We wrote recently about registering trademarks in China and the importance of not getting “hustled” by trademark squatters. See here. This is a follow-up article proving some additional information on the China system of registering trademarks. There a some similarities and large differences between the China system and the trademark system in the United States.
Trademarks in China: Registration Process
For foreign-based trademark owners, a domestic application for trademark registration can be filed directly with the China Trademark Office (“CTMO”) or by filing an international application with the World Intellectual Property Organization (“WIPO”) on the basis of a trademark registration or application with a treaty-signatory. See generally our discussion here.
The China domestic application process is similar to those used in other countries, including the US. In general, the trademark registration process involves:
- Filing an application — five copies are generally required
- Local language — Chinese — for a domestic application
- Translation must be provided if the mark is in a non-Chinese language or if non-Chinese registration materials are part of the application
- One application is filed per class of goods or services
- A precise list is required of the goods or services for which the mark will apply
- A fee is paid per application/class of goods
Similar to many registration processes, the Chinese registration process proceeds through four stages:
- Procedural examination of the application by the CTMO to verify the application is complete,
- Substantive examination to verify that the mark meets the legal requirements (see below),
- Publication and
- A three-month opposition period.
If no opposition proceeding is filed or if the opposition fails, then the mark becomes registered. The mark is valid for 10 years and can be renewed.
Trademarks in China: Legal Requirements
Unlike trademarks in the US, there is no “use in commerce” legal requirement. Rather, China is a pure “filing” registration system. To be registered by the CTMO, a mark must meet four requirements:
- Not violate certain statutory prohibitions: For example, no use of the flag of a nation, no use of certain insignia, not discriminatory against a nationality, etc.
- Must be distinctive: There are two aspects here; the mark itself must be easy to distinguish from other similar marks and must distinguish the goods/services of one business from those of another — if “distinctiveness” is based on acquired distinctiveness, such should be shown in the application.
- Trademark must be available: That is, not conflict with a previously-filed/registered trademark.
- Must not be functional or utilitarian: The applies with particular force to three-dimensional trademarks and what is commonly called in the US “trade dress”; for example, the shape of a hammer cannot be a trademark for a hammer and if the shape of a bottle has functional or utilitarian or technical effects, then registration will be denied.
Trademarks in China: “First To File” and Trademark Squatting
As noted, unlike the US system, to register a trademark in China, you do not need to be using the mark in commerce or have any intent to use the mark. When you file a registration with the CTMO, you do not even need to state a reason for registration. China is a “first to file” system of registration and there is no common law rights with respect to trademarks. This has led to the problem of trademark-squatting. See article here.
Because of this, many US and European companies file for trademark registration in China as a preemptive measure to prevent others from registering their trademark and demanding “ransom”. For example, President Trump’s businesses have made news in the past few months with respect to successful efforts to register trademarks in China even though Trump’s businesses have no current plans to enter the Chinese market for those class of goods and services. See NYT report here.
Trademarks in China: “Very Famous” Trademarks
Under many national trademark regimes, trademark property rights exist even in the absence of registration. Registration is needed to legally enforce the property rights.
As noted, China has no such common-law rule. That being said, there are provisions in the China trademark law that allow a well-known or famous international trademark owner to challenge registration and/or use of the well-known trademark. Michael Jordan has, famously, fought for years to prevent use of his transliterated name on Chinese sporting goods. The process, however, is not favorable to the owner of a non-registered trademark, no matter how famous. Further, the process is time-consuming, expensive, and without any guarantee of success. Mr. Jordan finally succeeded, but only partially.
If some third party is using your well-known trademark or has already registered your well-known mark with the CTMO, the only option is to file a cancellation proceedings with the appeal board of the CTMO. Cancellation proceedings cannot be filed in civil court; only before the CTMO. (The owner of a well-known trademark can also intervene during the three-month opposition period.)
As suggested by the articles linked above, cancellation proceedings take anywhere from four to six years to complete. Meanwhile, you cannot enforce your well-known trademark in Chinese courts because you do not have a registered trademark. Registration is necessary before civil litigation can begin for alleged infringement. This is one reason that skilled and experienced international trademark attorneys recommend filing for trademark registration with the CTMO the moment your business begins to think about commerce in or with China. This applies to selling branded goods in China and manufacturing goods in China for export. If you have not registered a trademark in China, it is nearly inevitable that someone else will register your trademark and THEN SUE YOU for infringing their trademark. This is the “hustle” that US trademark owners need to avoid.
Trademarks in China: Enforcement
There are two mechanisms for enforcing against trademark infringement – civil litigation in the People’s Courts and administrative action through the Administration of Industry and Commerce (“AIC”). In general, the People’s Courts play a role similar to role played by courts in other nations. Infringement suits can be filed by the owner of a registered trademark. Awards against infringers can be substantial.
The AIC is the key government agency that operates on all level of the Chinese economy regulating businesses and labor, formation of corporations, supervision of the market, fair competition, etc. With respect to trademark disputes and infringement claims, the AIC has the administrative authority to investigate and issue cease and desist orders against acts of infringement. The AIC also issues fines, requires destruction of counterfeit goods and conducts infringement raids. However, the AIC is not empowered to give compensation to the owner of a trademark that has been infringed; only the courts can award compensation.
Contact Revision Legal
If you need more information on international trademark law or have other questions about trademarks in China, contact the lawyers at Revision Legal. We can be reached by email or by calling us at 855-473-8474.
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