Category: Articles

Is it really necessary to do a comprehensive trademark search before filing?

Before filing your trademark registration applications in China, trademark attorneys will always ask you: do you wish to do a comprehensive trademark search before filing?

Advantages to do it

The advantages of doing a pre-filing trademark search are obvious:

  • You can confirm whether there are any conflicting trademarks before you file your application.
  • You don’t have to wait for a year or so to know that there is a conflicting trademark which can block your trademark registration, which you should have been known before filing (that’s one year earlier) if you had done the pre-filing search. It should reduce the uncertainty of your trademark’s status in China greatly.
  • If you find out that there are conflicting trademarks, you can take preemptive actions in advance, e.g. cancelling or invalidating or opposing the conflicting trademark, rather than waiting for a year to do that.
  • If you just cannot lift the conflicting trademark, you may consider your trademark strategy in China and amend your trademark for China. This is better than spending a lot of money to promote your brand in China, and found out later that you just cannot legally register and use it in China.

Disadvantages

Despite of the advantages of the pre-filing trademark search mentioned above, there are certain disadvantages to do the comprehensive pre-filing trademark:

  • It will increase your costs. Usually a comprehensive trademark search for one trademark in one Class will cost no less than USD 500. This is more than the cost of simply filing the trademark to China Trademark Office.
  • It will delay the process. As the comprehensive trademark search takes a lot of time, it will absolutely delay the process of trademark filing. In average, the filing process could be delayed for about 1 week if you choose to do the comprehensive pre-filing trademark search.
  • It may increase rather than reduce uncertainty. As the judgement of similarity between trademarks are quite subjective, it is not always a black-and-white issue to determine whether an existing trademark is conflicting with your proposed trademark. As such, sometimes the result of a comprehensive pre-filing search is more confusing, and no trademark attorney can guarantee what China Trademark Office will determine, which may cause greater uncertainty, rather than reducing the uncertainty.
  • It may put you in a more dangerous position. Taking an early action against the possible conflicting trademark could give an early warning to the owner of the conflicting trademark, and therefore may drag you into a fight when you just enter the China market and are not ready for the fight.

Our recommendation

Based on the above, it seems to us that a comprehensive pre-filing trademark search has its advantages and disadvantages. Whether you should do it really depends on your specific situation.

If you have already used your brand in China and built certain reputation on it, and changing your brand/logo could cause significant impact on your business, it seems that it is not necessary for you to do the comprehensive trademark search before filing.

This is because amending your trademark will not be an option for you and you can always take actions against the conflicting trademarks after your trademark applications are rejected by China Trademark Office citing certain conflicting trademarks. In this case, to keep a better position in the scenario of conflicting, it is always better to file your trademark application earlier rather than spend more time on trademark search which may not give you a lot of benefits.

However, if your brand is new to the China market and you can amend your brand or logo to suit the China market, and you just want to make sure that your trademark is registrable from the day one you promote your business in China, then yes, we strongly recommend you to do a comprehensive pre-filing trademark search, as long as you can afford it.

Having said the above, no matter what your specific situation is, you should always do a simple pre-filing trademark search to confirm whether there is any identical trademark existing. This should not take too much time and most trademark attorneys can do it without extra charge.

Why Apple lost its case in China but Facebook won?

For those who are interested in the Chinese trademark laws, they may have heard that Apple lost its case in China with respect to the “IPHONE” mark in Class 18. As the result, the Chinese court decides that a Chinese company owns the “IPHONE” mark in Class 18 and therefore has the right to use the “IPHONE” mark on its leather wallet and purse products.

For the details of the “IPHONE” trademark case, please see our earlier article on this case, “Chinese court decides that “IPHONE” is not a well-known trademark“.

However, on a similar case with respect to the “face book” mark in Class 32 (beverages), Facebook won the case where the Chinese court decided that the Chinese individual who applied to register “face book” mark in Class 32 had the intention to copy other’s trademark of high popularity, and therefore his trademark application shall not be approved according to the law.

Please refer to the BBC report on the above cases at “Facebook wins China trademark case“.

As these two cases look pretty similar (both cases are about a Chinese company/individual applying for a famous western brand in China in a class which is not directly relevant to the main business of such brand), people are wondering why this happened? Is it true that these cases have different outcomes because of political reasons as hinted by BBC or other western media?

Well, maybe there are some political factors in these cases. However, from the legal perspective, there could be other reasons for the different outcomes.

