Trademark Office and TRAB issue draft implementing regulations

Following the approval of the amendments to the Trademark Law in August 2013, the China Trademark Office (CTMO) and the Trademark Review and Adjudication Board (TRAB) have jointly drafted the new PRC Trademark Law Implementing Regulations, which detail the procedures and logistics of the various trademark proceedings, clarify uncertainties and ambiguities under the new law and regulate the practices of trademark agents in China. This update gives a quick overview of the key changes proposed by the CTMO and the TRAB.

1. E-service - the draft regulations require e-filings to be made in a specific format designated by the CTMO, and expressly recognise electronic communications or the service of all kinds of documents by the CTMO and/or the TRAB. Interestingly, for documents served by electronic means on the CTMO and/or the TRAB, service takes effect on the date of actual receipt by the officials, whilst for documents served by the CTMO and/or the TRAB on the relevant parties through electronic means, the documents are deemed to have been duly served on the date of dispatch, unless the recipients prove otherwise.



2. Time limits - for registration, review, opposition, invalidation and cancellation proceedings, the newly introduced time limits will not cover the time required for certain procedures (eg, where the CTMO or the TRAB must serve documents through publication in a gazette; where amendment to, or clarification of, the parties’ submissions is required; where another round of evidence exchange is required; and where the submission of evidence of use or a ballot for same-day applications is called for). Instead of relying on the general principles of civil law and the Civil Procedure Law in China, clear rules for the computation of time limits are provided in the draft regulations (eg, the first day is excluded when calculating all deadlines; for deadlines calculated in months, the deadline falls on the corresponding date on that month; if the deadline falls on a statutory holiday, it will automatically be postponed to the next working day).



3. 3D marks - the applicant for a 3D mark must make it clear on the application form that the mark is three dimensional, and submit drawings/pictures of the prescribed dimensions showing different views of the mark (from at least three sides).



4. Sound marks - the applicant for a sound mark must describe the sound mark clearly on the application form, using a stave divided into bars and showing the musical notes, and submit a written description and the corresponding sound sample (eg, on a CD or USB).



5. Multi-class applications - in a multi-class application, if the application in one class is blocked by a cited mark, the applicant is entitled to apply to split the application, hence allowing the class(es) that is (are) not blocked to proceed to registration and dealing with the blocked class separately.



6. Same-day applications for conflicting marks - as under the current rules, the draft regulations provide that, in the event that two parties apply for the same or similar marks in the same class or similar classes on the same day, the applicants shall submit evidence of prior use within 30 days or attempt to resolve the matter through negotiation. However, the draft regulations still fail to address the situation where one of the applications is allowed for registration after submission of evidence of prior use, while the other application is initially rejected but is subsequently allowed for registration by the TRAB upon review.



7. Amendment/clarification - if amendment to, or clarification of, a trademark application is required, the applicant must attend to this within 15 days of receipt of the notification issued by the CTMO.



8. Partial acceptance - the applicant is free to apply to split its application within 15 days of receipt of the notification of partial acceptance by the CTMO. Currently, the applicant has only the options of abandoning the goods/services for which the application has been refused or applying to the TRAB for a review of the CTMO’s decision.



9. Opposition - the period for filing supplemental evidence is reduced from three months to 30 days after the filing of the opposition. If the opposition is filed only with respect to some of the designated goods/services, the applicant is allowed to apply to split its application within 15 days of receipt of the ground of opposition from the CTMO, hence allowing the mark to proceed to registration in respect of the goods/services not covered by the opposition. Likewise, if the CTMO issues an opposition decision refusing to register the mark only in respect of some of the goods/services, the applicant can also apply to split the application.



10. Assignment - under the draft regulations, the recordal of an assignment is no longer the duty of the assignee only. Both the assignor and assignee are jointly responsible for recording the trademark assignment. The draft regulations expressly provide that, if ownership of a mark is transferred due to succession or enforcement of a judicial decision (ie, other than by way of assignment), the transfer will be gazetted upon approval and the transfer will take effect on the date of gazettal.



11. Licence recordal - under the current practice, a trademark licence must be recorded with the CTMO within three months of signing. However, neither the law nor the rules provide for the consequences of failing to do so. In practice, the CTMO processes applications for recordal of a licence as long as they have been filed within a year of signing. In contrast, the draft regulations expressly provide that the CTMO will not process applications for recordal of a licence filed out of time; moreover, although failure to record a trademark licence does not affect its validity, it cannot be enforced against a third party acting in good faith.



12. Pledge or charge - for any pledge or charge over PRC-registered trademarks, the parties should enter into an agreement and jointly record such pledge or charge with the CTMO, which will gazette the same.
    
     
13. Cancellation for non-use - the draft regulations expressly provide four exceptions to cancellation for non-use, namely:
    1. force majeure;
    2. governmental restrictions on use;
    3. bankruptcy; and
    4. other justifications for non-use for which the mark owner is not responsible.
        
14. TRAB proceedings - a party wishing to file a case with the TRAB may be required to amend it before the TRAB accepts it, and must make the necessary amendment within 15 days of receipt of the notification from the TRAB (instead of 30 days under the current practice). Supplemental evidence at TRAB level must be filed within 30 days of the filing the application or response (instead of three months under the current practice). As in CTMO opposition proceedings, the applicant is allowed to apply to split its trademark application upon a partially successful review at the TRAB.



15. Facilitating infringement - under the old rules, intentionally mailing, concealing, or providing storage or transport for the purpose of infringing the trademark rights of others amounted to facilitating infringement. A provision concerning the ‘facilitation of infringement’ has now been included in the new Trademark Law, and the draft regulations add that the provision of premises or internet services would also fall under that provision.



16. Administrations for Industry and Commerce (AIC) administrative raids - the draft regulations elaborate on who should be considered as ‘repeat infringers’ and on the circumstances which attract more severe penalties. They also elaborate on how retailers (which had no knowledge of an infringement) can limit their liability for infringement by adducing the purchase contract entered into with the supplier, the relevant purchase invoice or the product list and payment receipt bearing the supplier’s company name. The draft regulations expressly provide that a trademark owner or its authorised representative has the duty to assist the AIC investigation and issue a verification affidavit upon examination of the suspected infringing goods (including the examiner’s name, the verification methods, the examination process and the findings). However, in the event that suspected infringing goods are found in manufacturing or processing factories and the operators cannot show proof of authorisation, no verification is required.



17. Trademark agents’ practices - the draft regulations expressly set out the qualifications required for trademark agents and trademark attorneys, and explain what would constitute an unfair interruption of the order of the trademark agent industry - namely:

• soliciting business through false promotion;
• submitting false evidence;
• concealing facts;
• knowingly accepting instructions on bad-faith matters;
• accepting instructions despite a conflict of interests;
• engaging in trademark-squatting activities either themselves or on behalf of others;
• adopting illegal means to resolve disputes; or 
• interrupt the examination of trademark cases or adjudications so as to disturb the public order or threaten public security.

At the time of writing, the Chinese authorities were still consulting various stakeholders about the proposed amendments made in the draft regulations, and further changes are expected in the coming months.

It is regrettable that the draft regulations do not explain whether there are any transitional arrangements for the new Chinese trademark regime, which was one of the key concerns for most trademark practitioners and brand owners. For example, will all pending applications, oppositions and cancellations be concluded before the effective date of the new law (ie, May 1 2014)? Will the old law or the new law apply if an opposition is filed on April 30 2014? Will the new law apply to a trademark infringement lawsuit filed before May 1 2014, but heard after the new law takes effect?

How the authorities are going to address these issues remains to be seen.

Alan Chiu, Mayer Brown JSM, Hong Kong