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A Preliminary Analysis of the Strategies That Can Be Adopted in Trademark Refusal Appeal Cases Where Trademarks Are Identical or Similar
Hui XIAO
Chinese Trademark Attorney
Linda Liu & Partners
I. Preface
China, which has enjoyed the reputation of being the “World’s Factory” and an “Important World Market” for many years, has also topped the global list in trademark applications for 20 consecutive years. Due to China National Intellectual Property Administration’s (“CNIPA”) intensified crackdown on malicious trademark squatting in recent years, coupled with the economic downturn caused by the COVID-19 pandemic and global geopolitical conflicts, some enterprises have lost confidence in entering new markets and developing new products. Consequently, China’s soaring trademark application volume, which peaked at 9.45 million in 2021, has declined to over 7 million. Nevertheless, China remains the global leader in both trademark applications and total registrations. On June 18, 2024, the CNIPA released the “Intellectual Property Statistics Bulletin” (Issue 8, 2024), revealing that as of May 2024, the number of valid registered trademarks in China has reached 47.805 million. With such a vast pool of trademarks, it is increasingly evident that registering a new trademark has become more challenging. According to the statistics disclosed in the “CNIPA Annual Report 2022”, in trademark refusal appeal cases concluded in 2022, a staggering 65.8% of trademark applications were fully rejected, 10.9% were partially rejected, and only 23.3% were preliminarily approved. This underscores the current difficulty in obtaining trademark registrations in China.
Although the chances of success in a refusal appeal are currently only 20-30%, abandoning the application would render the trademark invalid, exposing enterprises to infringement risks if they continue to use the mark on their products. Therefore, enterprises that have already used the trademark and do not wish to change it should actively utilize the legal right of refusal appeal, actively appeal and present evidence in the appeal process, in an attempt to overcome the reasons for rejection. So, how should enterprises argue in an appeal when they receive a notification of rejection or partial rejection? Here, based on my practical experience, I would like to discuss with you some effective strategies that can be adopted in refusal appeal cases where trademarks are identical or similar, with examples.
II. Strategies That Can Be Adopted in Trademark Refusal Appeal Cases Where Trademarks Are Identical or Similar
As you may be aware, the common grounds in a notification of refusal or partial refusal of a trademark application mainly include the following:
In this article, we will analyze the effective countermeasures in the event of a refusal based on “the identical or similar prior trademarks”.
1. To Argue that the Trademarks Themselves are Dissimilar in the Refusal Appeal
As you may be aware, the CNIPA is becoming more and more strict in judging the similarity of trademarks. In refusal appeal cases, if we simply emphasize the originality of the applied-for trademark and it is different from the cited trademark in terms of overall appearance, pronunciation, and meaning, that is, arguing that the trademark itself is not similar to the cited trademark, the probability of success therein is not high. However, the author also found that there is a certain possibility of success in the following situations. Therefore, the author believes that when the rejected trademark falls under the following circumstances, it is possible to try to adopt a positive appeal strategy.
(1) When the word or device part similar to the cited trademark is a less distinctive part of the trademark
As shown in the table above, in the “Rock Sugar Property Listing and device” case 1, the small house device is obviously a device of weak distinctiveness in the services in Class 36 such as real estate rental and commercial housing sales, and in the “JOHKASOU”case2, the Chinese character “净 (Clean in Chinese)” is also of weak distinctiveness in “sewage purification tank” and other goods in Class 11. Therefore, if the applicant emphasizes in the refusal appeal that the relevant words or devices are commonly used words or devices, the inherent distinctiveness is relatively weak with respect to the relevant designated goods or services and should not be monopolized by one party, such claim may have a certain effect in the refusal appeal.
For another example, in case of “bibilee studio”3, the “studio” part in the applied-for trademark is small and of weak distinctiveness in meaning. The combination of the word “Studio” and the distinctive part “bibilee” in the applied-for trademark can be completely distinguished from the meaning and pronunciation of the cited trademark, and the arguments that the trademarks themselves are dissimilar has been recognized by the examiner.
