Trademark

Increasingly Stricter Examination Criteria for Registrability of Trademarks in the PRC

SIPSKnowledge, Trademark Registration

In China, the substantive examination of trademark applications is overseen by the Trademark Office (“TMO”) of the China National Intellectual Property Administration (“CNIPA”).

In recent years, CNIPA has become increasingly – and in many cases, unreasonably – strict in its examination of trademark applications for registrability issues. It is widely suspected that this is, in part, an attempt to reduce the vast number of trademark filings filed in China yearly, and/or an attempt to raise the threshold for market entry at a national level. Regardless of the motivation behind this shift, CNIPA’s increasingly strict interpretation of registrability criteria has made it more and more difficult to register trademarks in China.

This article will examine the legal basis for such refusals based on absolute grounds, recent changes in CNIPA’s examination practices on these issues, the risks of using unregistered marks previously refused by CNIPA on absolute grounds, and the impact of CNIPA’s stricter examination practice on existing registrations and doing business in China.

Legal Background

Articles 10 and 11 of the PRC Trademark Law list out the various absolute grounds of refusal for trademark applications.

Article 10 prohibits the registration and use of trademarks that damage, or could potentially damage, national dignity, public interests, public order, national unity, religious beliefs, etc., or trademarks that violate good social customs or have other adverse effects. Such trademarks include:

  1. trademarks consisting of specific signs, such as national flags, national emblems, etc.; and
  2. trademarks that are harmful to public order, good social customs, and public interests, e.g., marks that are ethnically discriminatory, deceptive, political, liable to create unhealthy social effects, etc.

Article 11, on the other hand, prohibits the registration of trademarks that lack distinctiveness and cannot serve the source-identifying function of trademarks.  Generally speaking, and under current practice, if the word portion of a composite trademark lacks distinctiveness, then the trademark as a whole will be deemed non-distinctive unless the additional elements of the trademark are themselves highly distinctive.

Recent Changes in Practice

As mentioned above, CNIPA has become increasingly strict in its examination of trademark applications for registrability issues. Not only has the TMO been ever stricter in examining trademark applications for these issues; the Trademark Review and Adjudication Department (“TRAD”) and to a large degree, even the courts, seem to be fully behind this approach, with both increasingly unwilling to overturn suspect TMO refusals based on absolute grounds.

The following types of trademarks have been particular victims of this tightening in examination standards:

Suggestive Trademarks

From a commercial perspective, a “good” trademark generally reflects or infer some characteristics of the goods/services, making it easy for consumers to associate the mark with the goods/services. At the same time, it should also be distinctive enough to distinguish the mark from other trademarks. In this regard, suggestive trademarks strike a solid balance between those two considerations.

Examples of previously-acceptable suggestive trademarks include “Safeguard” for soap, “Bang Bao Shi (帮宝适), the Chinese mark for “Pampers” literally meaning “help / children / comfortable”, and “Tai Zi” (汰渍), “Tide” in Chinese, literally meaning “eliminate stains”.

Recently, however, the TMO has been increasingly reluctant to allow suggestive trademarks to be registered in China, holding them to be either descriptive (and therefore lacking distinctiveness) or deceptive (depending on whether the characteristics of the relevant goods/services might possibly be deemed inconsistent with the words appearing in the mark).

The following marks are some notable examples of creative suggestive marks, that most trademark offices would waive through, that have recently been refused on this basis in China:

 

Mark Designated Goods Ruling
1. EARUP Physiotherapy apparatus, etc. in Class 10 Refused on the grounds of being misleading because it “suggests the goods improve the performance of ears.”
2. 夜安士

“Ye An Shi” in Chinese (Night / Comfortable / Scholar)

 

 

Nutritional products in Class 5 Refused as misleading because it “suggests the goods could make people comfortable at night.”
3. 干霸

“Gan Ba” in Chinese (Dry / Overlords)

Desiccant, in Class 1 Refused as misleading because it “suggests the goods have a strong effect.”

 

 

 

4. 智泽童康

“Zhi Ze Tong Kang” in Chinese (Intelligence / Moist / Child / Health)

Medical instruments in Class 10 Refused as misleading because it “suggests the goods are helpful for children’s health.”
5. 康齿家

“Kang Chi Jia”
in Chinese (Healthy / Teeth House (or Family)

Toothpaste in Class 3 Refused as misleading because it “suggests the goods’ function of keeping teeth healthy.”

