Trademarks in China: Traps for the Unwary

Miles & Stockbridge P.C.

Foreign brand owners can file trademark applications in China as national applications (CNAs) or International Registrations (IRs) under the Madrid Protocol. There are pros and cons to each route, and brand owners may find it difficult to decide on the filing approach. There are no easy answers to this subject, but specification coverage is always one of the key considerations as specification defines the scope of protection of a trademark registration. A better understanding of the unique classification of goods and services and examination practices in China will undoubtedly assist brand owners in making more comprehensive decisions.

China adopted the Nice Classification of Goods and Services (currently, 11th edition, version 2020), which is an international system for categorizing goods and services into appropriate classes. The China National Intellectual Property Administration (CNIPA) also developed its own unique sub-class system whereby goods and services under each Nice class are classified into sub-classes, and some sub-classes are further categorized into different groups. The sub-classes are listed out in a local standard classification manual together with the descriptions of goods and services in Chinese (“Chinese Classification Manual”).

The Chinese Classification Manual is the main reference that the CNIPA examiners rely on. Essentially, the general principles adopted by the CNIPA examiners are:

  1. goods and services in the same sub-class are deemed similar (unless otherwise specified in the Chinese Classification Manual);
  2. certain goods and services under different classes and sub-classes are regarded as similar and will be cross-searched with each other as specified in the Chinese Classification Manual;
  3. descriptions of goods and services not listed in the Chinese Classification Manual are considered non-standard; and
  4. during the substantive examination stage, an applied-for mark is typically only cross-checked against identical or similar prior mark(s) under the same sub-class or other sub-class(es), or sub-group(s) where goods and services thereof are deemed similar.

A major difference between CNAs and IRs is the treatment of non-standard descriptions of goods and services. Currently, the CNIPA administers over 13 million pending and registered trademarks. The CNIPA received over seven million applications and completed examination on over eight million applications in 2019.

With the revision of the China Trade Marks Law in 2014, the examination of applications must be completed within an average of nine months. A mechanical examination standard is a solution for the examiners who are faced with an overwhelming number of applications and the pressure to expedite the examination process, because applications with non-standard descriptions of goods/services will likely be objected. Standardized descriptions also allow examiners to categorize goods/services into the relevant sub-classes more easily and quickly, which can then facilitate substantive examination of the similarity of goods and services as determined by the sub-class(es). This mechanical approach to examination significantly raises efficiency. In 2019, the CNIPA met the goals set by the State Council, and the examination period of trademark applications further decreased to an average of around four to five months.

The examination standard of the CNIPA for IRs, insofar as specifications are concerned, is relatively more lenient than that for CNAs. The examiners of the CNIPA often exercise their discretion to accept non-standard descriptions covered by IRs. The designated goods and services will likely be accepted by the CNIPA (including non-standard ones) if they do not exceed the scope of the class covered by an IR.

However, the CNIPA does not blindly accept all non-standard descriptions covered by IRs. The CNIPA generally does not accept descriptions for retail services except those for pharmaceutical, veterinary, and sanitary preparations and medical supplies, and also forbidden descriptions, e.g., gambling services that are illegal in China, regardless of whether the application is filed locally or via IR extension.

All in all, the IR route provides leeway for brand owners to possibly cover non-standard descriptions in the specifications in China. This is particularly useful when brand owners cannot choose descriptions from the Chinese Classification Manual that specifically fit their needs for describing innovative products and technologies or particular products and services. Specific descriptions may also allow more room for a brand owner to negotiate for co-existence of marks with earlier marks and may also make it easier to prove use of a registered mark during non-use cancellation proceedings.

While the IR route has advantages, it also has drawbacks.

First, when IRs are extended to China, the examiners of the CNIPA will translate the specifications of the IRs into Chinese and assign the sub-class(es) for the designated goods and services at their sole discretion, without consulting the brand owners. This creates potential issues, such as: the choice of sub-class(es) selected by the examiners may not cover the essential ones, or the translation by the examiners may not accurately reflect the descriptions intended to be covered by the brand owners.

As goods and services categorized under different sub-classes are presumed to be dissimilar (unless specified otherwise in the Chinese Classification Manual) in China, the inappropriate classification of the specification will be detrimental to the protection of an IR in China. A brand owner may request the CNIPA to rectify any mistakes. However, the issue may not always be brought to the attention of the brand owner, especially when the IR proceeds to registration smoothly without involving any local agents who are more familiar with the classification practice in China.

