[authors: Yu Gao and Xinyah Liu]
- Existing Problems
The number of existing valid registered trademarks in China is large, and the annual number of trademark applications is also large, which makes it difficult for enterprises to successfully register trademarks. According to the 2022 annual report of the China National Intellectual Property Administration (hereinafter referred to as the “CNIPA”), the preliminary approval rate of trademark applications is only 52%. In other words, about half of all trademark applications will be rejected or partially rejected. In refusal notifications, trademark applications often encounter obstacles of the prior trademarks. Among these prior trademarks, there are many registered but non-used trademarks, and the applicant needs to clear the obstacles by filing an application for cancellation against the registered trademark based on three consecutive years of non-use (hereinafter referred to as the “non-use cancellation action”) so as to enable its trademark application to smoothly proceed to registration.
Since there is an uncertainty about which prior trademarks are cited in the trademark similarity examination, the applicant can only accurately determine the obstacles to its application after receiving the refusal notification. In order to reduce uncertainty and retain an earlier filing date, applicants often choose to file a refusal review while filing a non-use cancellation action against the unused prior trademark cited in the refusal notification at the same time. However, in practice, the average trial period for trademark refusal review is approximately 6-8 months in recent years, while the examination of a non-use cancellation action usually takes approximately 7-9 months or even longer. In other words, the examination period for the non-use cancellation action application is usually longer than that for the refusal review. Moreover, even if the cited trademark is successfully cancelled in the non-use cancellation action, it usually takes approximately 2-3 months for the decision to be published in the trademark gazette, and thus ultimately becomes invalid. Pursuant to the requirements of the examination time limit and the pursuit of the goal of shortening the examination period, the CNIPA often makes a refusal review decision directly in the review without waiting for the result of the non-use cancellation action against the cited mark. After receiving an unfavorable decision of refusal review, the applicant can only apply file an administrative litigation for relief, so as to continue to wait for the decision of non-use cancellation action against the cited mark to be made and take effect in the litigation procedure. However, the cost of litigation is usually much higher than the cost of trademark application. In order to control costs, a lot of applicants choose to re-file their applications after receiving an unfavorable decision on refusal review. However, at this time, new obstacles may arise in the re-filed application, leading to a further increase in new uncertainties. In the meanwhile, repeated re-filed applications not only waste a lot of administrative and judicial trial resources, but also increase the burden on applicants, and continuously push up the number of trademark applications in China every year.
- Reform Trends
- 2023 Draft Amendment to the Trademark Law (Draft for Comments) by the CNIPA
Faced with this situation, the CNIPA released the Draft Amendment to the Trademark Law of the People’s Republic of China (Draft for Comments) (hereinafter referred to as the ”2023 Draft for Comments”) on January 13, 2023, in which Article 42.1 explicitly stipulates the circumstances for “suspension of proceedings”.
Article 42 【Suspension of Proceedings】In the process of trademark examination and review by the intellectual property administration authorities under the State Council, where the determination of prior rights involved in the case must be made on the basis of the outcome of another case being heard by the people’s court or being handled by the administrative organ, the examination or review may be suspended. After the reasons for suspension are eliminated, the examination or review procedures shall be promptly resumed.
The above provisions preliminarily stipulate that the examination or review may be suspended during the process. After the reasons for the suspension are eliminated, the examination or review review procedures shall be promptly resumed. The draft amendment is subject to further consideration and has not yet been formally implemented.
- Interpretation of the Specification for the Circumstances for Suspension of Review and Adjudication Cases by the CNIPA
On June 13, 2023, the Trademark Office of the CNIPA issued an Interpretation of the Specification for the Circumstances for Suspension of Review and Adjudication Cases (hereinafter referred to as “the Interpretation”). The Interpretation lists ten (10) types of circumstances for suspension, including seven (7) circumstances that should explicitly be suspended and three (3) circumstances that may be suspended depending on the specific circumstances of the case. The applications for the ten (10) circumstances to the refusal review are summarized as follows.
