Legislation & Policy

PRC Trademarks: Consent Letters

SIPS Knowledge, Legislation and Policy

When handling appeals of rejected applications, administrative authorities and the courts in China have until recently accepted consent letters as persuasive evidence, provided that the word marks at issue are not identical or substantially identical. This practice seems in part to have demonstrated a respect for the views of the affected parties and also been a practical approach to responding to the reality of an increasingly crowded register.

However, recent decisions from Chinese authorities have suggested that policies regarding consents are now in flux, and the chances they will be accepted – particularly in first instance appeals before the Trademark Review and Adjudication Department (TRAD) of the China National IP Administration (CNIPA) – will be lower. As such, trademark applicants are advised that there is a greater likelihood that their cases will need to be appealed to the Beijing IP Court (BIPC) – thus leading to greater cost and delays in registration.

Background

There is no reference to consent letters in the PRC Trademark Law or its implementing rules.

However, they have routinely been considered as supporting evidence over the years, a practice recognized in a set of guidelines issued by the Beijing Higher People’s Court (BHPC) in 2019. Articles 15.10 and 15.12 of the Trial Guidelines for Administrative Cases Involving the Granting and Verification of Trademark Rights state:

When judging whether the Applied-for Mark and the Cited Mark are similar, coexistence agreement may be used as prima facie evidence precluding confusion. (15.10)

If the Applied-for Mark and the Cited Mark are identical or basically identical, and they are used on the same or similar goods, then the application for the Applied-for Mark cannot be approved merely based on a coexistence agreement. If the Applied-for Mark and the Cited Mark are similar and they are used on the same or similar goods, then if cited mark owner provides a coexistence agreement, and there is no other evidence to prove that coexistence of the Applied-for Mark and the Cited Mark will cause the relevant public to be confused as to the source of the goods, it may be determined that the Applied-for Mark and the Cited Mark are not similar marks. (15.12)

In December 2016, the Supreme Court of China (SPC) issued a decision suggesting an even more relaxed standard for assessing similarity and confusion in a retrial involving an appeal of Google’s application for the mark “NEXUS” where the cited mark – owned by Shimano of Japan – was identical.

While the NEXUS case has been considered an outlier and authorities only rarely allowed identical marks covering conflicting goods to coexist, the TRAD has until recently accepted consents in application-appeals where the differences between the marks are quite minor, e.g., where they differ by only one letter.

Recent Developments

While no formal regulations or notices have been issued, the TRAD has signaled that, starting September 2021, it will conduct a more stringent review of consents, and allow them only where the more pronounced differences between the marks and the case have been the subject of a formal review by the relevant TRAD adjudication panel.

Exactly how these changes will impact on consent practice remains unclear for now. But recent decisions by the TRAD and the BHPC in application-appeal cases clearly suggest that both the TRAD and the courts mean business. To illustrate:

  • On September 15, 2021, the TRAD issued a decision rejecting an appeal filed by a SIPS client on the basis of a consent where the marks concerned differed by one letter, the marks themselves were not highly distinctive and the parties operated in substantially different industries.
  • On August 31, 2021, the BHPC rejected a consent filed by the applicant, Volkswagen, in relation to the mark “TAYRON” for vehicles following a rejection based on a citation of the mark “TYRON” (identical but for the additional A). The consent was issued by Tyron Runflat, Inc., which uses “TYRON” in relation to tire-related products. In this case, the BHPC ruled that the possibility of public confusion cannot be excluded.

Consents can however still be useful where the marks contain other significant differences. To illustrate, on September 10, 2021, the BHPC issued a decision accepting a consent where the applicant had filed for the plain-letter mark “DYNAMICS 365” while the cited mark included other non-distinctive words – “DYNAMIC SOLAR SYSTEMS” in a stylized format:

  vs.  

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SIPS will continue monitoring decisions of the TRAD, BIPC and BHPC and update in due course.