 

There is also now a clear risk that any mark containing a product name, colour or any other characteristics of the goods/services, or that contains advertising or promotional words etc., even loosely related to the goods/services could be refused regardless of whether there are other distinctive elements contained in the trademark or whether the words are at most indirectly related to the designated goods/services. Below are a few more notable examples of recent refusals for marks that would almost undoubtedly have made it through examination in China in the past:

 

Mark Designated Goods Rulings
1. 北纬四十七度

“Bei Wei 47 Du” in Chinese (47 Degrees / North Latitude)

Disinfectant; vitamin preparations, etc. Refused because it is a location, even though this location has no direct connection or relationship to the goods.
2. 椰子知道

“Ye Zi Zhi Dao” in Chinese (Coconut / Knows)

Fruit jellies; canned fruit, etc. Refused on the grounds that the goods may not necessarily have coconut in them as a raw material and this would be liable to cause confusion if they do not.
3. 艾拓氪

“Ai Tuo Ke” in Chinese (a herb / Develop / Krypton, a chemical element)

Hand tools, etc. Refused on the grounds that the mark is liable to cause misidentification as to the raw materials of the products because of inclusion of the name of the element “Krypton”, which is actually not directly related to the designated goods.
4. 仙女杯

“Xian Nv Bei” in Chinese (Fairy / Cups)

Advertising, sales promotion for others, etc. Refused because it contains “cups” which is the name for a goods item that has no direct relationship with the designated services.

 

Trademarks with “Unhealthy Social Effects”

The TMO has also become increasingly willing to refuse trade mark applications on the blanket assertion that the marks might be deemed to have “unhealthy social effects”. Unsurprisingly, such a vague term has led to numerous decisions that seem to defy logic (making arguing against such decisions difficult, particularly when there is no explanation at all provided for the reasoning behind the alleged unhealth effect). Here are a few examples of strange rejections tied to this basis for refusal:

 

Mark Designated Goods Rulings
1. FALL GUYS Toys in Class 28 and education, etc. in Class 41 Refused on the grounds that it can mean “scapegoat”, which is against the social moral values of integrity and friendliness promoted in China.
2. 边境线

“Bian Jing Xian” in Chinese (direct meaning “border line”)

Kitchen utensils in Class 21 Refused because “border line” has political connotations as a term related to national sovereignty, which could cause unhealthy social effect if it were to be put into commercial use.
3. DAILY CLEAR-UP Yogurt and milk in Class 30 Refused because this term was used in China during the COVID-19 pandemic.
4. 桃花运

“Tao Hua Yun” in Chinese (Peach / Blossom / Fortune)

Restaurants in Class 43 Refused because this mark refers to luck/good fortune in romance and the TMO was of the view that this was inappropriately suggestive in respect of restaurant services provided under the mark, thereby negatively impacting the public interest.
5. 恶魔角

“E Mo Jiao” in Chinese (Bad / Devil / Horn)

Wines in Class 33 Refused because the mark contains “E Mo” which means “evil devil”.

 

Notably, the TMO is also believed to have an internal blacklist of words and characters that are blanketly prohibited from being registered as trademarks. This list has not been made public, but from past experience, it appears near certain that the characters for at least “Guo” (“national” or “nation” in Chinese), “Hua” (“China” or “Chinese” in Chinese) and the Chinese characters for “center/middle”” are on the list.

Meanwhile, uncommon meanings, homonyms, and other aspects of examined trademarks may also be taken into account by the TMO during its substantive review. This often results in rejections where the TMO decides there are undesirable connotations to be drawn, even where any such connections are exceedingly tenuous, if not wholly illusory or opaque. Here are a few such examples:

 

Mark Designated Goods Rulings
1.

“Lang” in Chinese (Waves or Unrestrained)

Advertising, sales promotion in Class 35 Refused because the character can mean “unrestrained” or “wild”, in spite of the fact that the character is most commonly used to mean “waves.”

