On May 14, 2017 at the “The Belt and Road” International Cooperation Summit Forum in Beijing, SIPO director and WIPO Director-General signed “IP Cooperation Agreement for strengthening the Belt & Road”. This is the first Belt & Road related IP cooperation agreement signed by the Chinese government with international organizations, marking the two sides will carry out comprehensive and in-depth cooperation to promote IP development among the countries and regions round Belt & Road. (Source: SIPO website)

Recently, the Intellectual Property Development Research Center of SIPO issued the "2016 China's IP Development Evaluation Report." The report shows that the country is making steady progress in overall IP development with outstanding achievement in international ranking.

The report shows that in recent years, China continues its improvement in IP creation, application, protection and environment, with the overall IP development index increased from 100 in 2010 to 200.3 in 2016. And China’s position among the 40 major IP countries increased from No. 19 in 2012 to No. 10 in 2015 among; although there is still imbalance, with environment improvements still lagging behind.

During the 19th China-EU Leaders' meeting, the Ministry of Commerce of China and the European Commission cosigned the "Administrative Arrangements for ‘IP Key China’ IP Cooperation between the Ministry of Commerce of China and EU Commission” and “Memorandum of Understanding between the Ministry of Commerce of China and the Directorate General of Agriculture and Rural Development of the European Commission on Cooperation and Protection of Geographical Indications (GI) " on June 2 in Brussels.

The two sides will carry out the fourth phase of IP cooperation project "IP Key China" from September 2017 to August 2021, to continue cooperation in IP legislation and law enforcement, corporate IP risk prevention, international IP rules and so on.

Both China and the EU economics are with rich GI resources. It’s of great significance to deploy cooperation in the protection of GIs so as to expand the trade scale of products with GIs and sustain healthy and stable development of China-EU economic and trade relations. The leaders of both sides welcomed the progress of the negotiations so far and called for the end of negotiations in 2017. On June 3, the two sides agreed each other to announce their GIs name list in accordance with their own laws in an agreed manner and expressed will to speed up the progress to reach an agreement.

April 26, 2017, State Intellectual Property Office Patent Reexamination Board published the Top 10 Patent Reexamination & Invalidation Cases in 2016, which were selected for the social attention received, the guiding significance in application of examination standard, and the clarity of the decision reasoning. The invalidation case of No. ZL 20132015657 6.8 “carrier device” patent in the name of Shenzhen DJI, which is represented by Unitalen, is selected in this Top 10 list.

Case Summary

Shenzhen Zero UAV Tech. Co., LTD filed a petition to invalidate Chinese utility model patent No. ZL201320156576.8 owned by Shenzhen Da-Jiang Innovative Technology Co., Ltd (DJI). This case concerns the emerging aerial technology of unmanned aerial vehicles, with two parties both holding certain market positions in this field. The patent mainly involves the improvement of data and power line of the aerial photography system for unmanned aerial aircrafts. The Patent Reexamination Board, after hearing, made the decision No. 30205 to maintain the validity of the patent involved.

Highlight of the Case

The examination decision explains how to determine the technical content from the view of technical personnel in the field. The technical personnel in the field are those aware of the prior art in the technical field prior to the date of application, capable of acquiring knowledge of the prior art in the technical field and conducting conventional experiments. In determination of whether the disclosure of the specifications is sufficient, whether the claim can be supported by the specifications, whether the scope of protection of the claim is clear, and whether the solution to be protected by the claim can solve technical problems, the evaluation shall be based on the knowledge and capability of the technical staff in the technical field. If a technical staff in the technical field can implement the technical solution of the patent based on the disclosed content of the specification, the specification shall be deemed as having satisfied the requirement of full disclosure.

In determining whether the claim is supported by the specification, the entire contents of the specification should be considered; if a technical staff in the technical field concerned can make reasonable prediction of all the equivalent alternatives or obvious variations of the embodiments given by the specifications, the patentee should be allowed to cover all of its equivalent or obvious variations into the scope of protection.

About DJI

Established in 2006, Shenzhen DJI-Innovations (“DJI”) is a global leader in R&D and manufactory of drones control system and Unmanned Aerial Vehicle (UAV) solutions. From the earliest commercial flight control systems, ACE series helicopters control systems, multi-rotors flight control systems, spreading wings series S1000 & s900, to all-in-one multi-rotors Phantom series and the handheld 3-Axis camera gimbal Robin series, DJI has filled numerous technology blanks both domestically and internationally and became the leading player in the field, with market share up to 70%.

