In 2023, the China National IP Administration (CNIPA), the parent organization of the Trademark Office (TMO) and Trademark Review and Adjudication Division (TRAD), tightened the standards for examination of new trademark applications, thereby resulting in a much higher number of rejections based on absolute grounds as well as a larger number of citations. CNIPA’s policy is reported to have been motivated by a desire to reduce the number of approved trademarks in China.  

Since the new policy was adopted, brand owners have increasingly been contending with rejections that seem on their face to be unreasonable, with the most frustrating cases involving those where the same brand owner already owns a registration for the same mark in China and is merely refiling to secure protection for a new stylization of the same word mark.

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.

In short, brand owners are encouraged to take the heightened risk of rejection into account before filing (or refiling) for new marks.  While appealing unreasonable rejections is always possible, the TRAD and Beijing courts appear to be generally supporting TMO determinations, likely based on the same policy considerations.

背景介绍

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

Article 10 prohibits the use and registration of trademarks that damage, or could potentially damage, national dignity, public interests, social order, national unity, religious beliefs, etc., or trademarks that 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 (but not the use) of trademarks that lack distinctiveness and cannot serve the source-identifying function of trademarks.  Generally speaking if the word portion of a composite trademark lacks distinctiveness, then the trademark as a whole will be deemed non-distinctive unless the word part is only an insignificant part of the trademark.

Recent Changes in Practice

As mentioned above, CNIPA, both at the TMO and the TRAD level, has become increasingly strict in its examination of trademark applications for registrability issues. Even the courts are increasingly unwilling to overturn TMO refusals based on absolute grounds.

The following types of trademarks have been particular victims of tightened examination standards:

Suggestive Trademarks

From a commercial perspective, a “good” trademark generally reflects or infers 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 sufficiently distinctive to distinguish the mark from other trademarks. Suggestive trademarks strike a 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”, which literally means “help / children / comfortable”, and “Tai Zi” (汰渍), the Chinese mark for “Tide”, which literally means “eliminating 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 have recently been refused in China:

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:

Trademarks with “Unhealthy Social Effects”

The TMO has also become more likely to refuse trademark applications on the blanket assertion that the marks might be deemed to have “unhealthy social effects”. Here are a few examples:

Notably, the TMO is believed to have an internal blacklist of words and characters that are blanketly prohibited from registration. This list has not been made public, but from past experience, it is almost certain that at least the characters “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 and homonyms may also be taken into consideration by the TMO. This often results in rejections where the TMO decides there are undesirable connotations to be drawn, even where such connections are exceedingly tenuous, if not wholly illusory or opaque. Here are a few such examples:

Positively, and in some rare cases, refusals based on the grounds of “unhealthy social effects” have been overcome on appeal to the courts. Here are a few limited examples of successful appeals at the court level.

	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 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 case reaches the court, leaving us to guess blindly as to why the mark had been rejectedl.
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 religious term.
3.	ORISMATIC	Sensors, etc. in Class 9	Refused by the CNIPA on the grounds that “ORISMATIC” may  refer 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 holding it is dissimilar to an image of a monk.

Notably, successful appeals of refusals against 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 can 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 to the extent that a direct correlation has been developed between the mark and the applicant in the minds of the public. 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 risks from similar registered marks. There is also 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 the standard of examination can vary wildly from application to application – even in 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 the use of trade marks falls under its ambit. Indeed, any use of such marks could result in administrative fines of up to 20 percent of the turnover generated by the mark in question.

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 Article 10 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 submits evidence of use in China to prove the fame of the mark in question.

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 trademark 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 invalidation actions 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 invalidation actions were based on absolute grounds.  In both cases, the TRAD decided to maintain the registrations, 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 that 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 not been positive. 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.