In our Insider’s Guide Part I, we shared best practice tips regarding prosecuting trademarks in China. In Part II we will discuss the appeals process, focusing on two common actions: trademark application appeals and non-use cancellations. We will also provide a few practice points on the formalities of court appeals, in particular, in relation to documentation requirements, a vexing topic of late for many foreign brand owners.
But first things first: since the last article was published, there have been some major developments in China IP that affect the entire trademark landscape here:
- Revisions to Trademark Law – on April 23, the Tenth Session of the Standing Committee of the 13th National People’s Congress passed significant revisions to the PRC Trademark Law, which will go into effect starting from November 1. This was done without any notice and comment period for the adopted changes. Among other things, the revisions should make it easier for the Trademark Office to reject applications during the examination process incidental to examination, rather than through oppositions or in the context of invalidations. It also increases the maximum statutory damages that may be awarded in cases of malicious infringement.
We will be devoting an entire article to the amendments of the law and their likely impact on trademark practice in China in a subsequent article (see: The Impact of China’s New Trademark Law Amendments).
- Reorganization of TMO/TRAB – as of April 1, 2019, the PRC Trademark and Patent offices are now part of a new, larger umbrella organization, the China National Intellectual Property Administration (CNIPA). For the time being, it appears that the PRC Trademark Office (or “TMO”) will retain its name and acronym. The Trademark Review and Adjudication Board (or “TRAB”), however, which hears appeals of TMO decisions and is the first-instance body for invalidation actions, has been renamed the Trademark Review and Adjudication Department (“TRAD”).The overall effects of the reorganization remain to be seen, but it is hoped the reorganization will lead to improvements in the process, including greater transparency and accelerated review of cases.
- Improving processing times and numbers – in relation to timelines for review, there is some good news to report here, too: consistent with plans announced in 2018, the TRAD has also decreased processing times for a range of trademark prosecution matters. The below list indicates current expected time lines for appeals filed with the TRAD, typically the cases that have taken longest for review decisions to issue:
|Decisions by TRAD in appeals of rejected applications||7 to 8 months|
|Non-use cancellation appeal decisions||9 to 11 months|
|Decisions by TRAD in invalidations||11 months|
Trademark Appeals in China
Not unlike many other jurisdictions, the appeals process in China occasions much uncertainty. Given that, this article will lay out a number of tried-and-true approaches in the appellate sphere that will hopefully minimize risks of refusal.
First, however, a bit of background on the PRC’s trademark appellate process. In China, if an application for a trademark has been rejected, the applicant has the option of filing one or more appeals, including to the TRAD as a first step. If the TRAD action fails, an appeal can be sought with the Beijing Intellectual Property Court (BJIPC), and then, to the Beijing Higher People’s Court. The court of final recourse is the Supreme People’s Court.
Few trade mark cases are heard at this highest level. In that regard, we note that in 2018, the TRAD heard nearly 180,000 appeals of application refusals, 23,000 invalidation appeals, and over 6,000 appeals of non-use cancellations, bringing the total number of cases to nearly 215,000. In that same year, only 8,700 First Instance court cases were filed. Supreme People’s Court filings numbered a mere 340.
Much of this is likely down to the costs involved in pursuing court appeals for trademark decisions. To avoid incurring those expenses, many brand owners opt to forego them in favour of other remedies, such as refiling the application or simply not using the mark. This puts extra pressure on trademark owners to either refile, in a timely fashion, or put all their resources into defeating prior marks on the registry before it becomes necessary to file a court appeal.
1. Procedure – Appealing with the TRAD
The three primary types of TRAD appeals include:
(1) rejections of applications, normally due to prior marks on the registry;
(2) reviews of unfavourable non-use cancellation decisions;
(3) oppositions, where the mark’s applicant has lost.
Note: only the applicant of the opposed mark is allowed to appeal TMO decisions upholding the opposition. In cases where the opposition is rejected, the opposing party is NOT allowed to appeal the TMO’s adverse decision, meaning the opposed application automatically moves on to gazettal and eventual registration from there.
In any of the above cases, appeals of these TMO decisions must be lodged with the TRAD within 15 days of issuance of the decision. However, the CNIPA recently implemented an electronic filing system for trade mark applications, where the deadline for appeals of rejected marks is extended to 30 days when the initial trademark filing was completed electronically. A period of 30 days is also allowed when the refusal relates to an International Registration.
It typically takes around 3-4 months for the TRAD to accept an appeal after it has been filed.