(2) When both the applied-for trademark and the cited trademark are composite trademarks with other distinguishable elements
In the “EASTZHI and device”4 and “ZHENG TAI QING and device” case5 in the table above, although the device elements in the composite trademarks are similar at certain level, when it is combined with other English or Chinese characters and the cited trademarks also have other distinguishable elements, the arguments that the trademarks themselves are dissimilar may be recognized by the examiner.
In order to support the above opinion, let’s take a look at the “S device” case6 and “SMASH and device” case7 listed below.
As shown from the examples in the table above, after the first application for a pure device trademark by the applicant was rejected in the refusal appeal, the applicant filed the application again with the addition of the highly distinguishable English element “Smash”. After being rejected again, the applicant filed a refusal appeal. This time, the applicant’s argument that the trademarks were not similar was recognized by the examiner due to the distinction between the “Smash” included in the applicant’s trademark and the “惠立洁 (Hui Li Jie)” included in the cited trademark. The examiner agreed that the two trademarks differed significantly in terms of word composition, pronunciation, and meaning, and ultimately the applied-for trademark was successfully approved for registration.
In conclusion, the author believes that when a trademark is rejected due to the word or device elements of less distinctiveness included therein, or when the applied-for trademark and the cited trademark each have other distinguishable elements, there is a certain possibility of success in arguing solely the differences between the trademarks in the appeal. Therefore, enterprises may actively file an appeal in such circumstances.
2. Submitting a Letter of Consent in Refusal Appeal
Using the “Mozlen” database, the author conducted a search with the keyword “Coexistence Agreement” and obtained the following data for reference. It is clear from the data that the number of submissions of Coexistence Agreement reached a peak of 2,795 in 2021 but decreased sharply to only 1,217 in 2023. The reason for this decrease is likely related to a significant change in the CNIPA’s attitude towards the recognition of coexistence agreements starting from the fourth quarter of 2021. Previously, the submission of a coexistence agreement was generally accepted in refusal appeal cases, but now CNIPA places greater emphasis on protecting consumer interests and adopts a stricter approach. Currently, if the examiner believes that the coexistence of the trademarks on the same or similar services may cause consumer confusion, the coexistence agreement is generally not recognized, even if it is provided. So, is it still necessary and can it still play a role to submit a “Coexistence Agreement” in a refusal appeal under the current circumstances? Let's analyze this through examples.
Statistics of Refusal Appeal Cases with “Letter of Consent” Submitted
(1) Cases in which Letter of Consent was not accepted
In the following four cases, including the “Puppy device” case8 and “Weibo Night” case9, although the applicants submitted a Letter of Consent in the refusal appeal stage, the examiner believes that protecting the interests of consumers is one of the legislative purposes of the Trademark Law, and the parties’ disposal of private rights should be subject to the aforementioned legislative purpose. Although the owner of the cited trademark issued a Letter of Consent, the applied-for trademark and the cited trademark constitute similar trademarks, and if they coexist on the same or similar services, it will cause confusion among consumers. Therefore, the trademark applications were rejected.
It should be noted that the applicant of the “TSINGTAO PURE DRAFT and device” case 10, i.e. Tsingtao Brewery Company, and the owner of the cited trademark, Shandong Xin Yin Mai Beer Co., Ltd., are affiliated companies. The applicant of “HYUNDAI and H device” case11, i.e. Hyundai Motor Company, and the owner of the cited trademarks 1-5 are also affiliated companies, but their submitted Letters of Consent letters were not accepted. It can be seen that the CNIPA currently holds a very strict attitude towards the recognition of Letter of Consent. letters. In order to prevent the same or similar trademarks from appearing on the market, it also holds a negative attitude towards the coexistence of similar trademarks of affiliated companies.
(2) Cases in which Letter of Consent was considered on a case-by-case basis
Since 2022, there has been a sharp decline in cases where Letter of Consent has been recognized in an refusal appeal. For example, in the “SWISS DELICE 狄妮诗 (Di Ni Shi)” case12 and the “东东农场 (Dong Dong Farm)” case13 listed in the following table, although the applicants submitted a Letter of Consent in the refusal appeal and the CNIPA made decisions to preliminarily approve the applications, no comments on the Letter of Consent were made in the appeal decisions. Instead, the decisions were made on the basis that the applied-for trademark and the cited trademarks are distinguishable in their overall composition. It is evident that currently, the CNIPA is very cautious about their expressions of directly recognizing or adopting the Letter of Consent in the decisions. Even if the Letter of Consent submitted by the applicant may have brought a certain impact on the examiner’s discretion on their final judgment, the basis for the examiner to make a decision of preliminary approval ultimately lies in the differences in the trademarks themselves in terms of word composition, visual effects, pronunciation, meaning, etc.
