[IP Update] Major changes implemented under the new Trademark Law

HFG partner Lanny Li uses HFG case examples to outline the key changes in practice seen in the implementation of the new Trademark Law.

For a pdf version in English click here, for Chinese translation here and for Japanese translation click here.

1. The “Good Faith Principle” First Cited By CTMO As A Principle in Trademark Review 

   The opponent is a renowned European manufacturer of sofas, leather cushions and other furniture. In the opposition procedure (i.e. applying for not granting an approval for the registration of a mark), the opponent found that the applicant of the opposed mark “adrenalina”, although named as an import and export company, is actually a competitor of the opponent in the same industry and is familiar with the furniture market in Europe, America and Asia. Even though the products of the opponent haven't yet entered the China market, and considering its renowned status in the furniture industry, it can be well inferred that the applicant should know the opponent’s brand and its business. 

   Meanwhile, the opponent further collected relevant evidence indicating the facts that the applicant applied and has registration on the marks designated respectively on the goods under almost identical class 20 and on services under class 35 with the marks which were previously registered by others or of which others have prior right to use. This evidence further proved the applicant’s bad faith of cybersquatting another’s marks with certain reputation.

   After examination, CTMO concluded that the applicant had bad faith in registering the opposed mark; this behavior was against the good faith principle which should be complied with in civil activities, disrupted the market economy order and caused negative social influence. CTMO ruled that the opposed mark should not be registered according to the Article 7 “good faith principle” under the new Trademark Law.

Remarks On The Case:

   This is the first time that CTMO cited the “good faith principle” in trademark review after the implementation of the new Trademark Law. It inferred from the article that the “good faith principle” is not only applied in trademark use, but also applied in trademark review and examinations by CTMO in trademark registration application. The “good faith principle” finds its place in the whole process of trademark application, registration and use. This fully reflects the efforts of CTMO in trying to avoid trademark confusion from the initial stage of trademarks registration and highlights CTMO’s aim and principle of shielding consumers from confusion.

   The application of the “good faith principle” in modern legal practice has vast extensions, and therefore it is called the “imperial article”. It enjoys the highest status among all the articles; the judicator could limit, complement or coordinate other regulations according to the equilibrium spirit contained in this article.

   The meaning and main values of good faith principle in the new Trademark Law are expressed in the following three aspects. First, it is a value guidance for the Trademark Law; second, it is a pre-condition for obtaining a trademark right - by setting appropriate exterior conditions, to check whether the applicant is honest in applying for trademark registration; third, when there is no appropriate legal basis directly applied to complex cases, the good faith principle could be cited.

   From this case, HFG believes that the good faith principle is no longer a pedantic and abstract concept, but has really penetrated into the practice of handling cases under the new Trademark Law. Therefore, in trademark application registration and protection, we could well treat the good faith principle as a “necessary article” for trademark cases and cite it when appropriate, which introduces new “tongs” for right holders in trademark protection.

HFG was involved in the actual handling of the above case.

[1] 2013 Article 7 of Trademark Law (2013): The good faith principle must be upheld in the registration application 
and use of trademarks. The user of trademark must be responsible for the goods on which the trademark is used. 
AIC in various levels must administer the use of trademarks and prevent the activities of cheating consumers.

2. New regulations on “proving prior right” in trademark opposition and registration rejection

   The Formal Examination Department of CTMO performs a very strict formal examination on prior right under Article 33 of Trademark Law. The applicant, when claiming for “prior right” or “interested relationship”, generally needs to prove such rights. According to the new practice under the Trademark Law, when claiming prior right under a relative ground, the opponent must submit materials in hard copy at the first-time filing an application for opposition.

  It is important to note CTMO will issue a notice on not accepting the application for opposition if an application is not submitted in hard copy at the first-time.

In previous practices, considering the applicant’s ability to provide materials conveniently, CTMO generally allowed the applicant to submit materials supporting the prior right claim and related certificates in the form of disks. However, after the launch of the new Trademark Law, the following 3 documents must now be submitted in hard copy format:

1) Application letter, application grounds, power of attorney and certificates on the qualification of the subjects;

2) The page of the opposed trademark in Trademark Gazette;

3) Certificates on prior right (including records of prior trademarks, registration certificate, copyright certificate, etc.)

   General speaking, in cases whereby the prior right to a trademark or a design patent is claimed, the applicant needs to provide its right number, as well as the scanned or copy of right certificate corresponding to the right number. If the prior right to copyright is claimed, the applicant needs to provide the evidence such as copyright number, copy of original manuscript and contract of engagement.

   If the opponent has no prior trademark right or other rights in China, he could try to provide evidence of his prior right overseas, and cite that the “trademark has already been used by others and has certain reputation” to support the opposition.

   According to the law, for cases filed on relative ground, the applicant needs to provide a certificate of prior right; the grounds include claiming for protection to a well-known mark under Article 13 of Trademark Law, applying for trademark registration on behalf of a representative or the agent’s own name under Article 15, goods designated under the applied mark not from the origin as indicated in the mark under Article 16, there exists the same or similar prior mark under Article 30 and Article 31, and cybersquatting marks with certain reputation which are used by others under Article 32.

   HFG believes that CTMO requires applicants to submit documents in hard copies instead of electrical documents stored in disks at the first application in order to finish the Trademark review within due time as stipulated by law. With the requirement on submission in hard copies, the amount of substantial examination can be reduced to some extent, the applications filed not by “prior right holders” can be eliminated, and it ensures CMTO will finish the review within the time limit. However, this “one set fits all” practice could unavoidably cause certain harms.

3. If the transference of a mark is filed electronically, a notarized assignment agreement or statement must be provided while filing.

   Prior to the launch of the new Trademark Law, and in order to promote electronic applications, CMTO stipulated that in electronic applications the applicant only needed to fill in related information on trademark registration; neither scanned Power of Attorney nor certificates on the qualification of the subjects were needed. Therefore, there were no seal or signature proving the applicant’s qualification in such applications in the inner CTMO system.

   Since there were no seal or signature at the time of registration application, in reviewing the electronic application for trademark transference, CTMO could not check the authenticity of documents on trademark assignment application. For prudent consideration, CTMO would require the applicant to submit a notarized assignment agreement signed by both the assigner and assignee, or a notarized statement signed by the assigner.

   After the launch of the new Trademark Law, CTMO has improved and perfected the procedures on electronic application for trademark registration. In electronic applications, the applicant, besides submitting the trademark pattern in electronic form, also needs to submit scanned Power of Attorney and certificate on the subject qualification of the applicant. Thus the qualification information is accurately recorded at the beginning of the trademark application, which could avoid the legal risks of not being able to verify the applicant’s qualification in later trademark assignment.

   Overall, in order to ensure a smooth transition at the initial stage of the launch of the new law, CTMO and TRAB didn’t make big changes in trademark review and examination and adjudication of trademark applications in terms of the application of law. The most prominent change is that CTMO, in the trademark review and appraisal, ruled for the first time that an applicant had bad faith according to the good faith principle. This practice casts light on the latest development trend in trademark examination.

For further informaiton or for any queries please contact Lanny Li on the below details.

 Lanny Li, Partner

 Trademark Attorney

 p. +86 021 5213 5500

 e. lli@hfgip.com

 www.hfgip.com