Shanghai Oriental Glasses Co., Ltd. (hereinafter referred to as “Shanghai Oriental”) was first established in 1928. In 2004, Guangzhou Oriental Glasses Chain Store, Ltd. (hereinafter referred to as “Guangzhou Oriental”) applied for registration of 东方 (“oriental” in Chinese) mark in respect of optical shop service in Class 44, which was opposed by Shanghai Oriental based on its prior right. The Trademark Office made a decision to refuse the application of Guangzhou Oriental for infringing Shanghai Oriental’s prior business name right and its prior use based trademark right over 东方眼镜 (Oriental Glasses). Guangzhou Oriental applied for review with Trademark Review And Adjudication Board (TRAB), who decided to approve the application of Guangzhou Oriental on the grounds that 1) although东方 (oriental) is a Chinese time-honored business name owned by Shanghai Oriental, its visibility is mainly in Shanghai area, while Guangzhou Oriental develops its business mainly in Guangzhou, so there should be no confusion aroused; and 2) Guangzhou Oriental had also earned a considerable level of visibility after 25 years of development.

Shanghai Oriental filed an administrative litigation with and received support from Beijing First Intermediate People's Court for the due protection that should be given to a time-honored business name. Guangzhou Oriental appealed to Beijing Higher People's Court, who revoked the first-instance ruling based on the same grounds as of TRAB decision.

In December 2014, Shanghai Oriental applied for retrial of the case by Supreme People's Court. The Supreme Court accepted the case and made a retrial ruling on December 23, 2016, which decided that Guangzhou Oriental’s application for registration of 东方mark in respect of optical shop services in Class 44 infringed on prior business name right of Shanghai Oriental“东方”(oriental) and shall not be approved for registration.

Typical Significance

The Oriental Glasses case is of great significance in the IP protection of China time-honored business names. It demonstrates the high awareness of right protection by owners of Chinese time-honored names nowadays. It also delivers an important message that Chinese time-honored business names will be rendered with “stronger protection” in accordance with laws.

DHC, owner of the cited marks, believing the disputed mark constitutes similar with the cited marks in respect of similar goods / services and infringes upon the prior business name rights of DHS and its affiliate company, applied for invalidation of the disputed mark. After receiving the TRAB decision to maintain the registration of the disputed mark, DHC initiated an administrative litigation.

After hearing, the court held that the disputed trademark and the cited marks do constitute similar marks. In addition, the services covered by the disputed mark, namely, beauty salon, manicure, barber shops, etc. in Class 44 and cosmetics products covered by citations overlap in terms of function, usage and target consumer, and constitute similar products and services. The court further affirmed that the disputed mark infringed upon the prior business name of DHC and its affiliate company, and made a ruling to revoke the TRAB decision.

Typical Significance

The court broke through the conventional standard of similar goods / services set forth by the “Guide for Similar Goods and Services”, and affirmed the similarity between cosmetics products in Class 3 and beauty salon services in Class 44, by taking into consideration of the lawyer’s opinions with sufficient evidences and giving attention to the public’s knowledge. On the other hand, the reputation of the cited marks played a vital role in this case.

Three years after China Trademark Law’s amendment, Trademark Office (TMO) and Supreme Court made respective patch-ups on issues needing to be specified or guided. On January 4, 2017, Trademark Office published the revised Trademark Examination and Review Standard (the Revised Standard); followed by Provisions of the Supreme People 's Court on Trial of Administrative Litigations Involving the Granting and Affirmation of Trademark rights”(Judicial Provisions) entering into effect on March 1, 2017,. Dan Chen of Unitalen Attorneys at Law shares her obversations on the highlights.

Have you found something notably new in the area of trademark registation examination?

Dan Chen: In the 2013 revision of the Trademark Law, sound mark was first introduced into China trademark system. Based on the last three years’s practice experiences, the Revised Standard has provided detailed guidance on the examination of sound mark applications in both registrability determination and similarity test for the first time. In terms of phohibitive provisions, according to the Revised Standard, a sound mark shall not be identical with or similar to the Chinese or foreign national anthems, military songs, or “the International”, and shall not include religious music, or sounds having negative affect such as horrifying or violent sounds. In terms of inherent distinctiveness, a sound mark shall be considered as devoid of distinctive character if it directly indicates the contents, target consumers, functions or other characteristics of the designated goods or services, for example, the sound of playing piano used as trademark for musical instrument, or kids’ laughing sound used as trademark for infant powder milk. At the same time, pitch or rythem that is too simple or common, a complete song or a lenthy piece of music, or a direct singing of advertising words or common phrases in plain tones will also be considered as lacking distinctinveness and therefore cannot be registered as trademark. As to the examination on trademark similarity, it is important to note that, in addition to the comparison between the audio effects, the Trademark Office also compares the verbal elements contained in a sound mark with prior word marks.

