The China National Intellectual Property Administration (CNIPA) recently published specifications on the Rules for Suspension of Review Cases, which represent a substantial progress in trademark practice from a procedural, timing, and strategic point of view and are likely to eliminate repeated trademark filings and legal proceedings.
The Rules are a positive development for brand owners and may lead to a strong reduction in the number of repeated backup applications and administrative appeals of CNIPA decisions due to timing issues with parallel procedures.
This may result in a lower cost for genuine trademark owners to obtain registration of their marks and in a lower caseload for the courts, which may benefit China’s trademark practice as a whole in the long term.
The Rules describe a series of situations where a suspension should be granted or can be granted, depending on the circumstances of the case. This step represents a clear intention by the CNIPA to improve the allocation of administrative and judicial resources and, at the same time, reduce the applicant’s burden for procedures.
The Rules for the suspension of trademark review cases include review on refusal cases, review on opposition proceedings and invalidation proceedings. Such suspension is often of enormous practical and strategic importance, such as when a trademark review procedure is dependent on the outcome of the legal challenges brought against a prior trademark blocking the mark under review.
Under the current practice, the CNIPA generally does not suspend such review proceedings. This results in numerous court appeals where the courts then decide about the status of the mark under review based on the outcome in the interrelated procedure, or about the grant of backup applications which depend on the review of the older application.
The Rules seek to change this practice by listing seven situations in which the CNIPA examiners “should” suspend the review case and three situations in which examiners “may” suspend the review case.
The general principles of the Rules are as follows:
Principle of necessity: proceedings should only be suspended if the suspension is likely to have a substantial impact on the outcome of the case. If the outcome of the case can be determined based on the basis of other grounds, or based on another stable prior trademark right, the proceedings should not be suspended.
Party autonomy: the will of the parties is respected as suspensions must generally be applied for (except for cases involving bad faith, where the examiner has the discretion to proactively suspend the case). The resumption of suspended proceedings must likewise also be applied for.
Specific Content of the Regulations: cases for mandatory suspension and cases for optional suspension
There are seven situations that require suspension and three where suspension may be considered by the CNIPA examiner.
The seven situations in which mandatory suspension will apply are:
The disputed or cited trademark is undergoing a change of ownership or transfer process, and after the change or transfer, there will no longer be a conflict of rights (e.g. the disputed or cited trademark is transferred to the applicant of suspension).
The cited trademark has expired and is in the process of renewal or grace period for renewal.
The cited trademark is undergoing a cancellation or withdrawal application procedure.
The cited trademark has been revoked, invalidated, or has expired without renewal, for less than one year, at the time of the review, and according to the law, the refused mark would not be approved before the expiration of the one year period.
A decision involving the cited trademark has already been issued and is awaiting the effectiveness of the decision or the execution of the judgment pending retrial.
In review on opposition and invalidation cases, the prior right involved in the case is dependent on the result of another case being reviewed by a court or processed by an administrative authority.
In review on refusal cases, the status of the cited trademark involved in the case is dependent on the result of another case being reviewed by a court or processed by an administrative authority, and the applicant explicitly requests suspension of the proceedings.
The first five suspension situations apply to review on refusal, review on opposition and invalidation proceedings. Situation number six applies to review on opposition and invalidation proceedings only, and the seventh to review on refusal proceeding only.
To maximize the protection of legitimate brand owners, the CNIPA should now grant suspension in the above cases regardless of whether the action against the cited mark is initiated before the filing of the refused mark or regardless of the identity of the party which initiated the action against the cited mark.
There are three circumstances where examiners may decide to suspend a hearing at their own discretion:
If the cited mark involved in the Review of Refusal case has been filed invalidation, and the registrant of the cited mark has been determined in other cases to constitute malicious registration situations as stipulated in Article 4, Article 19.4, and Article 44.1 of the Trademark Law, the trial may be suspended (this situation does not require the applicant to submit a suspension application, the examiner may independently decide whether to suspend the hearing based on the specific case);
If it is necessary to wait for the same case or related cases to be ruled beforehand, the trial may be suspended on a case-by-case basis (this situation does not require the applicant to submit a suspension application, the examiner may independently decide whether to suspend the hearing based;
Other situations where the trial may be suspended. For situations that cannot be exhausted, based on the principles of necessity and in favor of legitimate rights, and taking the above situations as a reference, the examiner may decide whether to suspend the trial at its discretion.
Previously, the applicant had to take action against a cited mark first and file trademark applications thereafter to ensure CNIPA will suspend the hearing of Review on Refusal until the outcome of the cited mark is available. Under the new Rules, timing and applicant of action taken against the cited mark will no longer be a consideration in granting suspension for Review on Refusal cases.
The Rules will help solve difficulties, such as the lack of coordination between various administrative procedures and between administrative and judicial procedures.
Since the new Rules have been put in place recently, applicants with ongoing cases should evaluate their situation. It may take some time to assess how these developments will be implemented in practice.
To learn more about our services in China, contact our Head of Business Advisory - Ms. Kristina Koehler-Coluccia at kristina@woodburnglobal.com. DISCLAIMER: All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.