China's trademark teething problems

This article originally appeared in Managing Intellectual Property, a sister publication of China Law & Practice

That's the finding of Shi Hui (pictured), IP officer at the British Embassy in Beijing. According to research and interviews conducted by Shi, though the changes in the law have led to some positive changes on the ground, there are still problems in the implementation of the revised PRC Trademark Law that are of concern.

All backed up

Many of the problems stem from what Shi described as a "huge backlog" of applications at the China Trademark Office (CTMO). Though the backlog is nothing new, the mandatory deadlines for initial examinations, which were intended to help ensure that filings are handled in a timely manner, has put extra pressure on the examiners to work quickly. Furthermore, this problem was exacerbated by computer system issues which arose last April that led to months-long delays in processing of cases at not only the CTMO but also the Trademark Review and Adjudication Board (TRAB), which handles appeals from the CTMO.

According to Shi, several trademark attorneys have complained that examination quality has suffered and the decisions seem to lack consistency when compared to previous years.

The pressure to work through cases quickly has resulted in not only inconsistent logic in decisions, but also the use of other means to quickly dispose of cases, noted Shi. One point of particular interest is that the CTMO appears to be scrutinising formalities a lot more closely and rejecting applications for issues such as improperly filled out forms.

Edward Chatterton of DLA Piper said that he has seen this problem as well.

"In the past, the CTMO would accept copies of powers of attorneys when filing an opposition, even though technically original powers of attorney were required," he explained. "However, recently, we have heard of cases where the CTMO has rejected oppositions that were filed without an original power of attorney."

The need for speed is also manifesting itself in other ways. According to Dan Plane of Simone IP Services, the CTMO has become more rigid in how it handles descriptions of goods and services, with examiners more frequently refusing terms that differ from the published CTMO sub-class index.

As an example, Plane said that he recently represented a client looking to register marks for a computer gaming device. However, the examiner refused to accept descriptions other than what was published in the CTMO sub-class index, which only contains more general descriptions for computer peripherals.

"The tightening seems to be the result of the new deadlines for examining and approving registration that appears in the recently-revised Trademark Law," he explained. "They are also no doubt a reaction to the fact that the CTMO has hired a lot of new examiners who lack experience in dealing with non-standard descriptions of goods and services."

Furthermore, the backlog may have ripple effects further down the line. For example, as Judge Chen Jinchuan of the Beijing IP Court told Managing IP, the Beijing Intermediate Courts saw a dramatic increase in IP cases in 2014, with about 10,000 matters (the IP tribunals in Beijing had about 4,000 cases in 2013). According to several practitioners who spoke with Managing IP, there appeared to be a significant increase in what they believe were clearly wrong decisions from the Trademark Review and Adjudication Board, leading to appeals to the Beijing IP tribunals. Given that the workload faced by the new IP Courts continue to be a concern, continued problems at the CTMO and the TRAB may filter up to the courts as well.

Finding the bodies

The CTMO has taken steps to address the backlog by increasing manpower by bringing in many new examiners.

However, large hiring programmes such as these inevitably mean that there will be an influx of inexperienced examiners, further exacerbating the problems. Furthermore, many of these new examiners may not be standard civil servants, but rather contractors brought on to help deal with the backlog.

"The training programme for these new examiners is ongoing," says Shi. "In fact, many of these examiners are based in an external examination centre, where the examiners are a mix of experienced examiners and more recent recruits under non-civil service contracts or other HR arrangements."

Focusing on the profession

Despite these teething problems, Shi said that the revised Trademark Law appears to have brought about several positive developments, particularly in the area of bad faith registrations and oppositions.

Bad faith was one of the key areas of concern that the revised Trademark Law sought to address. Some of the provisions, such as the one calling for the immediate registration of a mark that survived an opposition, have caused concerns. However, provisions seeking to restrict bad faith registrations by business partners, such as OEM partners and trademark agents, were largely welcomed though practitioners were waiting to see how the changes would be implemented. From Shi's research, she has found that the CTMO has been surprisingly aggressive in clamping down on these types of filings, particularly those by trademark agencies.

"The CTMO appears to be very serious about restricting bad-faith behaviour by trademark agencies and not allowing them to file marks beyond those related to their own business," she said. "This was a change in the new law, but this seems to be happening faster than most people expected."

These moves appear to be part of a larger campaign to increase the professionalism of trademark agencies. Recently, the quasi-governmental Chinese Trademark Association (CTA), announced that there will be a voluntary examination for trademark agents.

China previously had a mandatory examination for trademark attorneys, but the State Administration for Industry and Commerce abolished the requirement in 2003 in a bid to bolster the ranks of trademark professionals that could serve a growing demand for their services.

In addition, the CTA announced another programme to create a directory of trademark agencies and assign grades as to their quality. The two moves together, along with the strength of the CTA's influence, may have a big effect on professionalism and a sign of things to come.

"Even though the test is voluntary, combined with other measures such as the listing and grading of trade mark attorneys, it may be that many will end up choosing to take the test," she explained. "The CTA is a very influential quasi-governmental body, so even if the examination is not compulsory, these two moves are another sign that the government is serious about regulating the profession."

The usual uncertainty

Though practitioners and rights holders are understandably concerned about the implementation of the revised Trademark Law, these implementation concerns are nothing new. In China, changes are often made without full guidance about the details of the implementation and without all the preparation work being complete. For example, the new IP courts opened even though the judges not been picked in the Shanghai and Guangzhou locations. What remains to be seen then is how the system will function once the initial rough spots are addressed and whether these or other problems remain.


By Peter Leung, Managing Intellectual Property