Differences in the legal arguments made in both cases

For easy review, we compare the legal arguments made by Apple and Facebook as follows:

“IPHONE” case “face book” case
Approving the registration of this trademark will have negative impact to the society. (Article 10.1.8 of the 2001 Trademark Law) Approving the registration of this trademark will have negative impact to the society. (Article 10.1.8 of the 2001 Trademark Law)
“IPHONE” is a well-known trademark and shall be protected in all classes. (Article 13.2 of the 2001 Trademark Law) “Facebook” is a well-known trademark and shall be protected in all classes. (Article 13.2 of the 2001 Trademark Law)
N/A This trademark has infringed the prior trade name right of Facebook. (Article 31 of the 2001 Trademark Law)
N/A Trademark registered by deceptive or wrong means shall be revoked. (Article 41.1 of the 2001 Trademark Law)

As shown in the above table, Apple only made two legal arguments but Facebook made four legal arguments. The first two legal arguments made by Apple and Facebook are the same and none of them was accepted by the Chinese court. The third argument made by Facebook was also not supported by the Chinese court. In the “face book” case, the Chinese court decided in favor of Facebook based on the forth argument made by it.

In the “IPHONE” case, the Chinese court specifically addressed in the final judgment that because Apple did not argue that the “IPHONE” mark breached Article 41.1 of the 2001 Trademark Law, the court did not review this case based on such clause.

Here’s why

From the court’s perspective, there is no much difference in both cases.

The “negative social impact” argument was not accepted by the court because no public interest was involved in both cases.

The “well-known trademark” argument was not accepted by the court because neither “IPHONE” nor “Facebook” can established that it was well-known in China before the application date of the trademark in dispute.

The only difference which leads to the different outcomes of both cases is that Apple did not argue that the “IPHONE” mark was registered by deceptive or wrong means, which allows the judge to review the case from a more general perspective, i.e. whether the registration is in good faith.

To be fair, we have to say that it is not usual to quote Article 41.1 of the 2001 Trademark Law (the “good faith” clause) in a trademark case like the “IPHONE” case and the “face book” case and there is no precedence that the Chinese court can support this argument. However, apparently Facebook took its chance and finally won the case. As for Apple, maybe it is time to consider to change its trademark lawyer in China.

Chinese court decides that “IPHONE” is not a well-known trademark

Apple’s opposition against the “IPHONE” mark in Class 18

On October 18, 2002, Apple Inc. applied to register the “IPHONE” mark in Class 9 (computer hardware, computer software etc.) in China, which was approved on November 21, 2013.

On September 29, 2007, a local Chinese company Xin Tong Tian Di Company (“XTTD“) applied to register the “IPHONE” mark in Class 18 (leather, wallet, purse etc.) in China (“Disputed Trademark“).

After China Trademark Office (“CTO“) preliminarily approved the registration of the Disputed Trademark, Apple filed an opposition against it but the opposition was rejected by the CTO in 2012.

Then Apple applied for re-examination of the Disputed Trademark to China Trademark Review and Adjudication Board (“TRAB“). But the TRAB sustained the CTO’s decision on December 16, 2013.

Arguments of Apple

Apple argued that its “IPHONE” mark registered in Class 9 has gained high popularity and distinctiveness in China and therefore should be deemed as well-known trademark.

Since its launch of the IPHONE on June 29, 2007, it has launched 9 generations of IPHONE products and has been officially selling the IPHONE products in Mainland China since October 2009.

Based on the above, Apple applied to protect its “IPHONE” mark as a well-known trademark in China, which means, it should be protected in all Classes in China even if it has not been registered in a particular Class.

Opinion of the TRAB

The TRAB decided that Apple cannot prove that its trademark had become well-known in China before the application of the Disputed Trademark because its use of the trademark which can be supported by evidences submitted by Apple was all dated after the application date of the Disputed Trademark.

Despite that Apple’s “IPHONE” mark has high popularity on cell phones and relevant products, the current evidences were not sufficient to determine that the “IPHONE” mark had become a well-known trademark in China. It is not likely that the general public in China will associate the Disputed Trademark with Apple Inc.

Decision of the court

Apple appealed the TRAB decision to Beijing No. 1 Intermediate Court and then to Beijing Higher Court. Both courts decided that the “IPHONE” mark was not a well-known trademark before the application date of the Disputed Trademark because the IPHONE was first launched in June 2007 and was only officially sold in Mainland China in October 2009.

At the time of the application of the Disputed Trademark (September 29, 2007), the “IPHONE” mark was not well-known in China and therefore it cannot block the registration of the Disputed Trademark.

Accordingly, Beijing Higher Court finally rejected Apple’s appeal and affirmed the registration of the Disputed Trademark.