Do the two documents provide strengthened measures to tackle trademark squatting?

Dan Chen: Yes, there are several provisions in the Revised Standard that can be beneficial to trademark owners.

First of all, Paragraph 1 Article 44 of the New Trademark Law prescribes that, where a registered trademark was acquired by fraud or any other improper means, the Trademark Office shall declare the registered trademark invalid; and any other organization or individual may apply to the Trademark Review and Adjudication Board for invalidation of the registered trademark. This has been frequently adopted as an miscellaneous provision in trademark opposition or invalidation proceedings, but the rule of thumb on its application was not very clear in the past. In the Revised Standard, the circumstances constituting “registration acquired through other improper means” are specified as 1) registering many trademarks which are identical with or similar to highly distinctive trademarks of others, 2) registering many trademarks which are identical with or similar to others’ business names, entity names or the special names for well-known products, and 3) registering a large amount of trademarks with obvious lack of use intention. Further definition has been given to “obvious lack of use intention” as having neither actual use nor intention to use and merely aiming at selling the mark, seeking royalty fee or compensation. These specified provisions will significantly improve the applicability of Paragraph 1 Article 41, and turn it into a powerful weapon against those “professional” squatters even if the trademark owner may not be able to prove its prior use of the mark in China.

Secondly, with respect to the application of Paragraph 1 Article 15 of the New Trademark Law concerning agent or representatives attempting to register a trademark without authorization from the trademark owner, the Revised Standard and the Judicial Provisions broaden the application scope to those registration attempts taking place during the negotiation stage before an agency or representative relationship is formed and after termination of the relationship. In addition, where there is certain relationship such as kinship or investment relationship between the trademark applicant and the agent or representative of the trademark owner, they may be presumed to be in collusion, and hence fall into the scope of Paragraph 1 Article 15 as well. These specified provisions will help ensure safer business environment for trademark owners facing the risk of disclosing their trademarks to potential business partners. At the same time, however, trademark owners still need be mindful of preserving evidence from the very beginning, and are expected to input more efforts in background investigation, in order to dig out any potential link between its agent / distributor and the trademark applicant.

We have seen more and more successful opposition and invalidation actions based on the prior-copyright claim. Will this trend be loosened or tightened under the two documents?

Dan Chen: In my opinion, both documents deliver the same strong message that prior copyright will remain an effective tool in trademark oppoistion or invalidation proceedings. At the same time, however, certain borderlines have been drawn to avoid abuse of such rights. In terms of examination scope, for example, the Judicial Provisions require courts to conduct thorough examination on 1) whether the object at issue constitutes a copyrightable work, 2) whether the petitioner is the legitimate copyright owner or an interested party entitled to claim the copyright, and 3) whether the trademark at issue constitutes infringement of petitioner’s copyright. At the same time, the Revised Standard makes it clear that the petitioner’s trademark registration certificate alone or the copyright registration certificate dated later than the filing date of the trademark at issue cannot consitutue sufficient proof of prior copyright. In the past, it had been a very common practice for opposition / invalidation petitioner to apply for copyright registration after starting the opposition / invalidation proceeding. In light of this new evidence requirement, copyright owners shall either keep complete record of prior creation or publication of the work (not necessarily in China though), or take actions to obtain copyright registration as early as possible.

With regard to the use of a registered trademark, has there been any new requirement or trends?

Dan Chen: While the New Trademark Law describes trademark use as use of a trademark on goods, packages or containers of the goods or in trading documents, and use of the trademark in advertising, exhibition or any other business activities, to the extent to identify the origin of the goods, the Revised Standard further confines trademark use as use of a trademark in commerce and specifies several typical circumstances that do not constitute trademark use in the context of Trademark Law, namely, 1) publication of trademark registration information or declaration of trademark ownership; 2) use of a trademark other than in public business field; 3) use of a trademark merely on gifts; 4) mere transfer or license of trademark rights without actual use; and 5) symbolic use of trademark merely aiming at maintaining registration.

In our representation of trademark owners who are victims of trademark squatting, we frequently find trademark squatters carry out symbolic use of the preempted trademarks in an effort to keep the registration valid for sale. In the past, the Trademark Office would maintain a trademark registration so long as the registrant submitted one piece of valid use evidence. Under the new rules, petitioners of non-use cancellation will be able to challenge such single piece evidence as being symbolic use merely aiming at maintaining registration, and hence improve the chance of success. However, it is still not clear whether, at the stage of examination by Trademark Office, this test of symbolic use will be implemented ex officio and directly lead to the cancellation of a registered trademark.

