as special cases. In this regard, given the original registrant has not used the registered trademark for three consecutive years, the market has not appeared the goods or services of the registered trademark, which meets the legislative purpose of Article 50 "1-year quarantine". Therefore, once the non-use cancellation decision takes effect, the prior trademark should not be cited to block the following application of new identical or/and similar trademarks. In other words, Article 50 "1-year quarantine" shall be not applied in this situation.
Secondly, the prior registered trademarks that are cancelled due to becoming the generic name of the designated goods shall have additional consideration as well. Given the original trademark lacks distinctiveness and does not have the function for distinguishing goods any longer, which cannot be registered as a trademark, then the following application of new identical or/and similar trademarks shall be rejected due to lacking distinctiveness, namely Article 11. It is not necessary to apply Article 50 "1-year quarantine".
Thirdly, if the prior registered trademark that are cancelled due to no rectification after changing the registered trademark, name, or address during using, this kind of cancellation meets the scenario of Article 50, thus the following application of new identical or/and similar trademarks would be rejected by applying Article 50 "1-year quarantine".
(b) Invalidation of Prior Trademark
Firstly, if the prior trademark is declared invalid due to the violation of absolute grounds for non-registration of a trademark (such as lack of distinctiveness, adverse effects or being fraudulent to consumers, etc.), as mentioned above, the following application of new identical or/and similar trademark itself will be rejected by the corresponding absolute prohibition clause, and there is no need to apply Article 50 "1-year quarantine" to reject the trademark.
However, if the prior trademark is declared invalid due to the violation of relative grounds (such as being similar to prior trademark, infringement of prior rights, obtaining the registration with improper means, without authorization from representative, etc.), in practice, the following application of new identical or/and similar trademarks will be rejected by applying Article 50 "1-year quarantine".
Actually, many trademarks were recently declared invalid by confirming the "bad faith" of the applicant or because of lack of genuine intention of use. In this situation, if the real right holder would like to apply for the new identical or/and similar trademark, "1-year quarantine" will be forcibly applied, resulting in the extension of obtaining rights, which obviously places the additional burden on the genuine right holder.
In recent years, there're voices calling for the improvement of the interpretation on applying Article 50, especially for the invalidation case bearing bad faith. Unfortunately, the new Trademark Examination Guidelines still does not clearly stipulate that if a prior trademark is confirmed invalid due to "bad faith", the following application of new identical or/and similar trademark can be ruled out from Article 50 "1-year quarantine".
For the time being, if a trademark is rejected due to Article 50, the right holder still needs to actively file a rejection appeal to overcome in order to obtain the grant of protection.
Calculation of "1-year quarantine"
According to Trademark Examination Guide, if the prior trademark was declared invalid, the "1-year quarantine" shall be calculated from the date of expiration of the due date of invalidation decision. At the time of ruling new trademark application, if the said period less than 1 year, the prior trademark will be cited to reject new application based on Article 50.
Actually, the expiration of the due date of invalidation is unclear since the time required for the decision to reach different parties varies. In practice, the "1-year quarantine" can be calculated from the date of invalidation announcement published on trademark gazette.
As for the prior cancelled trademark, the "1-year quarantine" shall be calculated from the date of cancellation announcement published on trademark gazette.
Regarding the non-renewal trademark, the "1-year quarantine" shall be calculated from the date of expiration.
The legislation purpose of Article 50 is to reduce the likelihood of confusion among consumers, meaning to stabilize the market and protect the rights and interests of consumers by establishing "1-year quarantine".
However, with the development of the market, the number of trademark applications has increased exponentially, and various malicious registrations have emerged and been invalidated accordingly. Under such circumstances, it is necessary to reconsider the scope of application of Article 50. Hopefully, we can see more detailed interpretation of Article 50 in the near future.
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.