After discussions and consultations for nearly two years, the
Legislative Affairs Office of the State Council ("LAOSC")
of the People's Republic of China eventually published the
second version of the draft third amendments to the Trademark Law
on September 2, 2011. The public has the opportunity to offer
comments on this draft before October 8, 2011.
This draft was revised based on the previous draft submitted by the
State Administration for Industry and Commerce ("SAIC")
at the end of 2009. LAOSC will finalize the draft based on the
public comments and submit it for approval by the National
People's Congress.
LAOSC took a conservative approach in reviewing SAIC's draft
and rejected a number of amendments proposed by SAIC, while it also
brought in a new mechanism in trademark opposition. Overall, this
draft reflects the Central Government's intention to avoid
drastic changes in the existing system.
Sound and Single Color Marks
Along with the increasingly severe competition in the market,
new types of trademarks, such as smell, sounds, motions, etc., have
emerged as a way to identify a certain party's products from
its competitors. In theory, as long as a sign is capable of
distinguishing origin of goods and services, it should be entitled
to protection. Accordingly, these new types of trademarks should be
protected as well, and in fact they have actually been in the U.S.,
Singapore, and some other countries and regions.
In light of this global trend, SAIC had proposed in its draft that
the China Trade Mark Office ("CTMO") may accept
applications for smell, sound, and motion trademarks when
appropriate. This provides a clear authorization for CTMO to
consider and accept these nontraditional trademarks.
However, in LAOSC's draft, LAOSC removed such authorization
from CTMO but extended the scope of acceptable trademarks to single
color and sound trademarks
Multi-Class and Electronic Applications
Multi-class and electronic applications have been adopted in many countries for years and have proved to be efficient in simplifying the trademark registration process. This draft allows multi-class and electronic applications, which keeps China's commitments to the Singapore Treaty on the Law of Trademarks and reflects the modern trend of trademark legal systems.
Substantive Examination
The major change in substantive examinations is that the
applicant will be entitled to submit a response to the
Examiner's intended refusal within 30 days.
The existing Trademark Law does not require CTMO to notify the
applicant before the Examiner decides to reject an application. In
other words, the applicant has no notice of the intended refusal
and no means of discovering the grounds for intended refusal before
receiving the refusal decision from CTMO. The applicant's only
remedy, if unsatisfied with the refusal decision, is to file a
review of refusal with the Trademark Review and Adjudication Board
("TRAB"). This process normally takes one to two years
before the applicant receives a decision on the review of the
refusal. The above practice arguably violates the Singapore Treaty
on the Law of Trademarks, which requires that applicants be given
an opportunity to respond to the intended refusal within a
reasonable time period.
To comply with the above treaty, the draft amendments provide that
the Examiner may request the applicant to submit an explanation of
or amendments to a trademark application within 30 days during the
process of examination. Even though there is no provision as to
whether the applicant can file evidence or not, the law does not
forbid the submission of evidence. Such procedure provides a chance
for direct communication between the applicant and the Examiner,
which may enhance the chance of successful registration of an
application and save costs and time for the applicant, in
particular for those rejections caused by ownership of similar
marks by different affiliates or those that can be easily overcome
by submitting a letter of consent from the cited mark owner.
In addition, the deadline for filing a review of refusal is
extended from 15 days to 30 days, which is much more reasonable,
particularly for foreign applicants.
LAOSC also proposed additional absolute refusal grounds against
trademarks that 1) are identical with or similar to names and logos
of central government organizations, 2) are discriminatory toward
race, or 3) will easily confuse the public regarding quality or
place of origin.
Different Opposition Procedures in Different
Situations
Under the existing Trademark Law, a trademark opposition should
be filed with CTMO and may go through up to four rounds of
procedures that could last for more than 10 years. It is not
uncommon that an applicant finally wins the opposition but still
cannot get the registration certificate due to failure to renew its
application (in practice, CTMO requires an opposed application to
file renewals in due course even before it is registered). It is
also costly and time consuming for a rights owner to fight against
a hijacking application for more than 10 years.
As the TRAB Examiners are generally more experienced than the CTMO
examiners, SAIC proposed to abolish the CTMO procedure to simplify
the entire system. In other words, oppositions should be filed with
TRAB directly.
Surprisingly, LAOSC maintained the CTMO procedure and brought in a
different mechanism based on different decisions made by CTMO. More
specifically, if CTMO disregards an opposition (i.e., the
application is granted for registration), the application will
mature into registration without being subject to further review or
appeals; on the other hand, if CTMO upholds an opposition
(i.e., the application is rejected), the applicant is
entitled to file a review in opposition to TRAB and may further
appeal to the court for up to two instances if unsatisfied with the
TRAB decision.
This mechanism is adopted mainly to protect bona fide applications
from being blackmailed by bad faith oppositions for potentially
delaying the registration for as long as more than 10 years under
the current system.
As a balance, LAOSC's draft provides that the opponent may file
a cancellation against the same mark if unsatisfied with the
opposition decision, without any limitation on the grounds, while
it is prohibited to file a cancellation with the same grounds as
the previously filed opposition against the same mark under the
existing Trademark Law.
Below is a chart for comparisons of the different opposition
systems under the existing Trademark Law and the two drafts
amendments:
Current |
SAIC's Draft |
LAOSC's Draft |
|
1. CTMO |
No CTMO procedure |
1. CTMO |
|
If registration is granted: |
If registration is rejected: |
||
2. TRAB |
1. TRAB |
2. Proceed to registration |
2. TRAB |
3. Beijing No. 1 Intermediate People's Court |
2. Beijing No. 1 Intermediate People's Court |
3. Beijing No. 1 Intermediate People's Court |
|
4. Beijing Higher People's Court |
3. Beijing Higher People's Court |
4. Beijing Higher People's Court |
Strengthened Protection Against Hijacking Applications
Trademark hijacking is a serious problem that troubles rights owners in China. In most cases, the hijackers file applications for identical or similar marks in a rights owner's core classes or classes that are closely related to the rights owner's business before the rights owner manages to perfect, or even start, its trademark filings in China. It is very difficult for the rights owner to defend such hijacking applications if it has never used its marks in such classes in China or fails to provide sufficient evidence to prove prior use and reputation of its marks in China.
SAIC tried to prevent such hijacking applications by, among other regulations, imposing good faith requirements upon the applications. LAOSC removed such requirements in its draft but maintained the provisions that hijacking applications by certain relationships (contractual, business, geographical, etc.) shall be prohibited and that trademarks with strong distinctiveness and certain reputation shall be entitled to cross-class protection against imitations of the marks.
Higher Statutory Compensation Limit
Similar to the new Patent Law, LAOSC proposed to increase the statutory compensation to up to RMB 1 million (approximately US$153,846). Nevertheless, the rights owner will have to provide evidence of use within three years for the compensation claims.
Other Changes
There are other changes in LAOSC's draft, such as definition of trademark infringements as previously introduced in the judicial interpretations, authorization to the local governments for recognition of famous trademarks, and regulations on trademark agencies and examiners.
The author wishes to thank Reking Chen, a trademark specialist in the Beijing Office, for assistance with this Commentary.
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.