 

 

 

 

2. GUNPLA Stationery in Class 16 Refused because it could be split into “GUN” and “PLA”, which is the abbreviation of People’s Liberation Army.
3. NATUREZEN Baby food, nutritional products, etc. in Class 5 Refused because it contains “ZEN”, a religious term.
4. 鑫疆

“Xin Jiang” in Chinese (Prosperity / Boundary)

Electric cables, etc. in Class 9 Refused because it has the same Pinyin pronunciation as Xinjiang Province, though not the same meaning.
5. 呼孤

“Hu Gu” in Chinese (Breath or Call / Orphan)

Antibiotics, medicines for veterinary purposes, etc. in Class 5 Refused because when another character “肠 (Chang, means ‘intestines’)” is added between “Hu” and “Gu”, the term refers to “reovirus”, which is an infectious virus.

 

It is exceedingly difficult to analyse potential trademarks for susceptibility to rejections where logic plays little if any role in their examination. This is particularly the case if ulterior administrative or political motives are what is actually driving the use of these absolute ground refusals. Given the risks triggered when such a refusal is issued, however, it is now vital to brainstorm and give at least some thought to such refusals prior to filing new applications and/or rolling out a new product in the Chinese market.

Positively, and in some rare cases, refusals based on the grounds of “unhealthy social effects” have been overcome on appeal at the courts (with several examples as below), indicating they may still offer some relief from obtuse rejections. Here are a few limited examples where successful appeals of refusals due to “unhealthy social influences” have been granted by the Beijing IP Court.

 

Mark Designated Goods Rulings
1. Red Titan Toys in Class 28 Refused by the CNIPA on the grounds that “red titan” was a term used to refer to “former Soviet Union”. This refusal, handled by SIPS, was overturned by the Beijing IP Court on the grounds that the meaning is no longer used nor publicly known. Notably, neither the TMO nor the TRAD explained the precise reasoning behind the rejection until the court appeal stage, leaving us to guess blindly as to why the mark had been rejected and how we might be able to argue for its approval.
2. Parsons Ropes, wrapping or binding bands, not of metal, in Class 21 Refused by the CNIPA because “parsons” is a religious term in Christianity. The Beijing IP Court overturned the refusal on the grounds that when used with the applicant’s Chinese mark “Pa Sen Si” the mark would not be associated with the Christian term.

 

 

 

3. ORISMATIC Sensors, etc. in Class 9 Refused by the CNIPA on the grounds that “ORISMATIC” has a meaning referring to “Christianity” and its component “MATIC” has the meaning “automatic”.  The Beijing IP Court found nothing to support the view that the mark could refer to “Christianity” and overturned the rejection.
4. Education, training etc. in Class 41 Refused by the CNIPA on the grounds that the mark contains an image of a monk and therefore has an unhealthy religious impact. The Beijing IP Court overturned the refusal claiming it is dissimilar to an image of a monk.

 

Notably, successful appeals of refusals due to misleading/deceptiveness grounds have been extremely rare at all stages.

Risks in Using Unregistered Marks

Marks Refused Based on Article 11 Due to Lack of Distinctiveness

Legally speaking, marks that are rejected due to non-distinctiveness pursuant to Article 11 could, in theory, still be used as unregistered trademarks. They might also eventually be approvable for registration on the basis of acquired distinctiveness. That said, the standard for claiming acquired distinctiveness in China is extremely high. To meet that standard, an applicant needs to provide a large volume of evidence to prove its use of the mark over a long period of time across China. More than that, evidence of the mark’s generation of a reputation amongst Chinese consumers sufficient to create a direct correlation between the mark and the applicant in their minds should also be submitted. A notable case where acquired distinctiveness was successfully claimed is in relation to the US cosmetics brand “FRESH”. The applicant, Fresh, Inc. submitted voluminous evidence relating to sales of its products in cities throughout China, as well as advertisements in magazines, etc., in Chinese publications, thereby successfully proving the widespread and long-term use and promotion of its products in China.

That said, while the owner/user of the unregistered mark is working to generate sufficient reputation through use, possible infringement risks must always be kept in mind. This not only includes such risks from owners of similar already-registered marks. There is always the possibility that identical pirate marks may slip through to registration, despite the prior absolute refusal of the true owner’s original application. This is not uncommon in China, where examination can vary wildly from application to application – even applications for identical marks. This is due to the CNIPA’s “case-by-case” rule, which permits examiners to ignore contrary decisions or outcomes in highly similar cases, permitting them to decide individual cases in a de facto vacuum.

