An increase in CNIPA examination opinions based on bad faith has left applicants wary in China. Rouse’s Alice Zhang and Amanda Yang answer the six most important questions to avoid rejection.
Ownership of trademarks to protect, commercialise and enforce a company’s rights is especially important in countries such as China, which adopt a first-to-file policy. In the past, filing sizeable numbers of trademark applications in multiple classes did not cause any problems. However, since 2022, more and more trademark applications have triggered examination opinions (issued before substantive examination) or refusals (issued after substantive examination) on the grounds that they were filed in ‘bad faith without intention to use’ based on Article 4 of the China Trademark Law. These sudden rejections have surprised many applicants and made them anxious about how to protect their trademarks in future. But trademark protection does remain available for legitimate brand owners.
How many examination opinions and refusals has the CNIPA issued in recent years?
Historically, the China National Intellectual Property Administration (CNIPA) did not issue data about examination opinions based on ‘bad faith without intention to use’ that were issued before substantive examination. However, using the CNIPA database and the numbers of refusals, we have estimated the following:
| Year | Number to be challenged |
|---|---|
| 2020 | 11,449 |
| 2021 | 44,555 |
| 2022 | 15,436 |
| 2023* | 6,972 |
| Total | 78,412 |
Source: CNIPA database
*2023 data only includes those issued between January and April
Before 2022, examiners issued refusals directly if they saw applications as bad-faith filings with no intention to use. The table above shows that the number of refusals jumped significantly in 2021 to over 44,000, a rise of over 50% compared with the previous four years.
The sudden issuance of these refusals unsettled applicants, who were concerned about the impact on their trademark applications. To ease anxiety, the CNIPA changed its policy and began to issue examination opinions (before substantive examination) based on Article 4 from 2022. While this helped to a certain degree, it also created a large volume of examination opinions in 2022 (based on our experiences at the time). Submissions demonstrating a genuine intention to use the trademarks helped to convince examiners in some cases. This resulted in a dramatic decrease in refusals between 2022 and 2023.
Among these refusals, we found only 2,861 trademarks that have been appealed at the time of writing (mid-September 2023) on the third-party database, Mozhilun. Of these, 245 have been fully approved on appeal. This means that the chances of fully overcoming Article 4 on appeal are low (around 10%), which makes persuading the examiner in China Trademark Office proceedings more important.
How does the CNIPA determine examination opinions or refusals?
To determine whether new filings have been filed without an intention to use, the CNIPA considers the applicant’s full trademark portfolio. The size of the trademark portfolio in the past and the number of filings in the previous three to six months are key elements that the CNIPA will consider. If the CNIPA is not convinced that a large volume of filings in a short period has been made with a genuine intent to use, it will issue an examination opinion to allow the applicant to explain its business plans relating to the trademarks.
There is no hard and fast rule on how many applications will trigger examination opinions. The China Trademark Office has an alert mechanism in its internal system. The size of the existing trademark portfolio is an important factor for examiners to determine whether it is necessary to hold off on the examination of a company’s applications. If the applicant owns a large volume of trademarks (over 1,000) and has filed more applications (generally over 100 marks) in the past three to six months, an examination opinion will likely be issued. However, we have also seen examiners issuing examination opinions when the number of applications filed within the past three months reaches around 30 to 50.
In recent years, the examination period for most ordinary trademark applications is three to four months. If an applicant files a batch of applications and does not receive the examination results in four to five months, this could be an indicator that the examiners have delayed examination and could issue examination opinions based on Article 4.
What are the consequences of receiving an examination opinion or refusal based on Article 4?
Does a rejection mean that CNIPA examiners have decided that your applications are filed in bad faith? Based on our recent experience and the explanations given by examiners in public forums, the simple answer is ‘no’.
The CNIPA has stated that it has no intention of setting obstacles to the registration of trademarks required for business needs. Over the years, the Chinese register has been inundated with mass filings of applications, a sizeable portion of which have been filed by hoarders or squatters, with many trademarks not put to genuine use. The CNIPA’s aim is to stop such practices, which waste valuable resources. An examination opinion is intended to give applicants the opportunity to submit statements and/or evidence to show their genuine intention to use the mark.
How do you overcome an examination opinion or refusal based on Article 4?
