The fourth amendment to the Chinese Trademark Law entered into force this 1st November. The revisions intend to create an environment with better legal certainty and to avoid unfair competition. This time, the focus of the corrections is on bad faith trademark applications and imposing harsher penalties on trademark infringers.
But what are the particularities of the Chinese trademark registration system? In this article we try to collect its key points.
Foreign Companies and trademark protection in China
The internationalization of China’s market economy during the last decade has made it one of the most interesting countries to invest. The business growth and economic development that this country has experienced in the last years make China an attractive market to foreign marketers. Chinese public authorities are aware of the role and importance that Intellectual Property plays in the country’s socioeconomic development and they have undertaken many measures to improve IP protection in their country. The revisions that have taken effect on 1 November 2019 are a proof of that.
Foreign companies are aware of the importance of the world’s second largest economy, which is also worldwide famous for its bad reputation in copying and counterfeiting, and they have started to invest in the protection of their trademarks in China. According to World Intellectual Property Organization (WIPO), by April 2016, 10,68% of all valid Chinese Trademark registrations were filed by foreign companies .
The “first-to-file” system and its risks
Companies selling their products or offering their services in this country need to obtain trademark registration in China in order to prevent others from obtaining trademark rights first.
The China National Intellectual Property Administration (CNIPA) performs an ex officio examination of the existence of identical and/or similar earlier rights to the one intended to be protected as a trademark. It means that the existence of identical or similar earlier rights can prevent the registration of a trademark filed at a later stage and that the filing must be done as soon as possible.
Since unregistered trademarks are not recognized under the Chinese Trademark Law, the owner of the mark will be the one who files the trademark application first, which turns China into a “first-to-file” system.
Therefore, companies are strongly advised to file their Trademark applications in China if they are planning to use the trademark in this country in the sense described in this article in order to preempt a competitor from obtaining trademark protection first.
Manufacturing but not selling in China: protection needed?
It is also worth mentioning that whereas most companies agree on obtaining trademark protection in China if they are selling their products in this country, most of them ignore that it is also necessary to obtain trademark protection in this country if the manufacturing process of the goods takes place in China. This is because under the Chinese trademark system a trademark is considered to be used in China even if the branded goods are not sold within the country and China is only considered a manufacturing base.
Bearing in mind that China is a “first-to file” system, it is highly recommended to obtain trademark protection even though the branded products are not sold in China, since the manufacturer of the product might proceed to register the trademark first. Furthermore, there is a risk that the exported goods are seized by customs as suspect of counterfeit if the trademark does not benefit from Chinese protection.
Therefore, if foreign companies intend to manufacture products in China that will be exported to other countries, it will be necessary to obtain trademark protection in China in order to avoid all the aforementioned issues.
National and International Registration System
There are two ways of registering a trademark in China:
– the national registration system, or
– the international registration system
The international registration system is the most suitable option for foreign applicants. This is because if the trademark is filed directly in China, the application will have to be submitted through a local Chinese counsel and the language of the application should be Chinese, instead of Spanish, French or English.
Key aspects of the Chinese Trademark System
Regardless of the way of filing a trademark in China, there are some issues that need to be born in mind when seeking trademark protection in China:
1) Multi-class system
China has adopted the International Nice Classification which covers 34 classes of goods and 11 classes of services.
But, in addition to that, Chinese Trademark system have sub-classes, which is a unique classification. If the applicant does not choose the subclass, the examiner of the trademark application will do it. Therefore, the lack of selection of the subclasses might result in a trademark that does not protect the goods or services in the desired way.
2) Scope of protection
Hong Kong, Macao and Taiwan will not be protected under a Chinese trademark. These regions have a different legal system, and in order to obtain trademark protection, it would be necessary to file a separate trademark application in these regions.
3) Cancellation on the basis of non-use
Chinese trademark law states that if in the three years following the mark’s registration the mark has not been used for a continuous period of at least three years without due cause, it might be subject to cancellation proceedings.
4) Trademark in Chinese characters
Since the vast majority of the Chinese population does not speak English, it is important to obtain trademark protection for the Chinese version of a western trademark by way of translation, transliteration or by choosing a different name for the Chinese market. Otherwise, Chinese consumers will not be able to retain the trademark in their mind or to recognize it and distinguish them from other trademarks. For instance, the Chinese transliteration of “Starbucks” is “xing ba ke” (星巴克), and this is the way the local audience recognizes the brand.
Also, a trademark in roman characters does not automatically protect the trademark against the use or registration of the same or similar trademark written in Chinese. Hence, apart from registering the trademark in roman characters, it is also important to register the trademark in Chinese characters. Usually, trademarks with Chinese characters are filed directly in China via the national system.
Since choosing the Chinese version of a western trademark might be difficult for our clients, we always assist them on deciding the Chinese characters that best fit in our clients’ needs with the help of our local counsels.
5) Administrative proceedings against a third party’s trademark
A third party’s trademark can be challenged before and after its registration.
– Before registration:
An opposition can be lodged before the China National Intellectual Property Administration (CNIPA) within three months following the publication of the trademark application on the basis of earlier rights and legal interest.
As from 1 November 2019, anyone may file an opposition against a bad faith applications as well, pursuant to the amendments in the Chinese Trademark Law that will enter into force on the aforementioned date.
– After registration:
The trademark can be annulled or revoked if an invalidity or a revocation action is upheld by the Trademark Review and Adjudication Board or by the CNIPA.
As for invalidity actions, they can be based on the existence of earlier rights or on the claim of bad faith. In case of revocation actions, these can be filed on the basis of non-use during a three-year period or on arguments that the mark has become generic in the Chinese market.
The aforementioned points are the key aspects to be taken into account by foreign applicants when trying to seek trade mark protection in China. The understanding of the system will certainly help users to obtain the right protection for the goods and services intended to be branded under a Chinese trademark.