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Common Misunderstandings for Foreign Applicants to Obtain Trademark Rights in China
Time: 2016-07-05
Common Misunderstandings for Foreign Applicants
to Obtain Trademark Rights in China

July 05,2016 | Zio Zhihao DENG

Since China's accession into WTO in 2001 , a large number of foreign brands have been rushing to China. As China's trademark protection system follows the first-to-file principle [1], there is a natural threshold for foreign brands when they enter the Chinese market: their brands must obtain trademark rights in China. However, due to the differences in domestic and foreign trademark systems as well as in culture, there are always some misunderstandings for foreign applicants when obtaining their trademark rights in China. This may lead them to a passive position, either delaying implementation of their business plan, or being forced to withdraw from the Chinese market at worst.

Based on my long-term practice in trademark work, I choose some typical cases as examples, and try to analyze the reasons of the misunderstandings and recommend some ways to deal with them. Due to the limitation of sample collection base, the conclusion is inevitable over generalizing and for your reference only.

Misunderstanding One: trademark constituent elements lacking distinctive characteristics
Let us see the examples [2] below (Table I):

The nationalities of the above applicants are different, while they have a common preference that they prefer to use the industry (product) generic name and features as a composition element of the trademark. Since these trademarks have been approved for registration in their own countries, some of them have even obtained a certain reputation after long-term use, the applicants are often reluctant to make changes to the constituent elements of the trademarks when entering the Chinese market. Therefore, the applications are inevitably rejected by the Chinese Trademark Office.

As for the requirements of distinctive characteristics, Article 11[3] of the Trademark Law has clear stipulation. Before filing trademark registration in China, foreign applicants shall ask the Chinese trademark agents to check if the mark has distinctive characteristics. If the mark to be filed lacks distinctive characteristics, the following solutions may be taken: firstly, to make appropriate modifications to the reproduction of the mark, such as making special designs on the first letter of the English trademark, using abbreviations or replacing some letters; secondly, if the trademark has been widely used in China, applicants shall preserve carefully the relevant evidence which can be submitted to the Trademark Office during the trademark review procedure, to prove that the trademark has obtained distinctive characteristics by widely used.

Misunderstanding Two: non-standard goods/services and too narrow coverage scope
There are two problems included in this misunderstanding:
Firstly, with respect to the non-standard goods/service problem, namely the good/services which the applicant selected go beyond to the Chinese Classification, this may result in multiple negative consequences [4]:
1. Application cannot be filed through e-filing system, which postpones the time for filing;
2. After an application is filed, normally a Notice of Rectification will be issued by the Trademark Office, requiring the applicant to modify the goods/services description. Even if the description is modified as required as fast as possible, it will spend nearly two more months to get the official filing receipt;
3. If the applicant refuses to modify the goods/services description after receipt of the Notice of Rectification, he/she most likely will receive the Notice of Non-acceptance from the Trademark Office.

Therefore, the use of non-standard goods/service brings nothing but harm to the applicants. It is suggested that foreign applicants ask the Chinese trademark agents to equivalently or similarly convert the non-standard goods/services to standard goods/services before filing the application, trying not to exceed the scope of the Chinese Classification. If the applicant cannot find an equivalent of the goods/services from the Chinese Classification, he/she also has to give a reasonable explanation when responding to the Notice of Rectification, in order to avoid being unaccepted.

Secondly, the coverage of the goods/services is too narrow. In some countries following the first-to-use principle, the designated goods/services have to be deleted if they are not actually put into use. Therefore, many foreign trademark holders will designate one or two goods/services only when register in their countries, or even use qualifier to further define the actual field of use of the goods/services. If such a goods/services description is intactly copied to the trademark registration in China, it would lead to the non-standard problem mentioned above. On the other hand, the too narrow coverage problem will appear. In practice, it is of less conflict and easier to register with designating only one or two goods/services. However, after a trademark is successfully registered, especially when the trademark has obtained a certain reputation and influence in the Chinese market, trademark squatting in different classes or groups will ensue. In this case, foreign trademark holders have to spend a lot of time, effort and money to clean up these malicious squatting, which is always not worth the candle.