Multiple factors will be considered to overcome an examination opinion, including:
- the applicant’s current trademark portfolio, including recent filings;
- the industry and business operations of the applicant;
- the ranking of the applicant in the industry;
- the goods and services on which the house marks are used and their reputation;
- evidence of use on the specific goods and services claimed; and
- decisions in disputes and infringement cases involving the applicant’s marks.
The following cases help to illustrate the situation.
In an appeal against the refusal of Trademark Application No 30389072 for YU XÜ in Chinese characters, filed by Zhongyi Shanyuan (Beijing) Science & Technology Co Ltd, the Trademark Review and Adjudication Department held that the applicant had not violated Article 4 and approved its registration. The company’s trademark portfolio and an explanation showing the relevance of the goods and services claimed under the applications to its business were sufficient to overcome the objection. The company owned a portfolio of 290 trademarks when the appeal was reviewed. As a subsidiary of Bank of China, the entity had implemented social welfare and poverty relief programmes for many years. The purpose of applying for trademarks in Classes 29, 30 and 35 was to address normal business needs. Another important factor was that the submitted evidence showed use of some of the refused marks.
On the flipside, cases relating to Trademark Application Nos 37694436 and 39001589 for WU DANG SHAN in Chinese characters, filed by Beixin Group Jiancai Share Co Ltd, were rejected. The entity already owned over 1,000 trademarks when the cases were examined. Over 80 of these had been filed within a period of three months. Moreover, some of the trademarks were famous geographical names or the names of scenic locations (eg, WU TAI SHAN (a well-known Buddhist mountain in China), JIA YU GUAN (an historic pass in China), QIAO DAO HU (a scenic spot in China), MO GAO KU (one of the most well-known rock caves in China), MA WANG DUI (one of the world’s most popular ancient tombs), GU LANG YU (a Chinese island), RI YUE TAN (a scenic spot in Taiwan) and LI JIANG (a river in China)).
If an examination opinion or a refusal is issued, applicants have 15 days to respond upon receipt of the office action. It should be enough to overcome the objection by submitting materials showing:
- genuine use (eg, sale/service contracts, invoices and advertising) or intent to use (eg, company introductions);
- the connection between the marks and the company’s business;
- decisions in disputes and/or infringement cases involving the applicant’s marks (which demonstrates good faith by the necessity of filing defensive applications); and
- preparation for use of the marks.
Even if the applicant has only limited materials, provided that such use relates to its business, examiners have been willing to accept that the filing was made in good faith.
Is overcoming an examination opinion sufficient to avoid triggering the same for later filings?
We are afraid the answer is ‘no’. From the current information obtained from the CNIPA and other trademark professionals, overcoming one examination opinion does not prevent the applicant from being questioned about its intent to use the marks in subsequent applications.
Delaying later applications will not remove the risk, nor will separating these filings into multiple batches submitted over a period of time. However, if an applicant has already overcome an examination opinion, it should be easier to overcome the next one. The only concern to applicants is the burden of having to collect evidence showing their use or intent to use, as well as the delay in registering the marks.
Is there anything else applicants can do to lower the chance of triggering an Article 4 examination opinion?
To err on the side of caution, applicants may want to consider keeping the number of applications filed in a short space of time to a reasonable number. What constitutes ‘a reasonable number’ would vary depending on the factors considered by the CNIPA as stated above. On a trial basis, other options can be attempted to reduce this risk, such as submitting a statement of use or intent of use supported by evidence with the new applications.
Overall, the issuance of examination opinions (before substantive examination) brings additional inconvenience to legitimate brand owners. However, it also gives legitimate brand owners the chance to positively present their intention to protect the trademarks in China and help examiners to fully understand their trademark portfolio and trademark layout in China.
This policy also significantly reduces bad-faith filings by trademark squatters and hoarders. We have seen this phenomenon from our own monitoring. This will help legitimate brand owners to reduce costs spent fighting bad-faith filings, which have been an annoyance for some time.
In any event, brand owners should not be immediately concerned when receiving an examination opinion. They have a high chance of overcoming it, and there is something to be gained from the policy.
This article was first published by World Trademark Review in September 2023
For further information, please contact:
Amanda Yang, Rouse
ayang@rouse.com
