Chinese trademark filings: importance of reciting goods and services

22-05-2017

Foreign trademark attorneys should follow a number of best filing practices when working in China, as Lynn Wang of NTD Intellectual Property Attorneys, Catherine Wang of Dayup Intellectual Property and Allen Baden of Edge Law Group explain.

The China Trademark Office (CTMO) received more than three million applications in 2016, largely because of the Chinese government actively encouraging IP protection. In contrast, 388,000 trademark applications were filed with the US Patent and Trademark Office (USPTO) last year.

Some of this encouragement manifested itself in a 2014 amendment to the Chinese Trademark Law, which set a time limit of nine months from submission for the examination of trademark applications. By that deadline, the CTMO examiner must have either approved or rejected the filing.

Faced with millions of trademark applications every year and strict time limits, CTMO examiners rely on standard descriptions of goods and services under the Nice Classification system and the CTMO’s List of Non-standard Descriptions. The exception is filings under the Madrid Protocol, for which a separate group of examiners generally provides greater leeway to the descriptions used in those filings. As discussed below, while trademark owners benefit from the CTMO’s accelerated examination of applications, they should put extra thought into their goods/services descriptions, both to expedite examiner review of their filings and to minimise the risk of legal exposure when the way they use a trademark is inconsistent with the standard descriptions.

"As a result, in practice, when an examiner is not sure in which subclass the underlying goods and services belong, the examiner will assign the goods or services to all possible subclasses." 

This may all sound familiar to non-Chinese, particularly US practitioners, who have long faced the challenge of crafting descriptions that balance the need for accuracy (to avoid later third-party attack) with the desire to maximise the scope of protection afforded to their clients’ marks. 

Section 1.01

The CTMO divides each of the Nice system’s 45 classes of goods and services into subclasses. Each of these has a relatively broad title, the purpose of which is to help examiners categorise trademark filings. While the broad titles benefit the examiners, they can cause problems for applicants, and practitioners should be mindful of where examiners classify their clients’ filings.

From the examiner’s perspective, examining a trademark application is a two-step process. The examiner looks at whether the goods/services description falls within the list(s) of pre-approved descriptions, while concurrently determining into which subclass the applied-for goods or services should be categorised. The examiner will then determine the eligibility of the trademark for registration. If the applicant did not use a standardised description, the examiner may reject the application on those grounds.

Similarly, if the trademark is similar to another trademark and the goods/services in the two filings fall into the same subclass, the examiner will reject the application on those grounds (this rejection can be independent of differences between the actual goods/services, targeted consumers and channels of trade).

As discussed below, while the non-Chinese practitioner may be used to arguing successfully to examiners that the subject goods are so unrelated as to make confusion unlikely, CTMO examiners are less willing to accept such 

Section 1.02

In preparing a trademark application in China, the applicant may choose standard (pre-approved) descriptions from one of two sources:

1.         Nice Classification system. Any goods or services listed in Nice may be used (except for those expressly retained by the Chinese government when entering into the Nice Agreement); or

2.         CTMO’s List of Acceptable Non-standard Descriptions. In an effort to address limitations in the Nice Classification, since July 2016 the CTMO has issued three batches of “non-standard descriptions of goods and services” that trademark owners also may use for filing purposes.

While the CTMO does not have express rules for rejecting recitations of goods and services that fall outside the above two categories, because of time constraints the practical applicant may feel forced to use a standard description.

Pros and cons of standard descriptions

Section 2.01 pros

With strict deadlines to respond to CTMO office actions, the applicant will want to avoid the effort and cost associated with rejections on technical grounds, if possible. To that end, applicants often avail themselves of the standard descriptions upon which the CTMO relies.

Local agents often counsel applicants to use the standard descriptions for the same reason, perhaps to avoid having to report refusals to their clients, but more likely because they are pragmatic and reason that even a slightly flawed registration is preferable to not having a registration at all.

Section 2.02 cons

The use of standardised descriptions is not without risk, however. It is very important to identify and maintain a suitable scope of protection for a registered trademark in order to maximise the protection it affords, while minimising the risk of third-party challenge.

In fact, the use of trademarks on goods or services other than those listed (and approved) by the CTMO, even on different but similar goods and services, will not support a defence to a claim that the trademark has been used on the registered goods/services, and may result in cancellation (or partial cancellation) of the registration on the grounds of non-use.

This result is analogous to a third party validity challenge to a US registration on the grounds that the registrant did not use its trademark on some or all of the goods/services described in the registration.

Case study 1

As an example of what can happen with an ultimately flawed description, in the  scenario the applicant’s use of a standard description resulted in the examiner’s misclassification of the filing and the citation of a third-party registration.

A trademark owner sought to protect its trademark in connection with “stands for suspending and bearing various medical instruments by the bed”. Since the clause does not fall within either category of acceptable descriptions, the owner used the standardised description, “scalable stands for medical use” at filing.

Unfortunately for the applicant, the examiner classified these goods into subclass 1001 (apparatus, appliances, and instruments for surgical, medical, and veterinary use) and refused the application because of a prior similar trademark in that subclass.