Which would you consider the most typical trademark cases in the past year?

Dan Chen: Selected as 2016 top ten IP litigations by the Supreme Court, the series administrative litigations of Michael Jordan vs. TRAB and Qiaodan Sport are of significant importance for understanding the protection of person name rights against trademark squatting. These supreme court verdicts reflects the same standard as in the Judicial Provisions that the protection of person name rights includes not only the official name but also the pen name, stage name and translated name, to the extents that such name has enjoyed certain level of reputation, that a corresponding relationship has been established with the natural person, and that the relevant public refer it to the natural person.

Another 2016 top 10 IP litigation case concerning affirmation of trademark rights, namely the administrative litigation of Chateau Lafite Rothschild & TRAB vs. LAFEI MANOR, plays a guiding role in the determination of similarity between a foreign trademark with high level of reputation and the Chinese name preempted by others. During retrial of the case, the suprement court discussed various issues including composing elements of trademarks, degree of similarity in whole, the distinctiveness and reputation of the relevant trademarks, and most important of all, the determination of a stable corresponding relationship.　

Last but not the least, the civil litigation between Maco, a Chinese company well-known for industrial adhesives and glues, vs. Xiujie Xinxing over trademark infringement has set a new record for the highest amount of indemnity ordered by Beijing IP Court, which is 10 million RMB Yuan (nearly 1.5 million USD). In this case, Maco determined the amount of idenmity based on the profit acquired by the Defendant through infringement activities, and provided evidence collected through public information channels at their best, which includes the Defendant’s scale of operations, unit sales profit of infringing goods, production volume, sales period, number and geographical coverage of Defendant’s retail stores. With regard to sales profit, Maco requested the court to take into account of the unit price difference and the gross margin of the alleged infrining products. As for the sales volume, although there is no exact number, Maco was able to prove the monthly production of one type of the alleged infringing goods as 10,000 tons. Based on such, in combination with other factors such as Denfendant’s scale of operation, the number of retail stores and geographical coverage, Maco made resonable deduction that the three types of alleged infringing products should have a total monthly sales volume over 10,000 tons. The Defendant challenged the objectivity of the above evidence, but refused to provide the bookkeeping records and information of the relevant business activities despite the court’s order. In the end, Beijing IP Court granted full support to Maco petition and ordered the Defendant to compensate Maco for 10 million RMB yuan.

Ms. Dan Chen has over 20+ years’ experience in counseling clients on Chinese trademark law, anti-unfair competition law and copyright law. She has helped many businesses in the fields of trademark registration, disputes, licensing and transfer, infringement investigation, administrative enforcement and litigation. Her clients, ranging from Fortune 500 to startups, benefit from her in-depth knowledge and responsive services in preventing risks and resolving disputes in IP fields, as well as in portfolio management. Ms. Che is listed in “The world’s leading trademark professionals” directory, and is describes as “meticulous, thorough and trustworthy… always the top choice for large portfolios”. She was invited to lecture at many regional and international conferences and workshops, including ECTA annual conference, ABA spring conference, and McCarthy Institute of University of San Francisco. She was also the first Chinese lawyer who has ever served at anti-counterfeit committee of ECTA and provided annual report input on China IP status to the association. She is now member of various IP associations such as INTA, AIPPI, AIPLA and ABA. Currently Ms. Chen is chairing Unitalen IP Consulting, LLC, a US-based affiliate company of Unitalen Attorneys at Law.

Although it seems like 2017 has only just begun, there have been some interesting new updates in Chinese trademark practice in this short initial season. The following updates are summarized below:

1. New edition of Classification of Similar Goods and Services for registration in People’s Republic of China

Nice classification (11th edition) was officially put into use by WIPO on January 1st of 2017. The Chinese Trademark Office accordingly updated classification of similar goods and services table, in which many new goods or services were added, such as intelligent robot, selfie stick, screen protective film, head virtual reality, self-balanced vehicles, downloadable apps, bike share services, etc. Of course, some old goods or services were also deleted and modified.

According to current practice, the CTMO would like to accept standard items based on classification of similar goods and services table and the four lists for the accepted non-standard items announced by the CTMO. Therefore, due to non-standard many new items with new technology were not accepted by the CTMO. Thus, for some applicants or registrants, who only covered their real goods or services in their previous applications or registrations by broader descriptions or similar but standard descriptions, the new edition may meet and help their needs of protection on many new items with new technology.

