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Trademark practice - Changing Attitudes to Letters of Consent?

Rick Z. TAN | Dec 28, 2021

Due to a large number of existing trademarks, trademark registration applications in China are often rejected due to alleged conflicts with prior applications or registrations. A Letter of Consent (LoC) may provide a practical and efficient solution for such situations. For those who do not know what an LoC is, or how they work, please see our previous article: https://www.jiaquanip.com/news.asp?ArticleID=191&ClassID=41.

In our experience, a Letter of Consent has been quite useful for overcoming provisional refusals at the CNIPA (originally Trade Mark Review and Adjudication Board, i.e. TRAB) level, unless trademarks are far too similar, verbally identical, or the goods and services offered are practically the same.

However, the general attitude towards Letters of Consent appears to have shifted in the past few months. After recently receiving several unfavorable decisions, we reviewed all the refusal decisions (with LoC presence) made between July 2021 and September 2021. Our findings have been summarized in the table below:

July 2021

August 2021

September 2021

Number of cases in which LoC was accepted

82

53

3

Number of cases in which LoC was not accepted

96

204

219

Accepted rate

46.1%

20.6%

1.4%

 

The data indicates an abundantly clear trend of the CNIPA becoming more conservative, if not entirely resistant, in accepting Letters of Consent. Even in the three cases in September where LoCs were 'accepted', CNIPA did not accept the LoCs point-blank. Instead, CNIPA found that the applied-for trademarks did not constitute similar trademarks on the ground that "there was a certain distinction between the trademarks". In this light, it seems that CNIPA has rejected all Letters of Consent from September 2021 onwards. Why has CNIPA made such drastic changes to its practices? Considering that it is the last quarter of the year, could it be KPI-driven behavior? Does this signal a permanent shift in CNIPA policy? Any definitive answers remain unknown.

The most pressing question is whether Letters of Consent have become effectively useless. This largely depends upon the attitude of courts with the ability to overturn CNIPA’s decisions. We researched trademark administration litigation cases involving LoCs from July 2021 onwards, and fortunately found that courts of both the first and second instance have apparently treated LoC the same way they did previously. In other words, if trademark applicants took rejected cases through judicial processes, cases that would have once been accepted with an accompanying LoC at the CNIPA level would likely have their rejections reversed by the courts.

With that said, we cannot guarantee that the attitudes of these courts will not change in the near future. Thus, we must remain cautious and assume that these courts will eventually limit their acceptance of Letters of Consent as well - just not in the dramatic manner exhibited by CNIPA. From a higher dimensional perspective, whether it is the somewhat long-standing practice of not staying review of refusal cases pending the decision of non-use cancellation of cited marks or the emerging trend of refusing LoC, CNIPA appears to be sending a message that it does not want applicants to look for solutions when they encounter problems; rather, it encourages pre-filing planning. In this context, we highly recommend spending more time and effort on refining application strategies, i.e., based on search results, strategizing early to avoid known obstacles. From my experience, this is something I believe our peers in other countries still struggle with.

In addition, although it may be common knowledge, please consult a trusted Chinese trademark attorney regarding trademark filing strategies at the earliest possible stage.

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