China recently issued several new regulations and guidelines to strengthen the protection of the intellectual property rights and improve the quality control of trademark prosecution and enforcement. The purpose of the new documents, which were released by the China National Intellectual Property Administration (CNIPA) and the State Market Supervision Administration (State MSA), was to further guide and regulate trademark practice as well as trademark agency conduct.
On 7 December, the CNIPA issued the Guidance on Trademark Registration and Use on Services in Class 35. This enables relevant entities to correctly understand the connotation and denotation for services in class 35, to learn the original idea for classification of services, and to file trademark applications properly.
In China, most of the trademark applications are filed in the Trademark Office through agencies such as law firms or companies that provide IP services. For foreign brand owners, a frequent concern and challenge in China is the prevalence of trademark squatting activities.
According to Trademark Registration Classification, Class 35 includes mainly services, such as business management, operation, organization, and administration of a commercial or industrial enterprise, as well as advertising, marketing, and promotional services.
In China, Class 35 is usually called the “all-purpose class”. Given the requirements from online e-commerce platform or physical shopping mall or defensive purpose, many companies have additionally registered the mark in Class 35. The number of trademark applications in Class 35 are always at the top of the filing list, according to the trademark annual report.
In general, there is a lack of appropriate understanding of services mark in Class 35.
The China trademark office Classification of Similar Goods and Services states the services in Class 35 include advertising; business management; business administration; office functions; organization, operation and supervision of loyalty and incentive schemes; online advertising services; production of television and radio advertisements; accountancy; auctioneering; trade fairs; opinion polling; data processing; provision of business information; and retail services.
In general, entities engaged in the manufacturing of goods do not need to apply for trademark registrations on services in Class 35.
The Guidance provides clarifications for 11 groups of services in Class 35. The relevant services include “advertising-related services” in subclass 3501, “business management related services, franchise related services” in subclass 3502, “import and export agency services, sales promotion for others, providing online marketing services” in subclass 3503, “personnel related services” in subclass 3504, “office functions-related services” in subclass 3506, “accounting related services” in subclass 3507, “seeking sponsorship” in subclass 3508 and “retail or wholesale services of drugs and medical supplies” in subclass 3509.
The Guideline emphasizes that "the relevant services in Class 35 are provided for others, rather than for the right holder's own business needs”.
A company should correctly understand the connotation and denotation of the services in Class 35 and register the mark on the proper services.
Considering the special features of Class 35, the Guideline also provides an interpretation of how to use such service mark properly.
The Guideline explains that the use of a trademark on a signboard is for the purpose of selling own goods and shall not be regarded as use of the services in Class 35 like “promotion for others”.
In this regard, when it comes to trademark infringement cases, even if the infringer defends that its use is legitimate since it is the “proper” use of its registered trademark in Class 35 covering “promotion for others”, such defense may not be upheld anymore. Therefore, such use shall constitute an infringement against other's registered trademark or unfair competition to a large extent because such use for trademark in Class 35 is not the situation of “proper” use.
The Guideline emphasizes that in the process of marketing, some behavior may have the nature of "commercial" and "management". However, the owner of trademark in Class 35 cannot prohibit these market players from conducting marketing due to the existence of aforesaid nature.
This rule has been largely practiced in judicial procedures by the Court, however it’s the first time that it is being expressly confirmed at administrative level, which will support the right holders defense in future cases.
It is suggested to collect evidence in proof of use of the trademark on services in Class 35, such as registration number, services content, trading documents (contracts and invoices), advertising materials for the service mark in various media and indicate the trademark in service places.
If there is more than one registered trademark on related services, they should be used separately and the respective evidence of use for each mark kept separately. If the service mark is identical with the trade name, indicate the registered symbol on the trademark to distinguish the use from the trade name.
If the trademark owner cannot put the service trademark into use due to force majeure, governmental restrictions, bankruptcy, and liquidation, etc., it is better to prepare relevant defense evidence.
When enforcing trademark rights on goods by the owner and licensee, one should be careful to use the mark properly and avoid infringing others’ rights. The use of a trademark on the front door of the store for selling one’s own goods is not considered the use of services for “sales promotion for others” in Class 35. In that case, even with a trademark registration for “sales promotion for others” in Class 35, the user might still face the risk of infringing a third party’s trademark right.
For example, advertising and promotion of one’s own trademarked clothing products does not qualify as “advertising” services under Class 35, but instead it is a trademark for clothing under Class 25. By contrast, the typical use of a trademark for “advertising” services in Class 35 includes advertisement planning, design, and production for a third party’s products and/or services.
Although Chinese courts have made similar clarifications in adjudicating trademark cases, the Class 35 Guidelines now provide clear rules to assist trademark practitioners in understanding Class 35 services.
Foreign brand owners should include Class 35 in their trademark portfolio to obtain proper trademark protection in China. By way of example, if a clothing products brand owner does not protect its trademark rights by securing trademark registration in Class 35, its brand name may be pirated by a third party in Class 35.
The third-party pirate could then use the brand name as a shop name for selling clothing products, and the brand owner would likely find it difficult to stop the third party from using the shop name even if consumer confusion was obvious.
To learn more about our services in China, contact our Head of Business Advisory - Ms. Kristina Koehler-Coluccia at firstname.lastname@example.org. 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.