Foreign companies operating in China have always had difficulty protecting their brands and intellectual property. In recent years, Chinese authorities have focused in the area of trademark protection refusing to register bad faith trademarks and cleaning the registration system.
Bad faith trademark squatters have been a problem in China for many years. This is causing brand owners to try to protect their IP rights by defensively filing trademark applications, to avoid preemptive filings by those looking to file in bad faith.
Statistics from the China National Intellectual Property Administration (CNIPA) found that the register received more than 42.6 million valid trademark registrations in 2022, a considerable portion of which are bad faith or defensive brands that will never be used.
Foreign enterprises who want to protect their trademarks in China, may face a provisional refusal of trademark protection because of the CNIPA efforts to crack down on bad faith filings.
In the first two months of 2023, 755,000 applications were filed, a drop of more than 50% compared to a year earlier, according to the CNIPA.
Provisional refusal
A provisional refusal is a CNIPA notice sent to the trademark applicant to inform that the applied-for trademark is going to be refused and explain the reasons for the upcoming refusal. There could be different grounds for a trademark rejection, including absolute grounds (lack of distinctiveness, descriptiveness, genericness, etc.) or relative grounds (prior rights, well-known marks, etc.) or even based on an opposition filed by a third party against the applied-for trademark.
This notice does not represent an official refusal and it is only “provisional,” which means that a company can still overcome the provisional refusal and turn it into a successful trademark registration.
Reasons for provisional refusal
Absolute grounds: a provisional refusal on the basis of absolute grounds means that the refused trademark is considered to be harmful to the national orders or the stability of the trademark registration system, such as violating the politics, economy, culture, or morals.
Such a trademark will be prohibited from being registered partially or wholly. Possible cases could include:
The trademark is identical with or similar to State name, the national flag, emblem or anthem, the military flag, emblem or songs, or medals of the People’s Republic of China;
The trademark is identical with or similar to the State name, national flag, national emblem or military flag etc., of a foreign country, except with the consent of the government of that country;
The trademark is identical with or similar to the names, flag or symbols of international inter-governmental organizations, except with the consent of that organization or except where it is unlikely to mislead the public;
The trademark is identical with or similar to an official mark or inspection stamp that indicates control and guarantee, except where authorized;
The trademark is identical with or similar to the symbol or name of the Red Cross or the Red Crescent;
The trademark is considered being detrimental to socialist morals or customs, or have other negative impacts under the CNIPA opinion;
The trademark is deceptive and are likely to mislead the public in terms of the quality, place of production or other characteristics of the goods;
The trademark is considered to lack distinctive features or consists of the generic information of the goods only or the shape determined by the nature of the goods.
Relative/opposition grounds: A trademark can also be refused on relative grounds where it is considered violating others’ legitimate rights. For example:
The trademark is considered identical with or similar to conflicting trademarks registered for identical or similar goods/services;
The trademark is considered identical with or similar to well-known trademarks, regardless of whether it is registered or unregistered;
The trademark is identical with or similar to name right, portrait right, copyright, and unique name of well-known products.
Actions steps against a provisional refusal
Once the CNIPA issues a notice for provisional refusal, the applicant has a limited amount of time to respond and appeal the decision. If a respond or appeal is not sent within the timeframe, the trademark application will be considered abandoned.
The following steps can be taken to overcome a provisional refusal:
Reach out and hire a local trademark agent. Only a local licensed agent is legally allowed to file a response to the CNIPA.
A local licensed agent will know and understand the country’s laws to act against the provisional refusal from the CNIPA. They can also help analyze what caused the trademark to be refused and set out a suitable strategy to respond to the CNIPA.
It is important to investigate and select a well-known licensed trademark agent before acting. Otherwise, a company may lose not only money but the trademark as well.
Clarify reason for the refusal: through the trademark agent, a company can ask the reasons for refusal. In general, there is a higher probability of overcoming the refusal when it is based on relative grounds.
Authorities have a stricter view towards trademarks subject to provisional refusal on absolute grounds due to the possibility of negative impact on the stability of the trademark registration system and/or the national orders.
Establish a response strategy: This would be done by the local trademark agent. Depending on the situation, the response strategy may include the following:
Submitting additional evidence to prove that the trademark is distinctive, well-known, or has acquired secondary meaning in China.
Arguing that the trademark is not similar or identical to the conflicting trademarks and it would not cause any likelihood of confusion among consumers.
Requesting a coexistence agreement or a letter of consent from the owner of the conflicting trademark, if possible.
Modifying or limiting the scope of goods or services covered by your trademark application, if applicable.
Challenging the validity of the conflicting trademark if there are grounds to do so.
File a response to CNIPA: Upon authorization, the local trademark agent will represent the company in submitting the response letter to the CNIPA before the deadline.
Further appeal options: A company may consider initiating a legal proceeding/appeal against the decision of the CNIPA under the China’s laws.
Other considerations
The most important step before applying for trademark registration in China, is to conduct a trademark search to avoid any potential conflicts with existing trademarks. This will reduce the risk of receiving a provisional refusal.
A provisional refusal is not an end of the trademark registration in China. There is still a chance to reverse it.
If the trademark registration was filed through an International Registration under Madrid System, then the provisional refusal will not affect the validity of the International Registration in other designated countries.
Chinese authorities have been perfecting the trademark registration system at the levels of legislation, governance, policy, and rules in general. As a result, trademark guidance has experienced a rapid change in the system and practice on the ground.
To address trademark issues from a holistic and systematic perspective, the CNIPA released the Draft Amendment to the Trademark Law in January 2023. With the goal of strengthening the regulations relating to bad faith trademark registration, some of the suggested amendments include stronger measures to ensure that
trademark applications are made with intention to use, that those trademarks that are registered are used, and that duplicate trademark applications are prohibited.
Authorities’ current practice on absolute grounds rejection, view on consent, and recent attitude toward accepting nonstandard specifications are meant to slim down the size of the register, strengthen the protection of public order and public interest, and improve the current system and practice to better accommodate market needs for trademarks.
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