Is this a positive change for Brand Owners?
It is a common pain point for brand owners and trade mark practitioners that appeals against the refusal of trade mark applications are only occasionally suspended despite their outcome being solely dependent on the final decisions of actions taken in parallel against prior mark citations. The Trade Mark Review and Adjudication (TRAD) examiners appear reluctant to grant suspensions to keep the review procedure swift and simple, especially when there is no mandatory provision to grant a suspension in the trade mark law or regulations. Brand owners have to turn to the court for relief (1st or 2nd instance proceedings and even a retrial) or repeatedly file applications for the same trade mark (sacrificing the original filing date) until the citations are removed – resulting in increased costs and wasted resources.
Recent changes introduced by the China National Intellectual Property Administration (CNIPA) and Beijing Intellectual Property (IP) Court are intended to address this issue.
- On 13 June, the CNIPA issued new rules for the Suspension in Trade Mark Review Casesand released its interpretation on the new rules, which stipulates that a suspension will be granted based on the principle of necessity. See our earlier piece on this recent development.
- On 25 June, Beijing IP Court released a new procedure, Pre-filing of litigation for Some Refusal Appeals.
The TRAD suspension rules for refusal appeals are not entirely new, and recalls the unwritten practice before 2019. The rules assist by setting out clear guidance on when suspensions will be granted. If all citations can be, within a reasonable timeline, removed through assignments, oppositions, non-use cancellations, or invalidations, then the refusal appeal is likely to be suspended and ultimately the trade mark will mature to registration. The need for court appeals or repeated refilings will be a thing of the past.
The pre-filing procedure at the Beijing IP Court is a new one, likely driven by the overload of IP litigation cases (over 33,000 filed in 2022, coupled with a high target to conclude these cases, each judge is saddled with 360 cases to review per year). The new procedure provides up to 12 months to “pre-file” a case, before the formal litigation proceedings commence, if the appeals are filed by foreign brand owners and the validity of the citations is in question (this condition is strict, there must be no absolute grounds raised). In order to take advantage of the pre-filing procedure, the following conditions with proof and explanations are required (i) the pending application must only be facing a citation refusal, without any absolute grounds for refusal; (ii) the outcome of the related actions such as invalidation, non-use cancellation, opposition are vital to the refusal of the mark being waived; and (iii) the relevant actions against the citations have been taken before the TRAD decided the refusal appeal.
If the pre-filing procedure can be used, it means the applicant can request more time for the suspension and is therefore more likely to overcome the citation(s). Once the removal of the citation(s) is final (such as issuance of the publication of cancellation/invalidation) within this period, brand owners can request a formal filing of the case. The case will enter pre-litigation mediation, and the next stage, which could be the re-examination of the application by the court or referring the matter back to the TRAD for a new decision due to the change of circumstances.
Brand owners will benefit if the rules for suspension at the TRAD stage and pre-filing of the litigation at the Beijing IP Court can be implemented well. One of the benefits are that brand owners will be allowed additional time of about one to three years to wait for the removal of the obstacles through the on-going procedures which will greatly increase chances of success in the appeal.
Brand owners will be able to simplify their filing strategy if the changes give them the choice of selectively filing non-use cancellations, focusing on the key citations revealed during the pre-filing clearance search and dealing with less serious obstacles only when they are raised (the difficulty in predicting what citations will be raised given the inconsistency in examination standards).
Whilst brand owners are welcoming these changes, a few things need to be considered during the transition period. It is still unclear what constitutes the “principle of necessity”, and whether the rules can be implemented in a consistent manner. Under the new practice, refilings may still be necessary for important brands, for example, when there are no immediate means to clear all the citations completely.
On the flipside, these procedural changes may also be utilised by the prior mark owner. China being a first-to-file country, where your position in the queue matters a lot. If a vital prior mark is pending a refusal appeal, it may “keep its place in the line” for years due to the benefit of being suspended pending actions against other prior marks. This can bring much uncertainty to when its status will become final or when action against this prior mark can be taken – which also means a long delay to get your later right registered. Many marks cannot wait this long before being put into use given the dynamics of the Chinese marketplace.
The hope is that the procedural changes will bring about the desired effect. Nevertheless, due to the crowded nature of the Chinese register, pre-filing clearance searches remain important to identify potentially serious obstacles before filing, especially any obstacle pending refusal appeal, as well as evaluating the timeframe to clear the obstacles and obtain a trade mark registration. It will be the decision of brand owners if a “3-5 year long term plan” to achieve registration is practical, what appetite for risk is acceptable (especially with paper conflicts), or whether moving to an alternative name with a higher registration success rate is preferred.
Key takeaways
- Suspension will be granted if certain necessary conditions are met and subject to the approval of CNIPA and Beijing IP Courts.
- Monitoring the implementation of the suspension procedure and adjusting the filing strategy when the impact of the changes becomes clearer.
For further information, please contact:
Ya Wen, Rouse
ywen@rouse.com