Additionally, in the “东东农场 (Dong Dong Farm)”case, the examiner specifically mentioned that the applicant submitted use evidence of the “东东农场 (Dong Dong Farm)”trademark. This indicates that in refusal appeal cases, if the applied-for trademark has actual use and a certain level of popularity, it can help to prove that its coexistence with the cited trademark will not cause confusion or misidentification among the relevant public.
(3) Cases in which Letter of Consent was accepted
At present, there are very few cases in which the Letter of Consent was accepted directly in refusal appeals. The author lists several accepted cases as below for explanation.
In the “PILOT” case14, the judge in the first-instance judgment held that there were certain differences between the disputed trademark and the cited trademarks 2 and 3 in terms of composing elements and design style, and that the right holder had issued a Letter of Consent clearly agreeing to the registration of the disputed trademark in China. In the absence of evidence that the Letter of Consent for their coexistence would harm the interests of consumers, it should be respected, and the CNIPA National was ordered to make a new decision. Therefore, on March 17, 2023, the CNIPA made a new decision upon review in accordance with the court’s judgment, preliminarily approving the application for the trademark.
In the above listed “安心达 (An Xin Da), CareDriver and device” 15 and “CLYDE BERGEMANN and device” case16, similar to the aforementioned “PILOT” case, the judge of the first instance court believed that the owner of the cited trademark had issued a notarized and legalized Letter of Consent, and that there were certain differences between the two trademarks themselves, and that their coexistence would not cause consumer confusion and misidentification. Therefore, on June 27, 2023 and May 20, 2024, the CNIPA made decisions after review respectively in accordance with the court’s judgment, and preliminarily approved the applications of both applied-for trademarks.
In summary, all three of the aforementioned cases in which Letter of Consent was accepted have undergone judicial proceedings. It can be seen that although the court’s attitude towards recognition of Letter of Consent is still tightening, some judges still hold a respectful and supportive attitude towards the parties’ disposal of private rights. The author believes that although the number of Letters of Consent recognized by the CNIPA is currently very limited, if the applied-for trademark has been extensively used by the applicant and is crucial to the enterprise, and it has certain differences in pronunciation, appearance, and meaning from the cited trademark, it is still advisable to actively appeal by submitting Letter of Consent and use evidence of the applied-for trademark in the refusal appeal and subsequent administrative litigation, emphasizing the differences between the trademarks themselves and the fact that they will not cause consumer confusion and misidentification.
Furthermore, although both the CNIPA and the courts are currently very cautious about recognizing Letter of Consent, there is indeed a reasonable need for coexistence between enterprises in practice. How to achieve reasonable coexistence and inclusive development among different trademark owners in a vast market, protecting consumer interests while taking into account private rights, is also an important issue of common concern to enterprises and colleagues in the trademark industry. It is reported that from April 1, 2024, Japan officially implemented the Letter of Consent system for trademarks. The requirements set by this system include materials that can confirm the consent of others (i.e., the Letter of Consent) and materials to prove that the coexistence will not cause a likelihood of confusion. Among them, for “not causing a likelihood of confusion”, the Japan Patent Office provides very clear requirements and examples. For example, the applied-for trademark is always used in conjunction with symbols such as the company name and company emblem; the field of use for designated goods is different, with the applied-for trademark always used for “medical computer programs” while the cited trademark used for “computer programs for games”, etc. This requires applicants to explain the actual use of trademarks from various aspects such as the composition of trademarks, the form of trademark use, the goods or services where the trademarks are used, the sales methods, sales time, and sales regions of goods. It also requires both parties to clearly state in the Letter of Consent that the prior right holder consents to the registration of the late applied-for trademark, mutually confirms the current use of the two trademarks, and both parties agree on the current use and it will not change in the future, clarifying that trademark coexistence will not lead to market confusion, both currently and in the future. It can be seen that the trademark coexistence system currently implemented in Japan makes more detailed and clear requirements from the perspective of protecting consumer interests in terms of “not causing a likelihood of confusion” and its methods on how to prove that there is no likelihood of confusion are worthy of our reference and consideration. The author believes that in current refusal appeal cases, if applicants can provide relevant evidence of “not causing a likelihood of confusion” while providing a Letter of Consent, it will bring a positive effect on overcoming the refusal grounds.
