Chinas New Working Rules for Identifying Well-known Trademark

On April 21, 2009, Chinas State Administration for Industry and Commerce (SAIC) issued a Working Rules for Identifying Well-known Trademarks (Working Rules), which took into effect immediately, under Documentation Gong Shang Biao Zi (2009) No. 81 to guide the SAIC affiliated Trademark Office (China Trademark Office or CTO) and the Trademark Review and Adjudication Board (TRAB) to efficiently identify well-known trademark during their trademark administration. The Working Rules have reclarified certain criterions, particularly, designed a four-layer governmental identification structure and defined their respective powers and responsibilities, and further set out many specific procedures in great details on how to identify well-known trademark. The Working Rules imply that China has taken a more prudent and realistic attitude towards well-known trademark identification and protection. From now, the identification of well-known trademark in China will become more transparent and stricter and the protection to well-known trademark will become stronger. Foreign companies having business operation in China shall familiarize with these criterions, the identification structure and procedures so as to restructure their trademark management strategy and get their marks effectively identified as well-known trademarks in China.
Background
Like most countries, China provides an overall protection to officially identified well-known trademarks. Once a mark has been identified as well-known trademark, whether it is registered in China or not, Chinese laws provide it with a very strong protection. In China, those marks shall not be registered and shall be prohibited from use if (i) their application for registration on the same or similar products are copies, imitation or translation of a well-known trademark which has not been registered in China and is likely to cause confusion; or (ii) their application for registration on different or dissimilar products are copies, imitation or translation of a well-known trademark which has been registered in China, misleads the public and further results possible damages to the registrant of that well-known trademark . Based on such consideration, many enterprises have always been trying to get their marks identified as well-known trademarks. To achieve this purpose, some enterprises have even caused infringement happen to their marks and then tried to apply for identifying their marks as well-known trademarks. It is reported that CTO and TRAB identified 147, 197 and 229 marks as well-known trademarks in 2006, 2007 and 2008, respectively . Online resources even indicate that CTO and TRAB have already identified 390 marks as well-known trademarks in the first five months of 2009 . To avoid flooding of well-known trademarks and provide stronger protection to those marks which are really well-known, SAIC has taken a more prudent but realistic attitude towards well-known trademark identification, and timely promulgated these Working Rules to guide CTO and TRAB to effectively identify well-known trademarks.
In China, two methods are available for identification of well-known trademarks. One is administrative identification and the other is juridical identification. This article focuses on administrative identification and does not address juridical identification.
Identification Structure and Their Powers and Responsibilities
The Working Rules have designed a four-layer governmental identification structure responsible for acceptance and examination, review, approval and supervision to the identification of well-known trademarks.
The first layer is the special handling office (Handling Office) established within CTO and TRAB, respectively. The responsibilities of the Handling Office are to accept, docket and examine the application documents and evidence. The second layer is the president office meeting (President Office Meeting) and the director office meeting (Director Office Meeting) established within CTO and TRAB, respectively, with their responsibilities for reviewing the applications reported by their Handling Offices. The Well-known Trademark Identification Committee (Identification Committee) jointly established by CTO and TRAB is the third layer, which plays a decisive role in the identification of well-known trademark. The members of the Identification Committee include CTOs president and vice president, TRABs director and vice director, as well as the inspector and vice inspector of both CTO and TRAB, among whom the president and the director shall be the chairmen of the Identification Committee. The Identification Committee is responsible for approving and identifying the applying mark as well-known trademark. The last layer is the SAICs minister office meeting (Minister Office Meeting) with its responsibility to supervise the Identification Committees identification.
Form the above structure, we can see the responsibilities of each identification authority are very clear and closely interact with each other. Obviously, such structure is dedicated to assure a stricter identification procedure which will be more transparent and fairer. From now, only those marks which are really famous widely will be identified as well-known trademarks.
Factors to Be Considered and Evidence for Identification
To properly identify a mark as well-known trademark, the above identification authorities will consider certain factors of the mark in question and further review relevant evidence to support the famousness of the mark.
1. Factors to Be Considered for the Mark in Question
The PRC Trademark Law, the Regulation on Recognizing and Protecting Well-known Trademark (Regulation) , and the Working Rules have set out certain criterions for identification of well-known trademark. Therefore, when identifying the mark in question, the identification authorities will evaluate the following factors of the mark so as to determine the famousness of the mark :
(1) how well is the mark known by the relevant public;
(2) the period during which the mark has been in use;
(3) the period, extent and geographic scope of any publicity of the mark;
(4) the record of protection of the mark as a well-known trademark; and
(5) other factors which certify that the mark is well-known.
However, it is not a precondition that each of the above five factors must be satisfied at the same time for identifying the applying mark as well-known trademark.
2. Supporting Evidence
When applying with the authorities for identifying a mark as well-known trademark, the applicant will have to bear certain burden of proof to prove its mark is widely known. The following relevant evidences and materials are helpful for the authorities to determine the famousness of the mark in question, which show:
(1) the extent of knowledge of the trademark by the relevant general public;
(2) the duration of the trademark, including the materials involving the history and scope of the use and registration of the trademark;
(3) the duration, extent and geographic scope of any publicity work, including ways of adverting and promotion, geographic scope, type of publicity media and the quantity of the launched advertisements;
(4) the recordal that the trademark has been protected as a well-known trademark, including the pertinent materials that the trademark has been protected as a well-known trademark in China, or in other countries or regions; and
(5) other evidential materials which can prove the famousness of the trademark, including the materials regarding the recent three years output, sales revenue, profit and taxes, and sales territory of the goods using this trademark.