In my view, since China follows the first-to-file principle, foreign applicants should not be limited to their own designated goods/services, but consider the long view when filing trademark applications in China. The list of goods/services designated should cover all range of business which the applicants are likely to engage in, and associate with the category of goods/services, so as not to let others take advantage of the limited goods/services .

Misunderstanding Three: Considering Chinese Pinyin as English
Generally speaking, it is more likely that well-known trademarks are squatted. Therefore, some big companies are very keen on monitoring the preliminary announcement of others’ trademarks which are similar to their core brands, and actively prevent the registrations by filing oppositions, in order to protect their own brands.

It is understandable to monitor others’ trademarks. Some foreign applicants prefer to feed the monitoring results back to the Chinese trademark agents and ask for the feasibility of opposition. Due to cultural differences, some trademarks are deemed to be unsimilar by the Chinese, while deemed to be similar by foreigners, for example (Table II) [5]:

From the above cases, we can see that generally foreigners, including applicants and trademark attorneys, could not understand the Chinese Pinyin well. According to the Chinese reading practice, in a trademark combined by Chinese characters and Pinyin, the Chinese characters will be the major part of the trademark, while the part of Pinyin will only be a reference for pronunciation. Besides, we should know that homophone is very common in Chinese language. As such, a same Pinyin, performing the pronunciation function, will refer to different Chinese characters. Take the above TableⅡas an example, “咖蓝西+KALANXI” and “卡兰西+KALANXI” will not be considered as similar trademarks, even though they share the same Chinese Pinyin[6].

To solve this problem, we suggest the foreign applicants follow the advice from the local agents when planning to file an opposition against a trademark application in China with respect to the monitoring result when dealing with a trademark which consists of Chinese characters and English words(Pinyin). If the English words are actually only Chinese pinyin, an opposition request should not be filed if the local agent considers there is no similarity.

Misunderstanding Four: do not keep sound use evidence
China adopts first-to-file principle, however, use evidence to prove the situation of the mark in use is likely to be required in trademark proceedings such as review for refusal, opposition, invalidation and cancellation for non-use for three consecutive years. From our experience, foreign applicants may have problems in the below two aspects when providing use evidence. One is that they could not provide any use evidence. It is easy to understand the negative effect resulted from this aspect and we will not give further explanation about it. The other one is that they provide a large amount of use evidence, however, most of them is useless, for example, the use evidence obtained outside Chinese Mainland, Even if some use evidence contains some pictures taken in Chinese mainland, however, these pictures show no shooting time, place or any critical information about the trademark such as the applicant name, trademark logo at issue or designated goods/services, etc, such evidence is considered invalid. As for the second one, foreign applicantsare always confused why their request could not be supported while they have provided a large amount of use evidence. Actually, the examiners do not request such a large amount of use evidence, they just want sound evidence. H ere below we will give some examples to illustrate what is sound use evidence according to “already in use and enjoys substantial influence”, latter part of Article 32 of the Trademark Law[7].

Literally speaking, “already in use” requires that use evidence must take place before the filing date of the application of the trademark at issue. Although the laws do not stipulate the place where the evidence is incurred, there is an implied prerequisite that it must be incurred in Chinese mainland from the regional nature of trademark itself. “Substantial influence” refers to the fact that the trademark has been used for a long time in a wide space. Specifically, use evidence incurred in consecutive and different years could prove the use for long time; while in different provinces or cities in Chinese mainland could prove the use in a wide space.

In conclusion, sound evidence should include the time when it is happened as well as the place where it is incurred, and the said time and place should meet the requirements stipulated by the laws. At the same time, it should include critical information about the trademark at issue, such as the applicant name, trademark logo, designated goods/services, etc. Practically, it is not easy for a single piece of evidence to meet all requirements as above. Therefore, applicants are often required to provide a chain of evidence by using the trademark, which consists of a plurality of carriers and supports each other in order to make it admissible to examiners or judges. Common use of evidence in trademarks could be [8]:

For use on goods:
1. use of trademarks on the products, product packages, containers, labels etc. by attaching, stamping, imprinting or knitting, etc., or use of trademarks on attachments, product specifications, handbooks, price lists, etc.;
2. use of trademarks on the trading documents concerning sales, including use on sales contracts, invoices, notes, receipts, inspection and quarantine documents for import and export, customs declarations, etc.;
3. use of trademarks on media such as broadcast, television, etc., or publications, and advertisements or promotions for products where the trademarks are used by billboards, mailing advertisements, etc.;
4. use of trademarks in exhibitions and fairs, including use of trademarks on printing documents and other materials provided in exhibitions and fairs;
5. other use of trademarks which is in conformity with laws