While the applicant argued that the goods should have been classified into subclass 1004 (auxiliary apparatus, instruments, and articles for medical use), the examiner did not agree, and the applicant decided to refile the trademark with the description changed to “scalable stands for suspending and bearing medical instruments (furniture specially made for medical purposes)”.

This new description, which clearly stated that the goods were medical furniture (a parent category of the underlying goods), allowed the examiner to classify the goods into subclass 1004 and for the trademark owner to register its trademark.

US practitioners would not have faced the rejection experienced by the applicant in the  scenario, because US examining attorneys do not rely on a subclass classification system.

Case study 2: section 2.03 exceptions to the rule

That is not to say that there are no scenarios in which a trademark owner’s decision not to use a standard description pays off. As discussed below, using a non-standard description may benefit the applicant.

An applicant filed an application for a trademark for goods described as “support frame for PC screens and tablet PCs; tablet PC case”, and received an office action requiring amendment of the description.

In response, the applicant amended the goods description to “computer peripheral equipment”, the only phrase in the standardised descriptions of goods that was close to the trademark goods description that the applicant sought to register at the time of filing.

Subsequently, a competitor sought cancellation of the resulting registration from the CTMO on the grounds of non-use. This action demanded evidence of use for “computer peripheral equipment”. In response, along with evidence of use of the trademark for “support frame for PC screens and tablet PCs; tablet PC case”, (the goods for which the applicant originally sought registration of the subject trademark), the applicant provided documentation from prosecution of the application to establish that it originally sought to register the narrower description of goods; the amendment of the description to the broader phrase “computer peripheral equipment” was required by the CTMO to clear claims of inconsistency between registered goods and goods in use.

Had the applicant adopted the standardised description—“computer peripheral equipment” —in the first instance, the outcome in the non-use cancellation action would have been less favourable.

Section 2.04 treatment of Madrid filings

The CTMO uses different examination procedures (and a different group of examiners) for international registrations that designate China through the Madrid System versus national filings. Non-standard recitations of goods and services in Madrid registrations are generally accepted as is.

In those instances where they are not, however, for example a result of incorrect classification (by class or subclass), the applicant finds itself in a quandary, as the CTMO examination process does not include an amendment procedure for filings under Madrid.

As a result, in practice, when an examiner is not sure in which subclass the underlying goods and services belong, the examiner will assign the goods or services to all possible subclasses. The net effect is both positive and potentially negative: the trademark may enjoy a broader scope of protection, but, as described in the following example, there is an increased risk the filing will be refused over an earlier filing:

Case study 3

An applicant filed a Madrid application designating China for a trademark for “essential oils and plant extracts for cosmetic purposes”, which the CTMO examiner classified in subclass 0306 “cosmetics (excluding cosmetics for animals).” The designated goods should have been classified into subclass 0305 “perfumes and essential oils.”

Because of this erroneous classification, the application was rejected over a prior similar trademark in subclass 0306. Notwithstanding extensive communications with the CTMO, the examiner would not reassign the filing into subclass 0305. It was only after an appeal in which the applicant successfully argued differences in the subject goods that the application was approved.

To this day, however, the CTMO’s database shows this international registration in subclass 0306 and the question remains whether an examiner will some day (properly) cite the registration against later filings in the subclass 0305.

Lessons for non-Chinese practitioners

  • An accurate recitation of goods/services is as important in China as it is in the US and elsewhere.
  • However, accurate descriptions face obstacles if they do not fall within the lists of descriptions deemed acceptable by the CTMO.
  • There is an inevitable tension between the USPTO’s Manual of Acceptable Descriptions and the lists of descriptions deemed acceptable by the CTMO.
  • Consider using CTMO-approved standard descriptions in your original US filings, particularly if you plan to claim priority in a subsequent Chinese national or Madrid filing.
  • It may be advantageous to designate China through a Madrid filing versus a national filing, particularly if using a non-standard description of goods/services. On the downside, it may be difficult to amend a non-standard description, if refused by the CTMO, and the examination of Madrid filings may take twice as long as national filings, or longer.
  • Be prepared to communicate promptly with your clients and local counsel, given relatively short and non-extendable deadlines imposed by the CTMO.
  • For national filings, work closely with experienced Chinese counsel to craft the description of goods/services. Do not simply accept standard descriptions hoping for a quick approval of your client’s application.
  • The increase in the number of filings with the CTMO is likely to result in a greater risk of refusals for new applications.
  • Be prepared to lodge appeals to maintain the pendency of client filings and to nal filings to prevent third party intervening filings that may block subsequent filings efforts.
  • Expect a significant increase in the number of challenges to your clients’ registrations that are more than three years old, as later third party applicants seek to overcome refusals by attacking the validity of blocking registrations.
  • Be aware that, in cancellation actions, foreign registrants have frequently encountered difficulties in providing evidence of use of their trademarks, especially in instances in which they are working with Chinese partners and there may be different understanding of the differences in legal and cultural requirements for the forms of evidence.
  • Monitor developments at the CTMO carefully, as they may impact your future filing strategies.
  • File with an eye to the future. 

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