2.The Amendment of the Trademark Examination Criteria

The present Trademark Law of the People's Republic of China was enacted in 1982 and subsequently amended in 1993, 2001 and 2013 respectively. As the most related governmental body for trademark matters, the Chinese Trademark Office and the Trademark Adjudication Board enacted Trademark Examination Criteria following each amendment of Trademark Law in order to give a guideline to all the examiners and practitioners. After the New Trademark Law of the People's Republic of China came into force on May 1st of 2014 respectively, the CTMO and the TRAB started to draft the new amendment of the Trademark Examination Criteria and finally announced the new amendment on January 4 of 2017.

Basically, there are many changes in the amendment in order to be consistent with the new Chinese Trademark Law and the Supplementary Regulation of the new Trademark Law. These adaptations include the examination criteria on sound mark, application criteria for applying office actions, examination criteria for bad faith application and etc. In particular, with sound mark, it listed requirements of formality examination and substantial examination, which include examination of absolute ground, distinctiveness and similarity. Trademarks that are too simple, too generic or too long will not be enough to be registered as sound mark.

3. E-filing is available to all the applicants

On July 14 of 2016, the State Administration of Industry & Commerce enacted a new guideline, pointing out that e-filing will be available to all the applicants instead of only to IP agencies. This new and convenient policy, which has no requirements for Power of attorney and certificate of good standing, came into force from March 10 of 2017. In the meantime, as the CTMO set up a special and detailed regulation for e-filing procedures, it will not be that easy for applicants who have less knowledge on the regulation. And since only standard items could be selected to do e-filing, applicants who want to use somehow non-standard items, cannot use e-filing.

In conclusion, applicants shall have to decide which option better suits their needs. Specifically, for applicants who could accept standard items protection on an urgent basis and want to avoid some formality documentations, e-filing is absolutely better, easier and faster. However, if applicants prefer to apply for non-standard items as a try, paper-filing will seems to be more suitable.

4.50% off costs reduction for trademark matters

Since April 1st of 2017, the CTMO and the TRAB would reduce 50% official fees for almost all trademark matters, including new application, renewal, transfer, modification non-use cancellation, opposition and invalidation. This new reduction will definitely help many applicants to save costs of official fees and encourage domestic and international applicants to file more trademark applications.

On the other hand, as there was nearly 3.7 million new trademark applications filed before the CTMO in 2016 and could exceed 4 million this year, so many effective registrations and applications are already co-existing, it will be relatively easier to encounter prior rights in the future. Since China is a country which still follow “first to file, first to register”, so it is highly recommendable to file new applications in China as early as possible to obtain registration without rejections.

5. The Amendment of the judicial interpretation on Several Issues Concerning the Trial of Administrative Cases Involving the Authorization and Determination of Trademark Rights

Since the Decision of the Standing Committee of the National People's Congress on Amending the Trademark Law of the People's Republic of China came into force on December 1, 2001, the People's Courts started accepting and hearing cases about the authorization and determination of trademark rights. These were brought by the interested parties for the review of rejection, review of opposition filed by trademark applicants, review of invalidation, review of non-use cancellation and invalidation made by the Trademark Review and Adjudication Board of the State Administration for Industry and Commerce.

According to official statistic, administrative litigation of intellectual property is increasing every year in China. From 2002 to 2009, there were only 2624 IP litigation cases in China, however, in 2013 the number became 2161, 2014 was 7951 and 2015 was 7545. IP courts have actively explored issues concerning the application of law in the trial of these cases, and have accumulated a lot of judicial experiences.

To better try administrative cases about the authorization and determination of trademark rights, further summarize judicial experiences, and clarify and unify the standards for hearing such cases, the Supreme People's Court held many symposiums and launched many investigation and research activities to hear advices from the relevant courts, departments, experts and scholars. These researched on and summarized the application of law in the trial of administrative cases about the authorization and determination of trademark rights. Based thereon, and according to the Trademark Law of the People's Republic of China, the Administrative Procedure Law of the People's Republic of China and other relevant laws and regulations, the Supreme People's Court presents the following opinions in light of the actual situations of the adjudicative work:

a) Whether or not trademark registration certificate could be a proof of prior copyright is always controversial. However, according to the new interpretation, the owner of prior copyright could preliminarily claim copyright on the basis of trademark publication or trademark registration certificate. If there is no contrary, then trademark certificate or publication could be presumed as evidence for copyright. This will reduce burden of proof of brand owner.

b) Merchandising right, which is not subject to copyright protection under Chinese copyright law, could be protected, if it has certain reputation or fame and there is a likelihood of confusion.