Falling foul of China’s trademark system

The dangers of international trademark applications in China

China's Trademark System

Fashion brand owners entering China are generally well aware of the myriad of brand protection challenges awaiting them. One such challenge is China’s rigid first-to-file trademark system, which is blamed for the problem of brand piracy in China, where unrelated third parties register trademarks which are copies or imitations of well-known brands. One of the most effective ways to combat this scourge is for the brand owner to register first in China.

The question is: how? A brand owner can choose either to file a national Chinese trademark application with the Chinese Trademark Office (CTMO) or an international registration (IR) through the World Intellectual Property Organization, designating China. The IR option is sometimes perceived to be more attractive because it is easy to use, cheaper than a national Chinese trademark application and eliminates the need to engage a local Chinese law firm.

Yet, in our experience, these short-term apparent benefits are often offset by inconvenience and additional cost at a later stage. Worse still, use of IRs can often result in gaps in protection, defeating one of the key purposes of registering in China – namely, protection from brand pirates. Why can filing an IR in China be so dangerous?

No pre-clearance searches

In our experience, brand owners who file IRs rarely undertake pre-clearance searches in China. Pre-clearance searches provide brand owners with an alert about the risks of infringement raised by the use of their mark. Such searches are especially crucial in China because of the unique complexities of its trademark examination system.

First, in China, the consent of an existing registered trademark owner is not guaranteed to overcome a block, because the CTMO may still refuse the application if it considers that confusion is likely. Thus the options available for overcoming a citation are more limited. Second, alternative methods to overcome a block, like non-use cancellation proceedings, are time-consuming in China. The CTMO will often refuse applications to stay the prosecution proceedings pending the outcome of other proceedings; thus, non-use cancellation actions or invalidations must be filed as soon as possible. Pre-clearance searches help brand owners “front load” these problems, thereby facilitating clearance of such conflicts.

China’s trademark classification system

China has a unique system of trademark classification. Unlike most Western trademark classification systems, each Chinese class is divided further into a number of different sub-classes, each of which contain a list of “standard items” of goods and services.

When examining a trademark application, CTMO generally only cross checks an application against pre-existing identical or similar registered trademarks in identical sub-classes, but not in other sub-classes. If a mark is only registered in one sub-class within a class (e.g. clothing), a pirate could successfully register an identical or similar mark for similar goods in a different sub-class, within that same class (e.g. shoes).

Yet, despite this, our experience is that IRs are rarely drafted to take account of the Chinese system of sub-classification. This can lead to the following serious consequences.

First, it can significantly delay prosecution of the IR in China. CTMO examiners have wide discretion to reject registration of “non-standard items” within a specification (both national PRC applications and IRs), resulting in the need for rebuttal and/or specification amendment. This delays the grant of a trademark and increases the costs of the prosecution.

Second, it can result in deficiencies in brand protection, making enforcement difficult and rendering the trademark vulnerable to piracy. As IRs are rarely drafted using standard items of goods and services, CTMO examiners will allocate each good and service in the IR into the sub-class they deem the most appropriate. It is the examiners who make the choice of subclass in which to allocate a good or service. This can result in a trademark with perforated protection, with no coverage over essential but missed sub-classes, which brand pirates can fill by legitimately registering an identical trademark.

Whilst it is possible to avoid this by drafting an IR specification using only items of goods and services which are standard in China, brand owners rarely wish to do this because it will alter the IR specification in all other countries, producing a specification which may appear strange from a Western perspective.

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