Unlike the EUIPO and the Benelux IP Office, the Chinese Trademark Office can refuse a new trademark application based on a prior conflicting mark without the intervention of the prior mark owner. Consequently, contacting the prior mark owner to obtain a letter of consent (the “LoC”) would be a logical approach to consider when it comes to a refusal based on prior mark.
However, neither the Chinese Trademark Law nor its implementing regulations provide any reference to the acceptability of LoC. The practice of the Chinese courts and trademark authorities before September 2021 was divided into the following two stages:
- Stage One (before 2005): LoC not accepted; and
- Stage Two (2005-2021): Chinese courts and trademark authorities accepted LoC for similar (but not identical or substantively identical) trademarks on identical or similar goods.
Practice before 2021
Under the Chinese Trademark Law (in its current and previous versions), the rights and interests of the trademark holders are important but the overriding interest is inevitably the protection of the rights and interests of the consumers. That being said, a coexistence agreement between two parties cannot rule out the risk that the public would still confuse a new trademark and the earlier one belonging to another business. As a result, the Chinese courts and trademark authorities took the position to refuse every LoC in the very beginning.
However, that changed in 2005 with amendments to the Rules for Trademark Review issued by the China Trademark Office hinting that LoC could now be acceptable. Following these amendments, the Chinese courts and trademark authorities began to develop jurisprudence fleshing out this possibility.
For the first time in its judgment and based on the “Liang Zi” case, the Chinese Supreme Court confirmed in 2011, that a coexistence agreement between interested parties could potentially impact the judicial review of a given trademark’s registrability. Following the Supreme Court’s opinion, it became increasingly common for lower courts to consider LoC as evidence in support of registrability of a new trademark.
In 2019, the Beijing Higher Court issued Trial Guidelines for Administrative Cases Involving the Granting and Verification of Trademark Rights, stating the following in Articles 15.10 and 15.12:
When judging whether the Applied-for Mark and the Cited Mark are similar, coexistence agreement may be used as prima facie evidence precluding confusion. (15.10)
If the Applied-for Mark and the Cited Mark are identical or substantively identical, and they are used on the same or similar goods, then the application for the Applied-for Mark cannot be approved merely based on a coexistence agreement. If the Applied-for Mark and the Cited Mark are similar and they are used on the same or similar goods, then if cited mark owner provides a coexistence agreement, and there is no other evidence to prove that coexistence of the Applied-for Mark and the Cited Mark will cause the relevant public to be confused as to the source of the goods, it may be determined that the Applied-for Mark and the Cited Mark are not similar marks. (15.12)
Therefore, by 2021, LoC was generally accepted in China for similar trademarks (i.e. not identical or substantively identical trademarks) on identical or similar goods.
Drastic change in 2021
The turning point came on August 31, 2021. On that date, the Beijing Higher Court did a U-Turn and rejected a LoC filed by Volkswagen in relation to the registration of the mark “TAYRON” for vehicles in class 12. This mark had been previously refused by the China Trademark Office due to the prior mark “TYRON” registered by Tyron Runflat, Inc, a company producing tire-related products. However, despite the fact that Tyron Runflat, Inc and Volkswagen are active in different areas and the two marks in question are similar (i.e. not identical or substantively identical), the Beijing Higher Court still rejected the LoC issued by Tyron Runflat, Inc, considering that the risk of confusion could not be excluded.
In September 2021, the China Trademark Office followed the steps of the Beijing Higher Court by stating that more strict review should be carried out on LoC, and only LoC on trademarks with significant differences could be allowed.
Since then, a great number of decisions rejecting LoC on similar trademarks have been rendered by the Chinese courts and trademark authorities. To illustrate that trend, the Beijing Higher Court has rejected the LoC filed by a GEVERS client in a recent judgment (i.e. dated on 25 July 2022) despite the fact that the marks in question are similar but not identical and the parties are active in different industries.
How to handle this change?
From above, it should be understood that LoC is no longer accepted in China even if the marks in question are not identical or substantively identical.
It remains difficult to predict whether the Chinese courts and trademark authorities will change the practice again in the future.
Consequently, companies wishing to protect their trademarks in China should conduct trademark availability searches beforehand, and the following actions should be taken into consideration in the event that the desired trademarks are not available:
- File non-use cancellations against the prior conflicting marks if they are registered in China for more than 3 years and not in use by the trademark holders; and
- Negotiate with the owners of the prior conflicting marks in order to purchase their marks.
However, it should be noted that when assigning a trademark in China, all the identical or similar trademarks registered on identical or similar goods must be assigned to the same entity at the same time. Therefore, having a new trademark filed in the name of the prior mark owner and then transferred to another company (without assigning the prior conflicting mark) would not be an option to obtain trademark protection in China!
If you have any question in relation to trademark protection in China, please feel free to contact our GEVERS China Desk at email@example.com.
Bei Tang – Intellectual Property Attorney – Chinese Trademark and Design Attorney