Procedures for Identifying a Mark as Well-Known Trademark
According to the Working Rules, CTO during its trademark administration and opposition, and TRAB during its trademark review and disputes administration may, upon the request of the applicant, identify the mark in question as well-known trademark. Normally, such identification will involve four stages: examination, review, approval and supervision, which are illustrated in details by the following diagram:
It is noted when examining the application documents and evidence, the CTOs Handling Office will establish a panel consisting of no less than 2/3 of all its office members, which is presided over by the lead of the Handling Office, while the TRABs Handling Office will also establish a panel of more than three odd members of the office. Detailed minutes shall also be made during the panel discussion. Further, when examining the same, the CTOs president, vice president, inspector and vice inspector shall attend the President Office Meeting and the lead of the Handling Office shall also present. When TRAB convenes its Director Office Meeting to discuss the application, its director, vice director, inspector and vice inspector as well as the leads of each department within TRAB will attend the meeting. When the Identification Committee discusses and decides the application, the participates must reach more than 2/3 of its consisting members. Further more, during the identification, any one may express his opinions to CTO or TRAB concerning the identification of the trademark in question. CTO or TRAB shall strictly consider these opinions .
From the above diagram and the requirements on attendants for each discussion in each stage, we can see that the Working Rules have set out very strict procedural requirements for the identification authorities to review and identify a mark as well-known trademark. The purpose is to avoid flooding of well-known trademarks in China, but to provide stronger protection to those marks which are really well-known widely.
Generally, stricter procedure means more time the authorities will have to spend on the identification. Unfortunately, the Working Rules fail in specifying an exact time window for each layer of identification structure to complete their work in each stage. This will result in unprediction in terms of the length for identification. Under the Regulation which does not set out the same complex procedures as the Working Rules, at least seven months is required for CTO or TRAB to identify a mark as well-known trademark if it is a straight-forwarding case . Under the so complicated procedures by the Working Rules, we believe one year or one and half years is reasonable for the identification.
Political Supervision
The Working Rules have already set out very strict procedural requirements on well-known trademark identification. However, interesting enough, the Working Rules have further established a political interfere and supervision system which is quite rare in other Chinese laws and regulations. For instance, when CTO convenes its President Office Meeting or TRAB convenes its Director Office Meeting to discuss the identification of well-known trademark, the Central Commission for Discipline Inspection of the Communist Party of China (CCDICPC) and the Ministry of Supervision (MOS) will send its members stationed in SAIC to attend the meeting and supervise the identification. For the same purpose, CCDICPC and MOS will also send its members stationed in SAIC to attend the meeting of the Identification Committee and supervise the identification, while the China Trademark Association will send its members to present the meeting too .
The CCDICPC and MOS members are not intellectual property experts. Generally speaking, they could not express legal opinion on the trademark to be identified. However, the worry is when the CCDICPC and MOS members may have different opinions to the identification, particularly, when political opinion and legal opinion conflict, how will CTO and TRAB further proceed with the procedures. The Working Rules fail in making any clarification on this. However, it is widely believed that the main purpose of this political supervision system is to prevent corruption and bribery during the identification since the main functions of CCDICPC and MOS are to prevent corruption and bribery.
Conclusion
In order to provide a stronger protection to those trademarks which are really well-known widely in the public and to avoid flooding of well-known trademarks in China, SAIC has timely issued the Working Rules to guide CTO and TRAB to effectively identify marks as well-known trademarks during their trademark administration. Apart from the reclarification of certain criterions for identifying well-known trademarks prescribed by the Regulation, the Working Rules have particularly designed a new identification structure and set out very strict and interacted procedures for identifying mark as well-known trademark. A political supervision system is even introduced to the identification procedures. From now, only those marks which are really very famous will be identified as well-known trademarks. All these changes imply that China has taken a more prudent and realistic attitude towards identification and protection of well-known trademark. The Working Rules have advantageous and disadvantageous impact on foreign companies having business operation in China. The disadvantage is that foreign companies may have to subject to stricter, more time-consuming and unpredictable procedural review. The advantage is that the identification will become more transparent and fairer. Most importantly, once identified as well-known trademark, their marks will deserve really stronger protection. Therefore, foreign companies doing business in China need to restructure their trademark management and protection strategies so as to keep in line with the Working Rules, and most importantly, get themselves fully prepared for identifying their marks as well-known trademarks in China.
ABOUT THE AUTHOR: Bill H. Zhang
Bill H. Zhang is the managing partner of China Sunbow & Associates with rich experience in cross-border transactions involving China, particularly on corporate and commercial matters, such as mergers and acquisitions, direct investment, corporate governance and compliance, restructuring and reorganization, labor and employment, and dispute resolutions, as well as on intellectual property transactions such as patent and trademark prosecution, enforcement, dispute resolution, infringement analysis, due diligence, license and transfer. He has advised many multi-national companies on merging and acquiring Chinese enterprises, making investment, resolving commercial disputes in China and represented them to register, prosecute and enforce various trademarks, patents and copyrights in China.