The 2020 trends to protect your success in china

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The year 2020 is synonymous with many challenges experienced by every nation around the world. They shaped a new way of managing our businesses and ensuring greater security for our assets for the future. 

Outlined below are some of the key trademarks and design trends we're seeing more demand for, and those essential for businesses to consider when protecting your interests and growth plans in China. 

Register your right!
Obtaining a valid trademark in China in general, requires registration with the Chinese trademark office situated inside the China National Intellectual Property Administration. Unregistered rights or rights only registered abroad will not be protected unless they qualify as a well-known trademark inside China. This is a highly sought-after status and is difficult to achieve, especially for foreign brands.

Applicable laws and regulations
Trademarks, filing procedure, oppositions and in validations, and non-use cancellations for example, are governed by the Chinese Trademark Law (most recently revised in 2019) together with related implementing regulations and a host of administrative rules issued by the Chinese Trademark Office, Trademark Review and Adjudication Board TRAB inside the CNIPA. The Beijing Higher People’s Court has issued further judicial guidelines which impact the practice on the level of applicants and the Chinese trademark registration administration.

IR trademark or national application?
Trademark application numbers in China have ranked number one globally for many years. In 2019 applications filed nationally reached more than 7 million. China uses its own system for classification of goods and services, which can in some cases cause problems for international applications relying on the IR trademark application system and the related Nice Classification only. Filing fees for national applications have also been significantly lowered, making filing through the national route now quite competitive.

The trademark application system in a nutshell
The registration system has been significantly revamped and sped up in recent years. Trademarks can be granted as quickly as five to six months, with the general trend pointing towards even faster processing time. The application and registration process follows a two-step procedure. Firstly, an application is filed and upon acceptance will be reviewed, preliminarily approved and published in the Chinese Trademark Gazette. If no opposition is raised within three months of publication, the application if finally registered and re-announced as a registered mark in the Chinese Trademark Gazette. 

Substantive review
All applications are substantially reviewed by examiners for absolute and relative grounds of rejection. This means the office will not only object to applications which claim non-protectable subject matter, but also look at pre-existing rights of third parties which may block registration. Given the increasing number of registered rights, we would advise a pre-screening on whether an envisaged trademark is available.

Multiclass filing
China does allow multiclass filing. However, in practice, advantages of the multiclass applications are limited and need to be carefully assessed in advance if intended by an applicant. To date, a class-by-class application is still the preferred option for applicants. Especially since fees are at the same level as multi-class filings.

Following preliminary publication, under the Chinese Trademark Law certain third parties have the right to oppose final registration within a three-month period, from the date of publication. If an opposition is raised, the application will not proceed to registration. It would have to enter a separate process for decision on the opposition, and in effect delay registration.

If an opposition is rejected by the Chinese Trademark Office, an application will be registered. Third party right owners and interested parties will still have the right to apply for invalidation within five years from the date of registration. We've seen some exceptions for the five-year time limit exist for applications filed in bad faith and owners of well-known trademarks. 

Non-use cancellations
The Chinese Trademark Law requires actual use of a registered mark within a period of three years from the date of registration. Given the large number of trademark registrations, applications for cancellation due to non-use have risen in importance, and are part of the strategic arsenal of right owners to defend against free riding applications which may block filing for further marks in China. On the other hand, foreign applicants also need to consider the possibility of such applications and must take commensurate measures to preserve valid and acceptable proof of own use in China.

Historically, the Chinese Trademark Office was a separate entity from the State IP Office SIPO and administered by the State Administration of Industry and Commerce SAIC, now renamed and restructured into the State Administration of Market Regulation SAMR. 

Previously, most procedures and decisions of the CTMO could be challenged at the level of the administration in a two-step procedure before being appealed to Chinese courts. This process has been recently amended in terms of oppositions and now may lead more directly to an appeal to court. Decisions by the CTMO/TRAB are appealable in the first instance to the Beijing IP Court, and in second instance to the Beijing Higher People’s Court. Case numbers at courts have strongly risen and backlogs are frequent when looking at appeals and the timing of a final decision.

Filing strategy: Chinese language brands
Foreign applicants are well advised to consider registering their own international brand, and also the Chinese name or transliteration as Chinese character brand. Increasingly, Chinese names and brands gain importance among Chinese consumers, and in daily communication and use are often more relied on than the original foreign trademark. Brand owners are well advised to secure their signs, logos and names used for their online presence and to protect their specific indicators on social media platforms.

Copyright registration
Having just been revised this year in 2020, Chinese Copyright Law, related implementing regulations, and administrative rules and regulations allow registration of Chinese copyright with the China Copyright Protection Centre in Beijing. 

Different from trademarks, copyright registration does not need to be extended after 10 years and provides strong prima facie evidence on ownership for copyright. Registrable works can include pictures, texts, graphic designs, videos, artwork, and also software and all other types of works which qualify for protection under the Chinese copyright law.

Use of copyright to protect the integrity of your own brand and to oppose conflicting third-party applications is a very useful tool and should be seriously considered by right owners in addition to trademark registration in China.

Company names and trademarks
Right owners should also consider how to protect their company name in case of market entry into China. Ideally, company name and trademarks are mainly identical and enables owners to use the trademark to defend against free riding company names. On the other hand, earlier registered company names usually can claim a right to coexist, or in some cases may even be used to oppose trademark application. 

In practice, protection of company names without trademark protection is significantly more difficult. When filing for trademark protection, the overall strategy and branding situation for China should be considered in advance to exclude related problems from the very outset.

Geographical indications
China also offers a system of collective or certification marks for goods qualifying as geographical indications in their home country or region. While such process is more complicated, slower and more costly than a normal trademark application, recent enforcement efforts for these types of trademarks in the Chinese market show an increase in value of such more specialised type of rights.

Utilization of trademarks: assignment and licensing
Trademark assignment follows a special set of rules in China and may require not only an individual assignment, but concurrently the transfer of further identical or confusingly similar rights for identical or confusingly similar goods and services to allow assignment. Different to many jurisdictions, registration with the Chinese Trademark Office is a requirement for such assignment to enter legally into effect. In licensing, registration with the Chinese Trademark Office may greatly facilitate enforcement efforts later on.

Customs and IP protection
Trademark owners are entitled to register their granted trademark with China Customs to have incoming and outgoing goods held by customs, checked and seized in case of infringement. Implementation requires some additional information for customs and the ability to interact quickly with authorities. It is a highly efficient mechanism that needs to be harmonised with a right owner’s own licensees and legitimate trademark users inside the country to make it work. Proper planning and management can greatly help to increase the level of protection through this additional option.

For further information on any of these trends and legal considerations, please contact us