In the midst of the waves of advancement in the Chinese trademark laws being introduced in 2023, this article will take a deep dive into two of the hottest topics and shed light on the most asked questions, based on Vivien Chan & Co’s vast experience in the region. At the end of each topic, there are practical tips intended to help brand owners to secure their rights in China.

The acceptability of letters of consent

The first topic is whether letters of consent are to be accepted for overcoming prior cited marks in trademark applications. Before 2021, letters of consent were regularly accepted by the China National Intellectual Property Administration (CNIPA) as long as the cited mark and the objected mark were not identical. This was in line with the Trial Guidelines for Administrative Cases Involving the Granting and Prosecution of Trademark Rights promulgated by the Intellectual Property Division of the Beijing Higher People’s Court (BHPC) in April 2019, which expressly stated the following:

  • Article 15.10 – when determining whether the applied-for mark and the cited mark constitute similar marks, a coexistence agreement shall be used as prima facie evidence precluding confusion.
  • Article 15.12 – if the applied-for mark and the cited mark are identical or fundamentally 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 the 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. If the cited mark owner launches opposition or invalidation application against the applied-for mark after entering into a coexistence agreement based on the similarity of the marks, the opposition/invalidation application will not be supported, except if the agreement is held invalid according to law or is revoked.

However, there was a sudden change of practice, and from mid-2021, the CNIPA and the Chinese courts started to refuse to accept letters of consent even when the marks were not identical. The likelihood of a letter of consent being accepted plummeted.

In particular, the Chinese courts held in many unfavourable decisions against trademark applicants who sought to rely on letters of consent that “letters of consent are insufficient to show that there will be no actual consumer confusion.”

The sudden turnaround of the authorities’ attitude caught many brand owners off guard, as many relied upon consent in pre-negotiated coexistence agreements (or even global agreements) and auxiliary letters of consent to secure trademark registrations in mainland China. Some brand owners’ new applications are even blocked by prior marks registered on the basis of the formers’ consent, creating an inauspicious situation for the brand owners and a lot of uncertainty for them when applying for trademarks and entering into coexistence agreements with other business undertakings.

However, more recently, there have been signs of another change of attitude of the CNIPA and the courts towards the acceptance of letters of consent, which can be demonstrated by the following successful applications, where the cited marks were waived by the submission of letters of consent or coexistence agreements to the CNIPA or Chinese courts in 2023.

The future of consent

As can be seen from the above cases, the CNIPA and the courts have seemingly been adopting a more relaxed approach towards the acceptance of letters of consent recently, instead of insisting on an outright rejection, as observed from mid-2021.

As set out in the BHPC guidelines, the CNIPA and the court have the discretion to assess the overall circumstances and determine whether the consent sufficiently addresses the potential confusion between the marks on a case-by-case basis, having taken into account the similarity of the marks and the consent given by the cited mark owner. It has been a welcome development that where the level of similarity of the conflicting marks is relatively low, the CNIPA or the courts may now be inclined to consider more of the letters of consent submitted.

Practical tips

The CNIPA and the courts will still likely refuse registration if the conflicting marks are of a medium to high level of similarity even if a letter of consent or a coexistence agreement is submitted, unless the conflicting parties are related.

If the applicant would like to try to overcome the citation objections by submitting a letter of consent, the cited mark shall not be identical to the applied-for mark or share the same dominant element, as the risk of confusion is an important factor to be considered by the CNIPA or the court. If the conflicting marks are identical or fundamentally identical, alternative actions such as removing the cited mark by a non-use cancellation or a buyback should be preferred.

When there may be some differences in the marks, with the recent change of attitude of the authorities, the submission of letters of consent may now be tried again in the hope that the authorities will take them into account. Instead of submitting a simple signed letter of consent, Vivien Chan & Co recommends providing the supporting documents that confirm the authority of the signatory of the letter of consent, to pre-empt any possible query on the authenticity of the letter of consent.

In parallel, a letter of consent may also be a valuable tool in defending potential trademark infringement claims, in addition to supporting an application. Therefore, despite the uncertainties surrounding the acceptability of the same by the Chinese authorities, brand owners are still recommended to include China in any global coexistence negotiations and obtain a letter of consent from a cited mark owner in the lack of a better alternative to remove the cited marks.

Suspension of trademark examination procedures

Another development which has garnered significant attention is the introduction of a mechanism to suspend the examination of Chinese trademark applications in certain circumstances.