Next, the specification of an IR usually will not cater to the sub-class system in China and is limited by the basic application or registration. Some basic applications/registrations may have a rather narrow specification to comply with the local practice. For example, the specifications in the United States of America tend to be specific due to the local requirement to prove use. If an IR only covers a narrow specification, it is very likely that the coverage of sub-classes under the Chinese practice will be insufficient.

Taking the Nice class heading “clothing; footwear; headgear” of Class 25 as an example, brand owners may assume that the specification will be sufficient to cover various clothing items. However, such description in China will not cover goods such as socks, gloves, ties, scarves, belts, etc., which are generally regarded as clothing items elsewhere. As the aforesaid goods are categorized under other sub-classes of Class 25, they are dissimilar to “clothing”.

The insufficient coverage of sub-classes in China may give trademark pirates an opportunity to fill the gap by filing for identical or very similar trademarks in sub-classes not covered by a brand owner’s application or registration in China. This may exclude brand owners from using their own marks on their goods and services of interest and affect their trademark enforcement rights in China.

Many countries accept trademarks in relation to retail services. However, the CNIPA currently only accepts retail services for pharmaceutical, veterinary, and sanitary preparations and medical supplies, and will reject the descriptions concerning retail services of other goods. Without express acceptance of “retail services (except for pharmaceutical, veterinary, and sanitary preparations and medical supplies)” or any clear guidelines issued by the CNIPA, it remains uncertain as to how trademarks in relation to retail services are protected in China.

If a brand owner wishes to include specific non-standard descriptions in a national application, it is possible to include a written statement explaining why such descriptions should be accepted, together with the trademark application form at the time of national filing. As examiners have the discretion to accept non-standard descriptions, written statements that help the examiner’s understanding of the non-standard descriptions can raise the chances of acceptance of such items. If a Notice of Rectification is still issued regarding the non-standard descriptions, the applicant may not need to incur further costs to persuade the examiner or may simply delete or amend the description to standard ones.

Alternatively, the brand owner may include non-standard descriptions without a written statement. If the CNIPA issues a Notice of Rectification against the non-standard descriptions, the brand owner may file a response with supporting materials to persuade the CNIPA that such descriptions should be accepted. Under the current examination practices, the CNIPA only allows applicants to amend the specification of goods and services once. If the objectionable description(s) is not amended to acceptable or standard description(s), or deleted, the entire application will be rejected.

So, what is the best practice; the use of CNAs or IRs? It is advisable to file trademark applications for key marks via national filings and include as many sub-classes as possible for broader protection. This can deter bad faith filers or squatters from filing identical or very similar trademarks in sub-classes that are not covered by a brand owner’s applications. This would lead one to file under the CNA process.

It is recommended to include only standard descriptions from the current version of the Chinese Classification Manual in trademark applications in China. Thus, there must be coordination with the local Chinese counsel to assure success with this approach. By taking the time up front, one can avoid objections to non-standard descriptions, which will incur additional costs and cause delays to registration.

If a brand owner would like to cover non-standard descriptions in a trademark application, the brand owner may file an IR designating China, as the chances of receiving an objection against non-standard descriptions is generally lower.

If a brand owner intends to cover non-standard descriptions in a national trademark application in China, it is advisable to also include standard descriptions that are general enough to also cover the non-standard descriptions. In this case, the applicant can feel more comfortable deleting the objected non-standard descriptions or amending them to standard ones, knowing that there are general descriptions that may arguably cover the objected descriptions.

IRs designating China usually face the issue of insufficient coverage of sub-classes. It is advisable to review the protection of IRs in China and assess whether additional direct filing in China is necessary for protection and/or defensive purposes.

If a brand owner would like to cover retail services (except for pharmaceutical, veterinary, and sanitary preparations and medical supplies) for a trade mark, it is advisable to include services such as “sales promotion for others” and “provision of an online marketplace for buyers and sellers of goods and services,” as well as goods for which the mark is marketed. This may offer interim protection or grounds for enforcement in China before the CNIPA officially accepts retail services.

The key take-away is that merely relying on the description of goods/services in your U.S. Application will likely lead to a different scope of coverage in China. By being proactive on this issue, one can duplicate the scope of coverage regardless of whether the brand owner uses a CNA or IR. Merely blindly filing the same goods/services provided in a U.S. application may result in unexpected results in coverage.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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