For use on services:
1. use of trademarks on the places where the services are provided, including use of trademarks on the manuals of the services, billboards of the services, decoration of the places, clothes of the staff who provide the services, posters, menus, price lists, coupons, stationery, letter paper, etc.
2. use of trademarks on the documents concerning the services, including use on invoices, bank slips, agreements on the services, documents for maintenance, etc.;
No. 3, 4 and 5 for use on goods are also applicable for use on services.

In addition, among the above, materials provided by a third party has stronger effect than the ones provide by the applicants themselves. For example, invoice, inspection and quarantine documents for import and export, customs declarations, advertisements via media provided by the third party will be of greater strength than product packages and brochures provided by the applicants themselves. Applicants shall try their best to provide evidence which has stronger effect. Conclusion

Trademark right is one of the industrial property rights and it has its regional nature. Trademark practices are more or less different from one to another in different countries and regions. As such, misunderstanding will be inevitable and, actually, the misunderstandings will be far more than the above we provided.

To make sure well protection of the trademark rights in China, foreign applicants should seek help from Chinese trademark agents and follow their advice from the very beginning of the trademark filings to make proper trademark strategies according to the Chinese laws and practices.

[1] First-to-file principle, compared with first-to-use principle, is the establishment system of trademark rights. In China, exclusive right for use of the trademark will not be given to mere use of the trademark. The only way to obtain exclusive right for use of the trademark is registration.

Any natural person, legal person, or other organization desirous of acquiring the exclusive right to use a trademark for the goods produced, or services and activities offered by it or him shall file an application for the registration of the goods or service mark with the Trademark Office. Article 4 of Trademark Law of the People's Republic of China

No trademark application shall infringe upon another party’s existing prior rights. Nor shall an applicant rush to register in an unfair manner a mark that is already in use by another party and enjoys substantial influence. Article 31 of Trademark Law of the People's Republic of China
[2] Trademark application numbers are 13825305, 13595386 and 13370723 respectively
[3] The following marks are not permitted to be registered as a trademark:

1) Names, devices, or designs that are generic to a class or group of goods;
2) Marks that merely indicate the quality, principal raw materials, function, use, weight, quantity or other features of the goods in respect of which the marks are used;
3) Other marks that lack distinctive characteristics.
A mark to which the above provisions are applicable but which has acquired distinctiveness through use and is readily distinguishable may be registrable as a trademark.
[4] The filing date of an application for trademark registration shal1 be the date on which the Trademark Office receives the application documents.
  Where the formal requirements of the application are fulfilled and the application form filled out according to the relevant rules, the Trademark Office will accept the application and notify the applicant in writing. Where the formal requirements are not fulfilled or the application form not filled out according to the relevant rules, the Trademark Office will not accept it, and it shall notify the applicant in writing and explain the reason. Where the formal requirements are basically fulfilled or the application form filled out basica1ly according to the relevant rules, but amendments are required, the Trademark Office shall notify the applicant to make the amendments and require him to do so according to the contents prescribed and re-submit it to the Trademark Office within thirty days from the date on which he receives the notification. Where the application is amended and re-submitted to the Trademark Office within the time limit, the date of filing shall be retained. Where the application is not amended within the time limit, the application shall be deemed to have been abandoned, and the Trademark Office shall notify the applicant in writing. Article 11 of Trademark Law of the People's Republic of China
[5] Cited trademarks are No. G867267 and No. G700271, opposed trademarks are No. 15220267 and No.16129497
[6] No. 15, Page 69 to 71, of Standards for Trademark Examination and Trial;
[7] No trademark application shall infringe upon another party’s existing prior rights. Nor shall an applicant rush to register in an unfair manner a mark that is already in use by another party and enjoys substantial influence. Article 32 of Trademark Law of the People's Republic of China
[8] No. 5.3.2 and 5.3.3, Page132, of Standards for Trademark Examination and Trial.
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