Q & A - Chinese trademarks demystified
In this blog we are presenting the Q&A section of our extremely popular webinar ' 3 Keys to the Emperor's Kingdom - Chinese Trademarks Demystified'. The questions have been answered by our two guest speakers: Amy Hsiao, partner at Swanson & Bratschun and Joan Zhang, Senior Counsel at Lenovo US Inc.
Can you prevent an infringer from registering a mark in the same class but different subclass on the grounds of the “likelihood of confusion”?
Joan: It comes down to the well-known trademark or priority rights. If your trademark is registered in the class under certain subclasses, and the subclass(es) of the registration by the infringer is not relevant to your subclasses, and if you have no other priority rights, you have no right to prevent registration. That is why Amy was suggesting to cover all subclasses.
Then it depends on how much reputation you have, the fame of your trademark. If you can prove that you have a high reputation and/or that the subclasses are relevant directly or indirectly i.e. overlapping consumers, sales channels, etc. you may have the chance.
Amy: As Joan pointed out, cross subclass protection is very difficult in China, unless you have well-known recognition in China or something. However, some of the subclasses will be deemed formally related. For example - smart watches. A lot of clients are really interested in smart watches, and they fall under two classes in China – Class 9 subclass 01 and Class 14 subclass 04 – in that category sometimes the authority will say ok these two are related. You don’t need to have well-known recognition, it will protect them anyway.
What strategies do you recommend to cover multiple subclasses (or all subclasses within a class) without subjecting the registration to non-use cancellation after 3 years?
Amy: There are a lot of strategies in China, but what we are doing really all boils down to cost. For regular brands like most of our listeners are working with will cover 3-5 classes. Bear in mind the most important thing is: when you file in China you can cover 1 subclass, all subclasses or just the most important ones and the official fee will be the same.
Maybe there will be a non-use cancellation action filed or something. People will ask this question when it is tied to the US, because there is always the question of use of the trademark. Sometimes for key marks in China, we refile every three years, especially for the most important subclasses. Sometimes will do use evidence, sometimes we will even do us promotion or advertisement right outside the China TM office. This is the very nuanced thing – the use requirement, the threshold for use is much higher in the US than in China.
How do new inventions get translated into the existing subclasses? Is there a translation into the standard descriptions that is so far from the actual product that the eventual registration could not be read to cover the actual goods? How does the PTO handle this?
Amy: Usually, what most western brands do is a WIPO or IR extension, but I do not recommend that. When you go via WIPO in China, you basically let go of the control of how your goods & services are translated, and they decide your subclasses.
What is important is not the per say translation. It is the subclass(es).
Use the smart watch example – before you go into China, we would not just go with “smart watch tailored for sports, fitness, heart rates, etc.”. That is a Western description. In China, we would start by asked what would smart watches fall under, then pick the subclass and then pick the standard description. There is a book for that. Pick the subclass, then pick the description.
Joan: Just one comment to add. The examination by the China TM officers can be very stubborn. They look at the specific description, which is the standard description. The China Trademark Office has been open to accept newly developed products because their classification is out of date. They have started to accept these newly developed products that are not part of the standard descriptions. You might want to give it a try. You have one chance to submit with a non-standard description. If the officer rejects and asks you to come back, then you might want to change it. This is important because when you want to sell your product in an online store, the online store will sometimes ask for a TMRC from you. They will look at the description on your certificate. If you do not say i.e. wearable on the China TM description, then the online store might reject your project to be listed. You might want to try to include the specific description in the certificate to facilitate your future online business.
Is there a reason to sue in China? How often are companies protect their rights in a court in China? Is this common? Is it worth it?
Joan: That’s a good question. In the past, western companies have been reluctant to sue in China because the damages are too low and because you cannot get anything from the infringer, and the infringer just changes their name and comes back again with another one, etc.
But I think the situation has changed a lot. First of all – the New Balance case that Amy talked about there has created a change. Damages for TM infringement have been greatly increased, so that could be very threatening to a lot of infringers. That is the main reason western companies have started to look at litigation. Also, as we know from the marketplaces, the infringers have their own “WeChat” group or circle, where they share their latest news on trademark enforcement. Let’s say New Balance sues an infringer or company from an online store, one of the infringers will post this news to all the infringers that New Balance is going after them, then all of them will know and they will start to pay attention.
