Background

The Specifications are generally seen as an essential change needed in the context of the latest Draft Trademark Law (see our article here). Article 42 of the Draft Trademark Law proposes a very important procedural change relating to the consideration of the changed status of marks involved in the China Trademark Office's (“CTMO”) office actions and court appeals if no suspension is granted to await the outcome in connected proceedings. In fact, under Article 42 of the Draft, the courts would have to assess court appeals in trademark review decisions only based on the facts at the time when the appealed decision was made, i.e., regardless of whether the status of the relevant trademark has changed since then (e.g., regardless of whether a prior mark was successfully knocked out afterwards in a parallel procedure). If the CNIPA would continue its current practice of rarely granting suspensions, article 42 would risk causing substantial procedural uncertainties and unfair outcomes, as it would cause many such appeals to be rejected, based on marks that may then be subsequently annulled in parallel proceedings. The Specifications are therefore generally considered to be the CNIPA’s answer to solve this issue and to address the current lack of coordination between administrative trademark review procedures and judicial appeal procedures. 

General Principles of the Specifications

• Principle of necessity: proceedings should only be suspended if the suspension is likely to have a substantial impact on the outcome of the case. If the outcome of the case can be determined based on the basis of other grounds, or based on another stable prior trademark right, the proceedings should not be suspended.
• Party autonomy: the will of the parties is respected as suspensions must generally be applied for (except for cases involving bad faith, where the examiner has the discretion to proactively suspend the case). The resumption of suspended proceedings must likewise also be applied for.

Specific Content of the Regulations: cases for mandatory suspension and cases for optional suspension

The Specifications provide seven situations that require suspension and three situations where suspension may be considered by the CNIPA examiner.

The seven situations in which mandatory suspension will apply are: 

1. The disputed or cited trademark is undergoing a change of ownership or transfer process, and after the change or transfer, there will no longer be a conflict of rights (e.g. the disputed or cited trademark is transferred to the applicant of suspension).
2. The cited trademark has expired and is in the process of renewal or grace period for renewal.
3. The cited trademark is undergoing a cancellation or withdrawal application procedure.
4. The cited trademark has been revoked, invalidated, or has expired without renewal, for less than one year, at the time of the review, and according to the law, the refused mark would not be approved before the expiration of the one year period. 
5. A decision involving the cited trademark has already been issued and is awaiting the effectiveness of the decision or the execution of the judgment pending retrial.
6. In review on opposition and invalidation cases, the prior right involved in the case is dependent on the result of another case being reviewed by a court or processed by an administrative authority.
7. In review on refusal cases, the status of the cited trademark involved in the case is dependent on the result of another case being reviewed by a court or processed by an administrative authority, and the applicant explicitly requests suspension of the proceedings.

The above suspension situations 1)-5) apply to review on refusal, review on opposition and invalidation proceedings. The suspension situation 6) applies to review on opposition and invalidation proceedings only. The suspension situation 7) applies to review on refusal proceeding only.

To maximize the protection of legitimate brand owners, the CNIPA should now grant suspension in the above cases regardless of whether the action against the cited mark is initiated before the filing of the refused mark or regardless of the identity of the party which initiated the action against the cited mark. 

The three situations in which optional suspension will apply are: 

1. In review on refusal cases, if the cited trademark has been subject to an invalidation request and the bad faith of the cited mark’s owner has been recognized in other cases. Compared to situation 7) above, the suspension in this situation 1) is not dependent on an application for suspension. Instead, the CNIPA examiner may suspend the case proactively to curb bad faith trademark registrations
2. In cases where it is necessary to wait for a ruling or judgment in a similar or related case, the proceedings can be suspended based on individual case needs.  It is not necessary under this situation 2) for the cited mark itself to be involved, which is why the examiner may suspend such proceeding proactively. Instead, this ground for suspension was created more from the perspective of coordinating administrative and judicial proceedings, maintaining the consistency of the examination standards, and reducing the burden on brand owners.
3. Other situations in which the examiner determines that the proceeding should be suspended, based on the principles of necessity and benefiting legitimate rights holders. This is a “catch-all” provision, providing a level of flexibility to examiners.

For the above three optional cases of suspension, the CNIPA examiner can independently decide to suspend the proceedings ex officio, even without a request from the parties.

Timing and other requirements for filing a suspension request

Requests for suspension by applicants in review on refusal cases should be submitted no later than three months from the date of filing the application for review on refusal. We assume a similar arrangement will apply to review on opposition and invalidation proceedings. Requests for suspension should be explicitly put forward by the applicant either separately or along with the review arguments. In principle, the party requesting the suspension should also request the resumption of the proceeding after the status of the cited trademark is determined, accompanied by corresponding evidence.

The recent changed practice of the Beijing IP Court relating to the suspension of review on refusal cases

In parallel with these newly announced Specifications, the Beijing Intellectual Property Court (“BJIPC”, i.e. the court with exclusive jurisdiction over first instance review on refusal cases) has recently also adopted a new mechanism to assist with the suspension of review on refusal cases where the status of the cited mark remains uncertain. According to recent communications with the BJIPC, the court’s Case Acceptance Department has adopted a new pre-filing mechanism. Under this mechanism, an extension of case filing for up to 12 months is likely to be granted upon application for review on refusal cases where the status of the cited mark is under review. To obtain such extension, the applicant needs to file the extension application when the case is filed with the court, accompanied by brief evidence showing that the status of the cited mark is under review. 

Conclusion

The new Specifications have made substantial progress from a procedural, timing and strategic point of view and are likely to lead to a large number of suspensions in trademark review procedures. Going forward, the Specifications will be applied by the CNIPA examiners in their daily examination work. The Specifications are generally hailed as a positive development, which may lead to a strong reduction in the amount of repeated backup applications and administrative appeals of CNIPA decisions due to timing issues with parallel procedures. This may result in a lower cost for genuine trademark owners to obtain registration of their marks and in a lower caseload for the courts, which may benefit China’s trademark practice as a whole in the long term.

Since both the Specifications and the BJIPC’s new  extension have been put in place very recently, brand owners will still need some time to assess how these developments will be implemented in practice. However, given the considerable changes brought about by these new measures, brand owners will need to reassess their case filing timing and  strategy going forward . 

Authored by Helen Xia, Stefaan Meuwissen and Joan Mao.