Before June 2023, China lacked a formal guideline with regard to a suspension procedure. Although the existing Trademark Law and the implementing regulations provided that review examinations can be suspended under certain circumstances, in reality the application of this provision was subject to the individual examiner’s discretion and execution had been loose and inconsistent.

The lack of a suspension mechanism meant that an application for a review of a refusal issued against a trademark application would still be progressing while actions against the cited marks (for example, a non-use cancellation or an invalidation) were pending. As these contentious matters often take longer to resolve than the review examination period, this results in the applicant having to refile their trademarks multiple times or having to file an appeal against the review decision to higher courts. This has caused recurring trademark applications and repetitive legal proceedings for years, impeding the efficacy of the trademark registration system. Therefore, a formal suspension system had long been anticipated.

The rule

The wait finally ended when the CNIPA published the Interpretation of the Rules for Suspension of Review Cases (the Rules) on June 13 2023.

Under the Rules, a suspension can only be implemented if it satisfies the principle of necessity; i.e., the suspension is only granted when the determination of prior rights is at stake. For instance, if the applicant of a trademark fails to overcome the absolute ground rejection due to lack of distinctiveness, it is unnecessary for the CNIPA to suspend the examination of a review application to wait for the result of any actions taken against the cited mark(s), as the result of the latter will not affect the review decision to reject the trademark application on absolute grounds.

The Rules set out seven mandatory suspension circumstances and three discretionary suspension circumstances for different types of cases. The qualifying circumstances are summarised in the table below.

Practical tips

For review of refusal applications, the request for suspension must be made by the applicant no later than the three-month supplemental submission deadline from the filing of the review of refusal application. Therefore, to benefit from the above, actions against the cited marks must at least be commenced in this three-month period. A pre-filing search will still be useful, so that the time for filing the application may be better determined.

The suspension request must be supported by a written statement specifying the essential information pertaining to the circumstances entitling suspension, such as:

  • The trademark number of the cited mark;
  • Details of any legal actions taken against the cited mark; and
  • An explanation of how the outcome of the cited mark impacts the pending trademark application in review of refusal.

Also, the applicant who has requested the suspension would have to make another application for resumption of the examination process. After the status of the cited mark has become stable, the applicant must inform the CNIPA by submitting a statement along with supporting evidence to resume the examination procedure. This shall be docketed and followed up properly to avoid a delay in obtaining a registration.

Finally, as the Rules have just been released, the practicality of the execution of the same is yet to be tested. For now, if their budget allows, Vivien Chan & Co recommends that applicants consider filing back up-applications simultaneously to secure their position in cases of great importance.

Summary

In 2023, the Chinese authorities have taken huge steps forward in an attempt to speed up trademark examination and improve the efficiency of the trademark prosecution system to achieve fairer results in a more reasonable timeframe. Sometimes the changes are radical and swift.

About Vivien Chan & Co

Vivien Chan & Co’s long-established licensed offices in Greater China have allowed it to develop deep local roots and an integrated global perspective necessary to help domestic businesses and multinational companies alike in managing new waves of challenges and keep on top of all the latest developments in Chinese IP laws. If you have any IP needs in these areas or questions on the above, feel free to reach out to the firm.

Vivien Chan
Founding and managing partner, Vivien Chan & Co
E: vivchan@vcclawservices.com

Vivien is the founding and managing partner of Vivien Chan & Co, with over 40 years of experience in intellectual property, M&A, information technology, and related tax issues.

She was awarded the Lifetime Achievement Award in 2017 by the American Chamber of Commerce in Hong Kong, and the Bronze Bauhinia Star in 2008 and the Silver Bauhinia Star in 2014 by the Hong Kong SAR government for her outstanding contributions to Hong Kong.

Vivien is a Justice of the Peace and a past president of the Inter-Pacific Bar Association. She is also a notary public, a notarial attesting officer in China, and an arbitrator at the China International Economic and Trade Arbitration Commission.

Vivien received her law degree from King’s College London, and is admitted as a solicitor in England and Wales, Hong Kong, Australia, and Singapore. She is fluent in English, French, Mandarin, and Cantonese.

Ann Xu
Trademark attorney, Vivien Chan & Co
E: annxu@vcclawservices.com

Ann is a trademark attorney and heads the Beijing office at Vivien Chan & Co, with more than 20 years’ experience in intellectual property cases in mainland China. She has trademark, copyright, and designs expertise, and regularly advises on prosecution and portfolio management.

Ann is consistently nominated as an International Who’s Who Trademark Lawyer.