China has been revising its trademark laws and regulations to bring them more in line with WTO (World Trade Organization) rules and to provide companies with a better business environment with regard to intellectual property protection.

The purpose of this article is to help US companies understand the ever-evolving procedures governing the registration and protection of trademarks in China.

Trademark administration bodies

China employs a centralized trademark registration system. The Trademark Office within the State Administration of Industry and Commerce (SAIC) (Trademark Office) is responsible for the registration and overall administration of trademarks.

The local counterparts of SAIC, the Administration of Industry and Commerce (AICs) have established trademark offices to handle trademark administration and enforcement at local levels.

The Trademark Review and Adjudication Board (TRAB) within SAIC is responsible for handling trademark registration disputes.

Registration

A US company doing business in China should first ensure that its trademarks are properly registered in China.

All marks for goods, services, collective marks and certification marks (collectively referred to as "trademarks'') can be registered, provided they meet the stipulated requirements for registration.

Although registration is highly recommended, it is not mandatory, except in the case of trademarks used on specific goods such as pharmaceutical and tobacco products, which must be sold bearing registered trademarks.

Foreign individuals or enterprises must use authorized local agents in seeking trademark registration and handling other trademark related matters.

China employs a "first-to-file'' system for trademark registrations, rather than the "first-to-use'' system generally adopted in the United States.

Since China and the United States are both members to the Paris Convention, a US company that has applied for registration of a trademark in the United States may be regarded as having applied for the same registration in China on the same date, provided the application in China is filed within six months of the US filing date.

China's requirements for obtaining a trademark registration are basically the same as those in most other countries; namely, the trademark must be distinctive, and must not conflict with an existing registration.

Many companies also seek trademark registration in China as a defensive measure, applying for registrations in as many categories of goods and/or services as is viable.

While most US companies tend to register trademarks on goods and/or services related directly to their businesses, they often discover that their trademarks are registered by others in categories in which they, themselves, do not think it necessary to register.

Defensive registrations waste resources, since a company may obtain registrations in categories having nothing to do with its existing businesses.

Such defensive registrations nevertheless effectively prevent any later applicants from registering the same or similar trademarks in the same or similar categories, even if the later applicants may have a much longer history of use, or a greater reputation in using the trademarks.

In such cases, there are few options available for the later applicant to contest the prior registrations, unless it can prove that its trademarks are wellknown or that the prior registration has not been used for a consecutive three-year period.

Because of these difficulties, many later applicants resolve the matter by purchasing the previous registrations.

As in the United States, each new application will be preliminarily screened by the Trademark Office.

The preliminary screening is a fairly straightforward process, and the Trademark Office has a centralized database of all registered or applied-for trademarks.

A trademark application which passes the preliminary screening will be published in the Trademark Office's gazette for public objection for a three-month period.

The Trademark Office will subsequently issue a registration certificate if nobody raises any objection within the said three-month period, or if the objection is rejected by the Trademark Office.

However, if any objection is supported by the Trademark Office, the Trademark Office will deny the application.

The Trademark Office's decision may be reviewed by the TRAB, and the TRAB's decision may be judicially reviewed by the People's Court, upon request.

Protection

There are four basic ways in which US companies may protect their trademarks in China.

* Preventing registration of infringing trademarks

The first method of protection is for a company to prevent others from registering trademarks that are the same as, or similar to, its trademarks.

As previously discussed, defensive registrations are an effective way to prevent later applicants from registering in the same categories.

In addition, it is advisable that a US company use an authorized local trademark agent to monitor possible infringements of its registered trademarks.

Although its preliminary screening function serves to eliminate identical or highly similar marks, the Trademark Office checks similarity in a rigid and prescribed manner.

Also, the Trademark Office may not be able to identify certain similarities; and it has no way to determine whether an application has been filed in bad faith.

The authors, Margaret Lu and Yuping Wang, are attorneys at the Shanghai Office of the International law firm of DWT LLP which has its head office in the United States.
 
(China Daily July 2, 2004)