In the case of non-use cancellation appeals, the TRAD first forwards the use evidence (if any) filed by the mark’s registrant during the initial proceedings to the party applying to cancel the trademark (“Cancelling Party”). Note that this use evidence is NOT provided to the Cancelling Party at the TMO stage, meaning filing a TRAD appeal is the only way to examine the registrant’s evidence to determine if it might be fraudulent.
At that point, any response filed by the Cancelling Party will be forwarded to the mark’s registrant to allow them to file a rebuttal.
Timing of Actions against Blocking Marks
A key additional point to note in relation to trademark application refusals, and actions taken to clear the path for those marks, such as non-use cancellations or invalidation decisions: The TRAD is generally unwilling to suspend its review of refusal appeals pending the outcome of linked cases against blocking marks. The only exception is where such actions were filed BEFORE the application date of the refused mark. Given the massive number of appeals each year, it is suspected that the TRAD’s primary motivation here is to keep its docket as clear as possible, where suspensions granted to await outcomes in actions that can, via appeals, drag on for years are inimical to this.
This makes pre-filing clearance searches on the PRC trademark register to identify potential blocking marks – and the taking of actions against those potentially blocking marks – a key point of consideration. This is as opposed to past practice, where PRC practitioners were more inclined to suggest foregoing pre-clearance searches, particularly where clients were keen to save up-front costs.
Decisions in non-use cancellations, application appeal rejection decisions and invalidation decisions can be appealed to the BJIPC.
2. Evidence in TRAD Actions
In the case of TRAD appeals, careful consideration should be given to the nature of the evidence used, the purpose the evidence is intended to serve, and any potential formality and/or language requirements that may drive both the means used to collect the evidence, as well as the form in which it can or should be presented to the TRAD.
Evidence of PRC Use or of Fame in China
In the case of non-use cancellation applications against a foreign-brand owner’s mark, evidence of use in China is obviously key. This is also true where the brand owner must prove the reputation of their mark in China (such as part of an invalidation filed with the TRAD or an opposition filed with the TMO). In either case, such evidence may include any of the following:
- Distribution agreements, invoices, sales receipts etc. in relation to sales of the products;
- Manufacturing agreements in relation to production and export of the products;
- Agreements related to advertising services in relation to the products;
- Media reports in relation to the brand;
- Materials showing use of the mark at exhibitions or trade fairs;
- Materials showing awards and honors received by the company’s products;
- Registration certificates for marks in China and other jurisdictions;
- Copyright in the logo in and outside of China.
If the owner of the mark in question has not made any real use of the mark in China, evidence showing use in other countries can always be submitted, though it must be noted that such evidence is quite likely to be ignored by the TMO/TRAD as extraneous. As well, any evidence not in Chinese must also be translated into that language.
To be on the safe side, particularly if there is any chance that a court appeal might eventually ensue, the evidence should also be notarized and legalized. In that case, the translation of the evidence should also be conducted by an entity with translation qualifications acceptable to PRC courts. Since such formalities are burdensome and can add significantly to the overall costs of the action, it is best practice to collect evidence from China-based sources whenever possible.
Even where there is little to no use of a given mark in China by a brand owner itself, evidence of use by third parties, including sales of parallel-import products from third parties based in China, can often be found on China’s online shopping platforms such as Alibaba, Taobao, Jingdong Mall, and can potentially be relied upon as proof of either use of the mark and/or as evidence of the mark’s notoriety in the PRC.
Finally, materials stored on English-language websites on servers outside of China are deemed “foreign-sourced evidence,” even if the pages from the site are printed out from within China, and consideration should be given to handling that evidence through the notarization/legalization/translation process mentioned above.
Evidence of Bad Faith
Where the applicant appears to be a pirate, to bolster the chances of success on appeal or an invalidation action, brand owners should strongly consider arranging on-site investigations into the pirate, its business and use of the mark. As well, if there is any likelihood that the action in which the evidence is used might be the subject of an eventual court appeal, collecting that evidence in the presence of a PRC notary public is crucial.
Co-Existence Agreements – Letters of Consent
In the case of trademark rejection appeals, co-existence agreements or letters of consent should be given strong consideration. Generally speaking, the TRAD’s willingness to accept such documents has been and remains somewhat inconsistent, to say the least. That being said, there have been positive improvements in this regard, particularly where the mark in question was not rejected on the basis of an identical or very-nearly-identical prior mark.
In relation to these types of documents, we note that Chinese companies are quite hesitant to issue them, particularly without some form of remuneration. As well, and again, to hedge against the possibility of the TRAD rejecting the letter as sufficient to overcome the conflict, strong consideration should be given to having the letter legalized and notarized (as well as translated if not bilingual, of course).