I think that can be a very useful weapon, to send the message to the infringers. Not to mention the legal environment has greatly improved in China.
What is the best tactic for clearing a mark for use in China--i.e. if same mark already exists in the IC, is it safer to rule name candidate out? Or better to consider the description and/or subclass to determine if marks can co-exist in the same class?
Amy: I think this is a very interesting topic. Many western companies are very frustrated with search and clearance subpoenas in China. The really important thing in China is the refusal rate right now is way higher. It is very, very difficult to 100% clear a mark. As a result, we change the strategy. What we are trying to clear is not absolutely every subclass. What we are trying to clear is the key subclass. For computers, Class 09 subclass 01, you will focus on that specific subclass. You do not want to try to clear all 24 subclasses. You ask the client what is the mark for and you clear that specific product for that. When you generate the search results, that might be 200 marks but only 10 marks that focus on that specific subclass.
The sub-question becomes: what do you do when you come across an exact mark? Here is when a non-use cancellation comes into play. It is a very effective tool to remove obstacles, because that is one of the best ways. China does allow default judgement. Most companies do not respond, so that is an effective way to do with that.
One special note: when you do search and clearance, it is very difficult and different in China. You do ABC, BCA, CBA, etc. 6 different combinations, then you try to see if there is a Chinese character mark, then you try to see if there are characters that are phonetically conceptually different but look alike or sound alike. I do not usually do a western search, I go straight to the Chinese central system and search it that way.
Joan: I totally agree with Amy has recommended. That is a key principle to doing trademark clearance in China.
It is really a problem due to the huge volume of new applications. The China Trademark Office has just recruited over 2,000 examiners last year to come up with the examination requirements. Because the officers are pretty new to this field, sometimes there can be some inconsistency with examination criteria. Technically you cannot clear every TM but here are some suggestions:
- Always have a backup name
- You can try to lock your mark up with TMs that have more distinctiveness.
- Even if you are rejected in a filing, you might want to appeal. You will have the chance to reverse the decision
- Keep your evidences of use to prove to the examiner in the appeal case that your mark has been used widely and you have gained high reputation in order to weight your case.
In the filing stage, the examiner does not look at your use evidences at all. You always have a second chance at the appeal stage.
Does the likelihood of confusion factor into this at all?
Joan: It really depends on the cited trademark and the subclasses. It is a really hard question to answer at this stage.
Question: Is it worth appealing if you have good evidence? Is the “game” changing in China?
Joan: Yes, in fact Lenovo has several trademarks that were rejected at the filing stages. In order to prove our trademark is not similar to the cited trademarks or we have used it and gained fame, we have eventually registered the trademark after the appeal.
Amy: Even us, even me, a Chinese person practicing in this field, a lot of times the citation will come and we will be like “why is this similar”? I read Chinese and I do not think the two marks look similar. But this is because we are dealing with a large number. As Joan mentioned, there are a lot of new examiners, these are fresh college graduates, they do not have experience and they are under very strict timelines. Right now the rule of thumb is to kick it up to people upstairs to review. This is why there are a lot of refusals.
Don’t give up a mark because there are senior similar marks cited. That is expected. You just need to tailor your filing strategy. Sometimes it might be an IR because you may have a better chance of getting it through, because it goes through a different office.
Is it required or recommended to do a customs recordal in China to stop potential export of infringing products?
Joan: it is not required to do this, but we do find that if customs officers seize the goods, they will detain temporarily detain the goods when they realize that the goods are bearing a famous trademark, and they will inform the owner even if you have not done a customs recordal. You might want to consider doing a customs recordation though, because it is a very efficient system. But it is not mandatory.
Amy: It is not required for my line of practice unless it is a house mark or something easily recognizable. These are customs officials, they are not going to analyse the law. They want something easy and fast, where they can grab it and cease goods on the spot. I usually record logos.
Bear in mind recordals are very expensive. I usually would do China and Hong Kong. It is very expensive, most clients do not like the costs. Effectiveness for me – is that is not too effective, because only about 2% of goods will be seized (statistic is about 2 years old). Granted, 2% of outbound shipment from China is huge. But still there is just the 2% so you need to consider all of these factors. And you need to constantly update the list of authorized users to ensure legitimate goods are not seized.