2023 Changes
1. Apostille Convention
On March 8 this year, China acceded to the Apostille Convention, with effect from November 7, 2023. By acceding to the Convention, the authentication procedure for public documents, including judicial, official, and notarial, will be simplified and will replace the previous time-consuming and costly legalisation process. It is even possible that in future, foreign companies will no longer have to go through this legalisation process when preparing documents for submission to Chinese courts, but it is still unclear whether these facilitations will take full effect and to which kind of documents they will apply. In any case, the Apostille accession alone is already a positive development.
2. Intention to use in “mass” applications
Previous experience shows that, to counter trademark squatters filing a large number of mostly unrelated trademarks, the China National Intellectual Property Administration (CNIPA) is quick to assume bad faith when it comes to “mass applications” for trademarks, which can quickly become a problem for applicants acting in good faith, wanting to secure the launch of a new product by filing several trademark applications for example. If, when in doubt about the intention to use the mark, the CNIPA refuses registration in the case of applications filed in good faith, the applicant can try to change the office’s opinion by providing explanations and evidence. It will therefore be very interesting to see in which direction the office's practice consolidates, as there certainly is a high potential for problems for applicants acting in good faith.
3. Staying of proceedings
As of June 1 this year, an applicant-friendly change in proceedings came into effect: the staying of registration procedures in case older rights' legal status is challenged. Before June, it was commonplace that, in case an older trademark deemed relevant for an application was subjected to a non-use cancellation, for example, the younger application's proceedings continued and usually got rejected. The applicant had to file a new application or enter the review proceedings to “stay in the game.” Today, the younger trademark's application process is stayed/paused until the non-use cancellation against the older trademark is completed - a great improvement for applicants indeed.
4. Consent letters
Until recently, consent letters were an effective means of overcoming an objection by the CNIPA based on earlier rights, for example in the registration procedure. Unfortunately, the practice has changed considerably and consent letters are now effective for very few exceptions only. Since around August 2021, the CNIPA has been rejecting consent letters in increasing numbers.
Intended Changes in Trademark Law
1. Transfer of bad-faith trademarks
According to the proposed law, it will still be possible to cancel trademarks applied for in bad faith, but also to transfer them to the legitimate trademark owner as an alternative. Even though the application is subject to a number of conditions, these conditions should be easy to fulfil in the vast majority of cases. The proceedings will be similar to the cancelling ones, and the attacked trademark will be cancelled if the transfer is not possible due to a failure to fulfill one of the conditions. This amendment creates a mighty new tool for taking action against trademark squatters.
2. Proof of use
Similar to US law, the proposed amendment provides for the introduction of stricter rules on use. Thus, the applicant shall be required to prove the use of his trademarks at the time of filing. Furthermore, the trademark owner shall be required to submit declarations of use or legitimate reasons for non-use within 12 months after the expiration of 5 years from the date of trademark registration.
3. Prohibition of re-applications
Re-applications of an identical trademark by the same applicant will be prohibited but it's unclear yet how exactly this prohibition will be enforced. For the time being, re-application is still an effective tool in case of trademark problems, so this tool might get lost.
4. Reduction of the opposition period
The opposition period is to be reduced from 3 to 2 months.
5. Action against trademark squatters based on unfair competition
In 2022, squatting of a trademark was recognised for the first time as unfair competition, giving rise to civil claims for the plaintiff (“In-Sink-Erator Case”). The defendant was ordered to pay damages of approximately $230,000. This is very welcome and opens up an interesting new defense possibility.
Conclusion
The amendments are of a far-reaching and welcome nature. However, they also render previous trademark strategies ineffective in some areas. It will be very interesting to observe in which direction the practice will settle and whether the amendments, along with their implementation and execution, lead to gaps in daily practice.
Ludwig Lindermayer is a Patent & Trademark Attorney at PAUSTIAN & PARTNER.
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