Marks Refused Based on Article 10 Due to Marks Being Misleading or Deceptive

Unlike Article 11, Article 10 prohibits not only the registration, but also even the use of trade marks falling under its ambit. Indeed, any use of such marks could result in administrative penalties starting from RMB10,000 (around $1,400) up to a fifth of the turnover generated by said mark.

Historically, authorities have not been overly proactive in policing the market for use of such marks. Ominously, however, in May 2023 CNIPA released its two-year work plan, which specifically noted that at some point in the near future, authorities will begin actively monitoring to see whether trademarks refused by CNIPA on registrability grounds are being actively used in the market. This is especially the case for those marks deemed likely to be deceptive and those creating “unhealthy social effects”. Naturally, the risks in this regard will undoubtedly be increased where in appealing the TMO’s Article 10 refusal of their trademark, the trademark owner appeals the refusal to the TRAD (or further to the courts) and submits evidence of use in China intended to prove the fame of the mark in question.

CNIPA’s work plan does not set out a concrete timeline for the implementation of these measures or otherwise clarify the method of detection. But if experience is any guide, CNIPA could implement a broad enforcement campaign at any time, pursuing a substantial number of cases right out of the blocks to encourage voluntary compliance.

Given the high stakes involved here, and in cases where there is a concrete fear that a given mark might somehow be vulnerable to an Article 10 rejection, strong consideration should be given to adopting alternative strategies for the mark and/or the China market. For example, redesigning the mark altogether (e.g., adopting a Chinese brand specifically for China); filing the initial application in the name of an unrelated third party; avoiding trademark use (not framing it as a trademark in any way); and limiting its use as trade name or a slogan (if applicable) are all possible strategies.

Impacts on Existing Registrations?

Over the last three to five years, the CNIPA and the courts have taken a more active and aggressive approach to trademark piracy. As a result, pirates have begun to eschew their historically docile approach of merely defending their pirated portfolios and are now regularly adopting much more aggressive tactics. As a result, it is now common for trademark squatters to file retaliatory non-use actions, for example, against vulnerable trademark registrations held by their victims as a means of forcing a settlement.

With that in mind, there is also a real risk that CNIPA’s stricter interpretation of registrability requirements may embolden trademark squatters and bad-faith actors to also begin filing retaliatory invalidation actions against rights-holders’ existing trade mark registrations, claiming those registrations are void ab initio due to Article 10 and/or 11 defects.

So far, it appears that the TRAD and the courts have been generally sympathetic to rights holders in such cases, dismissing the invalidation petitions and (eventually) maintaining the rights-holders’ registrations. This is particularly the case where:

  1. the trademark has certain distinctive features and does not fall into an extreme situation where it should have rightly been refused for registration;
  2. the trademark has been used and/or has acquired certain reputation in China; and
  3. there is proof that the other party bore malicious intent in filing the invalidation action.

Two notable examples in this context are recent invalidations against the marks “CELLFOOD” (covering nutritional preparation in Class 5) and “HEATSTICKS” (covering electronic cigarettes in accessories in Class 34), filed by trademark squatters/rival business operators. Both invalidations were based on absolute grounds.  In both cases, the TRAD decided to maintain registrations of the marks, holding that they were each coined words (despite the meanings of their individual components) and not generic names or a universal expression/direct description of any characteristics of the respective designated goods. It also noted that the marks had achieved a certain degree of reputation via their continuous use and promotion. In the decision for “CELLFOOD”, the TRAD also specifically criticized the bad faith of the appellant, which had clearly maliciously filed the invalidation action in support of its own corresponding pirate applications for very similar marks.

In light of these risks, consideration should always be given to potential vulnerabilities in any company’s portfolio, particularly when striking out hard against larger-scale pirates who are likely more desperate to see a return on their “investment” in their ill-gotten portfolios as the tide turns against them.

Conclusion

There have been a range of efforts from various channels campaigning for a change in CNIPA’s examination practices relating to refusals on absolute grounds. Up till now, however, feedback received has been negative. CNIPA’s attitude appears to suggest that they are not considering any change in the short term. Given that, these issues must remain front of mind for businesses in China, particularly multinationals looking to extend offshore products and their trademarks into the China market – where those trademarks could eventually be deemed unregistrable, and perhaps even unusable – in China. This requires broader and deeper examination of possible Article 10 and 11 issues during the clearance process for new trademark applications in China.

Dan Plane, Sherry Li and Jeremy Chiu