3. Court Appeals
As already noted, appellate review of TRAD decisions on non-use cancellation appeals, trademark refusals, and oppositions (filed by the registrant of the mark, NOT the opposing party), along with appeals of the TRAD’s own decisions on invalidation petitions, are all potential subjects for judicial review.
Appeals of TRAD decisions must be filed with the BJIPC within 30 days of receipt of the decision. A complete set of formality documents must be filed within 90 days of filing with the BJIPC.
The BJIPC is very strict when it comes to formalities and timelines. Many companies have had their appeals rejected out of hand due to failure to meet the court’s tight deadlines or, more commonly, abide by its very formulaic requirements regarding formality documents. These standards appear to be tightening of late, making it progressively harder for foreign companies to develop stable and reliable “best practices” when undertaking appeals of TRAD decisions.
The greatest obstacle is clearly the legalization/notarization process already referred to above. That process is intended to ensure that the documents and signatures thereon are authentic and reliable.
Generally speaking, this process should be straightforward, with non-government-issued documents (such as Powers of Attorney) first being executed before a local notary public. Those documents, as well as government-issued documents (such as certificates of incorporation or trade mark registration certificates), are then forwarded to the relevant local government authority (in the case of Australia, for example, the Department of Foreign Affairs and Trade) for authentication. Finally, the authenticated document is passed onto the local PRC embassy or consulate for review and authentication.
Documents required in a court appeal include, but are not necessarily limited to, the following:
- a signed Power of Attorney (PoA);
- an (original) executed version of the Certificate of Identity of Legal Representative (CILR), a document that represents the company itself speaking, and identifying an individual as its designated “Legal Representative.” That title is a term of art in PRC law signifying a statutorily-designated individual named by a company that is authorized to bind it legally, including through the execution of contracts and the issuance of powers of attorney to lawyers;
- an original or certified copy of the company’s Certificate of Good Standing (or an equivalent document).
Ideally, the individual who signs the CILR should hold a higher position within the company than the individual who signs the PoA. The person named as the Legal Representative should not be the same person that signs the CILR (i.e., no “self-designation” as Legal Representative).
While Australian and New Zealand companies enjoy a relatively smooth path to creating/obtaining these documents, companies in a number of jurisdictions, particularly the United States, have been having a much harder time in this regard of late, with courts, and in some cases, authenticating Chinese consulates overseas, becoming quite arbitrary in their review of documents. This has even resulted in PRC consulates rejecting applications for authentication not signed for by the party executing the document, such as the party issuing a letter of consent (“Consenting Party”). This puts the Consenting Party, who, practically speaking, is doing the appealing party a favour by executing the document in the first place, in an uncomfortable situation, where the applicant for consular authentication is required to provide a copy of their passport to support the same. We have had a number of instances where the Consenting Party viewed the provision of their identification documents to the Chinese government as a “bridge too far.”
Another issue that has arisen is where PRC courts require additional proof that the individual executing the CILR actually has the authority to sign the document. This may require submitting legalized/translated copies of specific pages of state or federal laws governing companies that confirm the statutory authority granted to individuals holding given positions within the executing company, such as “CEO” or corporate secretary. In some cases, additional documentation, such as a fully executed board resolution, articles of association or company by-laws indicating that the individual who signed the CILR is empowered to execute legal documents on behalf of the company may be required. But those additional documents must also be notarized and legalized (and eventually translated, too).
In short, creation of formality documents has become a real minefield.
4. Conclusion Summary – Best practice in appeals
a) In application and non-use appeals:
i. Search and consider proactively filing to invalidate or cancel potentially conflicting marks for non-use BEFORE filing trade mark applications to avoid having to appeal, and to increase the odds that the TRAD might suspend its review of the rejection appeal pending the outcome of those actions;
ii. Where the applicant appears to be a pirate, arrange for on-site investigations to obtain bad faith evidence and bolster the chances of success on appeal;
iii. In the cases of foreign-sourced evidence and onsite investigations against bad-faith pirates, consider having evidence legalised and notarised to give it additional weight and to make it more readily admissible in any eventual court appeals;
iv. Consider seeking co-existence agreements or letters of consent from owners of conflicting marks, and have those agreements/letters; and legalised/notarised;
b) In court appeals:
i. Build in enough time to meet deadlines and formality requirements, especially in court appeals. Start preparing those documents immediately rather than waiting till the last minute to account for objections, including from Chinese consulates.
ii. Provide scanned copies of formality documents to your advisers in China at each stage of authentication before proceeding with the next stage in the process to increase the odds of potential deficiencies being identified and corrected.