In the Interpretation issued by the Trademark Office of the CNIPA, it is clearly stated that, “The suspension of trial must meet the aforementioned principle of necessity. That is, the trial will only be suspended in the circumstances such as the determination of prior rights involved in the trial of the case have a substantial impact on the outcome of the trial; If other reasons for review or other prior trademark(s) with certain right status is sufficient to determine the conclusion of the case, the trial shall not be suspended.”
Then, in a refusal review, if the status of the cited trademark is unstable only due to the non-use cancellation action against the cited trademark, does it fall within the scope that should be suspended? The author believes that if the cited trademark(s) against which the non-use cancellation action(s) is/are filed is/are indeed all the obstacle(s) to the application, and the cited trademark(s) has/have indeed not been used, then in the practice of review and adjudication, if the applicant voluntarily files a request for suspension, No. 7 listed in the above table, i.e. “the status of the cited trademark is unstable” can be applied to suspend the trial of the case.
However, due to the relatively short promulgation time of the above-mentioned specification, whether a refusal review with the cited trademark under non-use cancellation can be suspended is awaiting a further test by practice.
- Changes in the Pre-registration Period for Filing Administrative Litigation for Trademark Right Confirmation Disputes
In order to effectively avoid idling case procedures and reduce the burden of litigation for the parties, the Beijing Intellectual Property Court recently reformed the case pre-registration system for trademark administrative litigation cases regarding trademark refusal review. For administrative litigation for trademark refusal review where the status of the cited trademark is unstable, the court extended the pre-registration period at the pre-registration stage.
An application for pre-registration due to the unstable status of the cited trademark means that the cited trademark(s) is/are already in an unstable state before the decision in dispute is made, and the final conclusion of the cited trademark(s) is/are sufficient to have a substantial impact on the trial of the case. When applying, prima facie evidence of the unstable status of the cited trademark shall be submitted together with an explanation of the possible impact of its status on the conclusion of the case.
In this case, the pre-registration period for administrative litigation cases is 12 months. Details are as follows.
(1) If the plaintiff applies for pre-registration only because it is a foreign, Hong Kong, Macao or Taiwan entity, the pre-registration period is three (3) months, and it can be extended from the date of the pre-registration application, and the cumulative extension generally does not exceed three (3) months.
(2) If an application for pre-registration is made only due to the unstable status of the cited trademark, the pre-registration period is twelve (12) months from the date of the pre-registration application, and it cannot be extended.
(3) If the plaintiff applies for pre-registration because it is a foreign, Hong Kong, Macao or Taiwan entity, and the status of the cited trademark is unstable, the pre-registration period is twelve (12) months from the date of the pre-registration application, and it cannot be extended.
Before the promulgation of this provision, if the plaintiff was not a foreign, Hong Kong, Macao or Taiwan entity, it could not enjoy any pre-registration period, and the administrative litigation procedure for trademark refusal review usually went through a speedy trial, where a judgment could be rendered within a few months. After the implementation of the above provisions, the plaintiff is entitled to a pre-registration period of 12 months if it encounters uncertainties about the status of the cited trademark(s). During this period, a change in the status of the cited trademark(s) may trigger a change of circumstances, thereby facilitating the plaintiff's right relief.
It can be seen that in the case of refusal review where a non-use cancellation action(s) has/have been filed against the cited trademark(s), the change in the pre-registration stage of the trademark administrative litigation also gives the plaintiff more time to wait for the trial of the non-use cancellation action against the cited trademark(s).
In order to solve the problems of “procedural idling” in reality, the CNIPA has made some new provisions in the review procedure of trademark refusal review, and so has the Beijing Intellectual Property Court in the pre-registration system for administrative litigation. These new provisions allow applicants (plaintiffs) to obtain more time in administrative litigation proceedings for refusal review to wait for changes in the status of the cited trademark.