3. Claiming the applied-for trademark will not cause confusion on the grounds that the enterprise registration of the cited trademark owner has been cancelled and the cited mark is not in actual use.
In practice, from time to time, we find that many cited trademark owners (limited to companies) have been cancelled and have lost their entity qualifications. In this case, as shown in the five cases in the following table including “潮好味 (Chao Hao Wei) Chaohaowei”case17, “岄界 (Yue Jie) 799” case18, “Dragon device” case19, “Fish device” case20 and “WOLVES ESPORTS” case21, the applicant only needs to emphasize that “the cited trademark owner has been cancelled and has not made any transfer or other disposition of the cited trademark, and the cited trademark has not actually been used and has been an idle trademark in the market. The coexistence of the applied-for trademark and the cited trademark should not cause confusion among consumers”, and such claims are generally accepted by the examiner. Therefore, the author believes that no matter whether it is a Chinese character, device or English trademark, if the cited trademark in the refusal notification falls in the above situation, the applicant should actively submit evidence that the cited trademark owner has been cancelled, such as the query results from the National Enterprise Credit Information Publicity System for the appeal. The following successful cases also strongly support such response as an effective coping strategy.
4. Fully utilize the suspension of proceedings system in the appeal to request the examiner to wait for the change in the right status of the cited trademark.
In June 2023, the CNIPA released “Interpretation of the ‘Regulations on the Circumstances of Suspension of Review Cases’”. Currently, there is an increasing number of cases in which applicants request suspension of proceedings in refusal appeals due to the unstable status of the cited trademark. So, under what circumstances will a request for suspension be accepted by the examiner? Let's take a look at some cases.
(1) Refusal based on relative grounds only
Based on the cases listed in the table below, currently, the request of suspending the review is still based on the principle of necessity. Only when the determination of prior rights involved in the review has a substantial impact on the results, will the examiner suspend the review. That is, if the cited trademark involved in the case may be removed, such as when the cited trademark is undergoing a name change, assignment, withdrawal, cancellation based on three consecutive years of non-use (hereinafter referred to as “non-use cancellation”), opposition, invalidate, expiration without renewal and within one year, the examiner is more likely to accept the applicant’s request to suspend the review. However, if only some of the cited trademarks in the case meet the suspension conditions, but the final status of these trademarks will not have a substantial impact on the conclusion of the case, the examiner will not suspend the review.
① Cases in which the cited trademark is under a change of address
In the “Q-SYS” case22, the registrants of the four cited trademarks were actually the applicant in this case (but were considered as different entities due to different addresses). While requesting a suspension of the proceedings, the applicant argued that it had submitted an application for address change to the World Intellectual Property Organization (WIPO), and that the name and address of the applied-for trademark would be changed to be consistent with those of the cited trademarks, thereby eliminating any conflict of rights. The examiner accepted the request for suspension and approved the request for territorial extension of the applied-for trademark to China after the relevant changes were completed.
② Cases in which the cited trademark is under invalidation action
In the “金日牌 (Jin Ri Pai – Golden Sun Brand in Chinese))” case23, the applicant deleted the goods that conflicted with Cited Trademark 2 and requested a suspension of the review on the grounds that “Cited Trademark 1 is in the proceeding of invalidation action, and its right status is unstable”. Given that the right status of Cited Trademark 1 had a substantial impact on the outcome of the“金日牌 (Jin Ri Pai – Golden Sun Brand in Chinese))” case, the examiner suspended the review and did not make a decision until March 20, 2024, when Cited Trademark 1
was invalidated with respect to the conflicting goods such as “power supply materials (wires, cables)” and etc. Subsequently, the decision was made to preliminarily approve the application of the applied-for trademark with respect to the goods for refusal appeal.
