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The Puzzle of the Deregistered Citation Owners

DATE:2023-09-06      FROM:LexField

by Nancy ZHANG

In China's trademark prosecution practice, trademark applications often face refusals due to prior cited marks. Some cited marks may still be valid, even if the ownership of these marks are held by companies that may no longer exist. This situation raises a controversial issue:  Whether the cited mark, owned by a deregistered owner, can affect the applied-for trademark?

There are two perspectives on this issue:

1. The first perspective argues that the cited mark remains valid, regardless of the owner's deregistration. Thus, the cited mark is an obstacle to the registration of the later applied-for trademark.

2. The second perspective suggests that the cited mark can coexist with the applied-for mark, unless it is assigned to a new party.

While consensus has not been yet reached by the China National Intellectual Property Administration (CNIPA)[2], previous precedents show that the majority of cases support the first perspective.

The Courts take a comprehensive approach and tend to support the second perspective. Courts base their decisions on the understanding that trademarks aim to protect the interests of consumers, producers, and dealers. If a trademark owner no longer exists, the mark loses its ability to identify the source of goods/services and cannot prevent the registration of a later trademark on the basis of confusing similarity. The Beijing High People's Court has explicitly stated that if a cited trademark's owner is deregistered without evidence of a successor entity, the cited mark may be considered dissimilar to the applied-for trademark.  As per Article 15.7 of the Guidelines for the Trial of Trademark Right Granting and Verification Cases[3], in administrative trademark cases, if the owner of a cited trademark is deregistered and no evidence exists to prove the existence of a successor entity, the cited mark may be deemed dissimilar to the applied-for trademark.

If the cited mark is assigned to a new entity in the future, the new owner can file an opposition or invalidation as remedy within the stipulated period to resolve the conflict of rights.

In cases where the owner of the cited mark has been deregistered, the author recommends the following:

1. If the cited mark is vulnerable to non-use cancellation[4], the applicant may file a non-use cancellation directly. Although providing evidence of the deregistration of the cited mark owner may demonstrate that coexistence would not create confusion, it is more cost-efficient to address the obstacle through non-use cancellation.

2.  If the cited mark has been registered for less than three years and/or is not vulnerable to non-use cancellation, the applicant should proceed with the Refusal Review and submit evidence including:

 a) information from the National Enterprise Credit Information Publicity System;

 b) documents from the State Administration for Market Regulation confirming deregistration of the owner of  the cited mark; 

 c) evidence from the CNIPA showing no transfer or licensing to a third party.

Given the above, if a trademark registration is important to you, receiving a refusal based on a prior registered mark may not defeat you completely and the author strongly recommends that applicants maximize their interests by pursuing a Refusal Review and/or administrative litigation.

[1] Closing a business in China can be completed through a deregistration process with the State Administration for Market Supervision (SAMR) and its local branches.  While the deregistration process may be a complex one, this article is written on the premise that the deregistration was completed correctly, and the company is liquidated.

[2] The CNIPA is responsible for the operational guidance of trademark and patent law enforcement, formulating and guiding the implementation of trademark rights, patent right confirmation and infringement judgment standards, formulating inspection, identification and other relevant standards for trademark and patent law enforcement, establishing mechanisms, and doing a good job in the convergence of policy standards and information notification.

[3] These guidelines were issued in 2019 by the Beijing High People’s Court to facilitate the determination of the protection scope of trademark rights, infringement, and trademark infringement defense.

[4] A registered trademark that has ceased to be used for three consecutive years may be vulnerable to a third party’s cancellation request based on non-use.


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