A lot of
brand owners are frustrated of the need to repeatedly re-file their trademarks pending
the proceedings in removing prior marks, which not only increases the costs,
but also creates uncertainty as more subsequent citations may emerge. A lack of formal procedure for suspension of
trademark refusal review is attributed to such a phenomenon. Good news to brand owners is that the China
National Intellectual Property Administration (CNIPA) published a guidance note
in June 2023, for the first-time specifying circumstances warranting a
suspension of the trademark review procedures with the aims to lower
prosecution costs and achieve better utilization of administrative and judicial
resources. We will walk you through the
guidance note and discuss the potential implications on future prosecution
strategies in China.
Ten Specific Circumstances Justifying Suspension
The new
rules apply to (1) trademark refusal reviews, (2) opposition reviews, and (3)
invalidations. The principle of
necessity applies when deciding whether to suspend examination. If the outcome of pending actions against
prior marks has a material impact on the outcome of the review cases, the examination
procedures should be suspended.
The
guidance note set out seven circumstances where a suspension should be granted and three circumstances where a suspension may be granted,
details of which are set out below: -
Circumstances which Suspension Should be Granted
Applicable Cases: Trademark Refusal Reviews, Opposition Reviews,
and Invalidations
1. The cited mark is in the process of name change or assignment,
which, if approved, can resolve the conflict of rights;
2. The cited mark has expired and is pending renewal or is within the
grace period;
3. The cited mark is in the process of being withdrawn or
surrendered;
4. The cited mark is cited merely because it has been cancelled (due
to reasons other than non-use) or invalidated or has expired for less than one
year (after which the citation objection will be waived); and
5. The action against the cited mark has been concluded, but the
decision has yet to take effect, or the action is pending CNIPA’s reexamination
as directed by the Chinese courts.
Applicable Cases: Opposition Reviews and Invalidations
6. The status of the prior right must be based on the outcome of
another action that is being heard by a Chinese court or processed by an
administrative authority.
Applicable Cases: Trademark Refusal Reviews
7. The status of the cited mark must be based on the outcome of
another action that is being heard by a Chinese court or processed by an
administrative authority. To rely on this, trademark applicants must submit a
suspension request.
Circumstances which Suspension May be Granted
Applicable Cases: Trademark Refusal Reviews
8. The cited mark is subject to
invalidation based on bad faith, and the bad faith of the cited mark owner has
been confirmed in earlier actions. It is stipulated that examiners can suspend
refusal review procedures on their own volition even though no suspension
request has been made by trademark applicants. This aims to address the
situation where squatters keep re-filing their marks to block brand owners’
trademark applications.
Applicable Cases: Trademark Refusal Reviews, Opposition Reviews,
and Invalidations
9. Based on the circumstances of review cases,
examiners may suspend the cases if they consider it necessary to await
decisions or judgments on earlier actions involving identical or related facts.
It is again stipulated that examiners can suspend examination procedures on their own volition even though no suspension request has been made. The goal is
to ensure consistency in examination standards and to avoid conflicting
decisions.
10. For circumstances other than the
abovementioned, examiners may suspend based on the principle of necessity and
for benefit of legitimate right owners.
An Encouraging Development
In
the past, whether suspension may be granted was entirely at the discretion of
handling examiners. To achieve the
CNIPA’s goal in expediting examination procedures, most examiners tend to
strictly abide by the performance pledge and issue decision without regard to
the proceedings taken against the prior marks. Trademark applicants have no choice but to
keep re-filing their marks and/or lodging appeals to the Chinese Courts, in the
hope that the prior marks could be removed before the issuance of the final
decision on their own applications. This
significantly increases prosecution costs, and creates uncertainty.
The
new rules are in line with the CNIPA’s objective in deterring unnecessary and
illegitimate repeated trademark filings as evident in the draft amendments to
the PRC Trademark Law published in January 2023. By introducing a more formal suspension
procedure, and by setting out specific circumstances under which suspension
should or may be granted, this would help minimize or even eliminate the need
for legitimate trademark re-filing in the future. This also helps address the public’s concern
over the proposed ban on trademark re-filing under the draft amendments.
The new
rules are indeed taken from the chapter “Standards for Suspension of Review
Cases” of “Working Policy for Examination and Trial of Trademark Review and
Adjudication Cases” recently published by the CNIPA, which is an internal
policy document for examiners. Examiners
are thus expected to follow and implement the abovementioned rules in
examination.
Getting the Most Out of the New Rules
According
to the guidance note, it is not mandatory to submit a suspension request to be
benefited from the new rules, except under the circumstance (7) which trademark
applicants are required to submit a request no later than the expiry of the
three-month supplemental period after the filing of refusal review applications.
Nonetheless, we still recommend
submitting suspension requests under all applicable circumstances to make sure
that examiners are aware of the need to suspend. Requests should be accompanied with details of
pending actions and detailed explanations on how the outcome of the pending
actions will materially affect the outcome of the present proceedings, together
with the specific circumstance(s) that may be applicable.
The
guidance note also specifies that the timing and/or the applicant of the action
lodged against a prior mark are not relevant factors when deciding whether to
grant suspension. In other words, even
if the pending proceeding against the cited mark was lodged by a third party,
and/or the proceeding was only lodged after the filing date of a trademark
application, the pending proceeding against the cited mark may still be a valid
reason for suspension.
However, it
is not entirely clear as to how this suspension procedure will work out, in particular
we still may not receive any official notice signifying if the suspension
request is granted or not. With this
relatively new guidance note and the procedure has yet to be made as a formal
procedure under the PRC Trademark Law, it is suggested that trademark
applicants may still adopt the existing re-filing strategy in the interim, and
we will keep you updated on the exact running of the suspension procedure and
how the filing strategy is to be adjusted going forward.
© Vivien Chan & Co., Newsletter issue 07, July 2023
All Rights Reserved
About Us
Vivien Chan & Co. is a full-service law practice with offices in Hong Kong (1985) and Beijing (1993). We are consistently recognized as a premier law firm for and in Greater China. With over 35 years of doing business in Greater China, our Hong Kong and China teams have an in-depth understanding and knowledge of the legal culture and market dynamics.
Our long established licensed law offices in Greater China have allowed us to develop deep local roots and an integrated global perspective necessary to help domestic businesses and multinational companies alike seamlessly manage even the most complex local and cross border transactions.
We have advised on some of the most significant acquisitions, arbitrations, real estate projects and intellectual property enforcement to date. This is particularly evident from our leading position in areas such as intellectual property, tax, employment, mergers & acquisitions and dispute resolution. Our ability to collaborate across practices and borders with ease allows us to bring the right team to every transaction, regardless of location.