③ Cases in which the cited trademark is under non-use cancellation or within one year from the expiration date of the exclusive use period.
In the following “Sheii” case24, the applicant deleted the goods “hats” that conflicted with Cited Trademark 1, and requested a suspension of the proceedings on the grounds that “Cited Trademark 2 is within one year from its expiration date of its exclusive use period, and Cited Trademark 3 is in the process of a non-use cancellation, right status of which are unstable”. Given that the right status of the cited trademarks had a substantial impact on the outcome of the review, and the request for suspension complied with the “Regulations on the Circumstances of Suspension of Review Cases”, the examiner suspended the review. On January 30, 2024, after the conflicts between the applied-for trademark and the two cited trademarks were eliminated, the examiner preliminarily approved the application of the applied-for trademark with respect to the goods for refusal appeal.
④Cases in which the obstacles of all cited trademarks cannot be removed.
In the “Device” case25 in the following table, the applicant was unable to file a non-use cancellation against Cited Trademark 2 during the refusal appeal, so they requested a suspension of review on the grounds that Cited Trademarks 1 and 3 were in the process of non-use cancellation action. During the review of this case, although the examiner found out the status of the non-use cancellation against Cited Trademarks 1 and 3, the examiner also clearly mentioned that although the rights status of Cited Trademarks 1 and 3 were unstable, it would not affect the conclusion of the review of this case. Therefore, in this case, the examiner did not suspend the review, but made a direct decision to reject the application based on the status of the cited trademarks during the review.
(2) Refusal based on both relative and absolute grounds
As shown in the case of “BE CHEF”26 in the following table, the grounds for rejection in this case included not only relative grounds, but also absolute grounds that the trademark application is in violation of Article 11.1.(3) of the Trademark Law. When the examiner believed that the absolute grounds for rejection was established, the right status of the cited trademarks would not have a substantial impact on the examination result of the case. Therefore, in this case, the examiner did not accept the applicant’s request for suspension and directly made a decision to reject the application.
Of course, if there is an opportunity to overcome both relative and absolute grounds of rejection in a refusal appeal, it is still worthwhile to actively try to appeal. For example, in the three cases shown in the following table, “马大姐剥皮软糖 (Madam Ma Peeled Soft Candy)”27, “1664 槟悦啤酒 (Bin Yue Beer)”28 and “KOKSHETAU KAZAHSTAN TURAN WATER and device”29, the refusal notifications included both absolute and relative grounds for rejection. To overcome the absolute grounds based on Article 10.1.(7) of the Trademark Law, the applicants filed refusal appeals respectively for partial rejected goods, while also requesting a suspension of the review on the grounds that the cited trademarks were under refusal appeal, non-use cancellation or assignment. In these three cases, due to the reason that the applicants successfully overcame the absolute grounds by deleting or limiting the goods, their requests for a suspension of the review to overcome the relative grounds were also recognized by the examiners. Ultimately, all three of the applied-for trademarks were successfully published for preliminary approval after the cited trademarks are no longer obstacles to registration.
Furthermore, from these three cases, the author has also noticed that when the applicants received absolute rejection grounds based on Article 10.1.(7) of the Trademark Law, if it involves misleading with respect to the quality, raw materials, or other characteristics of the goods, it is a highly effective strategy to delete (both domestic and international applications) or limit (only for Madrid International Registration applications) the designated goods in the refusal appeal. In these three cases, as the applicants deleted or limited their designated goods to related goods such as “gummies (candy)”, “beer” or “water”, they successfully overcame the absolute grounds for rejection.
III. Conclusion
In this article, the author provides some strategies that can be adopted in refusal appeals where trademarks are deemed identical or similar, based on personal practical experience and the latest cases. As mentioned previously, although the overall success rate of trademark refusal appeals in China is currently not high, by carefully analyzing the refusal grounds upon receipt of the refusal notification, conducting individual case analysis based on different situations, adjusting the application strategy (such as adjusting the trademark design, filing an appeal for the goods after deletion or limitation, etc.), and with the professional assistance of agents, it is still possible to maximize the chances of success in the appeal and lay a solid foundation for the ultimate approval and registration of the trademark.