Comments from China Filing

Chinese laws do provide special protection to well-known trademarks. However, being recognized as a well-known trademark is not retrospective. Even if a trademark becomes well-known after massive use and promotion, at its early stage when it is not that “famous”, it cannot prevent others from registering the identical or similar trademark on irrelevant Classes (goods or services).

Big companies such as Apple should consider to register its major trademarks in all 45 Classes in China before its launch in China. The registration costs for all 45 Classes may seem to be very high, but it will save a lot of litigation costs in the future and can eventually protect its trademark in all Classes in China.

IP Protection by China Customs in in China

According to Chinese laws, China Customs can protect China registered trademarks, patents and copyrights by monitoring and investigating on goods passing through the China border.

The Customs can detain the goods which they suspect to be infringing other’s IP rights, and may forfeit the goods or impose administrative penalties on the consignor or consignee of the infringing goods.

Where the Customs is not sure whether the IP infringement can be established, they may ask the IP owner to bring the case to the court and continue to detain the goods at the request of the court.

Statistics published by China Customs indicates that, protection provided by China Customs on IP rights are quite strong. Below is a table showing the quantities of goods detained on suspicion of IP infringement from Year 2012 to 2014.

Detained goods

Year 2012

Year 2013

Year 2014

Quantity (in batches)

15,690

20,464

23,860

Quantity (in pieces)

93,117,335

75,945,594

91,965,548

Statistics sourced from Annual Report published by China Customs for Year 2012, 2013 and 2014.

Further review on the details of the IP protection of China Customs for the recent three years shows the following characteristics:

(1) Most of China Customs actions are related to trademark infringement

From 2012 to 2014, more than 90% of the detained goods were relevant to trademark infringement.

Details on detainment of goods relating to each type of IP rights infringement are set out in the table below.

IP right

Detained goods

Year 2012

Year 2013

Year 2014

Trademark

Quantity (in pieces)

88,210,686

74,808,04

89,075,040

Percentage against all goods detained

94.73%

98.5%

96.86%

Patent

Quantity (in pieces)

4,557,264

532,315

1,786,551

Percentage against all goods detained

0.38%

0.8%

1.94%

Copyright

Quantity (in pieces)

349,385

604,788

1,100,857

Percentage against all goods detained

4.89%

0.8%

1.2%

Statistics sourced from Annual Report published by China Customs for Year 2012, 2013 and 2014.

The reason behind probably is this: it would be easier for the customs officials to determine whether the trademark infringement can be established, compared with the patent infringement and the copyright infringement.

For patent infringement and copyright infringement, the customs officials usually requests the IP owner to submit it to the court for a judgement.

(2) Most investigations taken by China Customs were initiated by ex officio.

From 2012 to 2014, more than 99% of the investigations were initiated by ex officio.

How Initiated

Investigation taken by China Customs

Year 2012

Year 2013

Year 2014

By ex officio

Quantity (in times)

15,646

20,426

23,817

Percentage against all investigations

99.72%

99.8%

99.82%

By application

Quantity (in times)

70

38

43

Percentage against all investigations

0.45%

0.2%

0.18%

Statistics sourced from Annual Report published by China Customs for Year 2012, 2013 and 2014.

In practice, it is very difficult for the IP owner to get information about the infringing goods and the consignor or consignee of the infringing goods. Without such information, they cannot get the China Customs to initiate the investigations.

That is why the recordal of the IP rights at the China Customs is very important. After they are recorded at China Customs, it will monitor the goods imported or exported, and can start investigation on the possible infringing goods by ex officio.

(3) Most of IP right infringements occurred in the export process.

From 2012 to 2014, more than 95% of the infringement activities identified by China Customs occurred in export process, and more than 99% of detained goods were for exportation.

Import or export

Identified infringement/Detained Goods

Year 2012

Year 2013

Year 2014

Import

Quantity (in times)

690

679

842

Percentage against all identified infringement

4.40%

3.3%

3.53%

Export

Quantity (in times)

15,000

19,787

23,019

Percentage against all identified infringement

95.60%

96.7%

96.48%

Import

Quantity (in pieces)

211,487

452,648

439,933

Percentage against all identified infringement

0.23%

0.6%

0.48%

Export

Quantity (in pieces)

92,905,848

75,492,946

91,525,615

Percentage against all identified infringement

99.77%

99.4%

99.52%

Statistics sourced from Annual Report published by China Customs for Year 2012, 2013 and 2014.

This means that for the foreign companies which use China as the production base, it is very important for them to register their IP rights in China even though they are not selling products in China.

Otherwise, if their IP rights were registered by others, their IP rights could be recorded at China Customs in others’ names, which can effectively interfere the export of the products manufactured in China.