Legal Update: Regulations on Illegal Trademark Use

In China, registration and use of a trade/service mark are subject to administration and regulation by the China National Intellectual Property Administration (“CNIPA”).  The CNIPA issued Standards for Assessing General Illegal Trademark Acts (the “Administrative Rules”), which came into force in January 2022. Recently, the CNIPA released its official interpretations and explanations to provide guidance on implementation of these new rules.  

Use of marks on tobacco products

Article 4 of the Administrative Rules provides that trade marks used on tobacco products (e.g. cigarettes, cigars, packed tobacco, and electronic cigarettes) must be registered with the CNIPA. Sale of tobacco products bearing unregistered marks is prohibited and is subject to penalties. This mandatary requirement applies to all imported tobacco products.

Comments: Use of unregistered marks is generally permitted on most of products. However, use of an unregistered mark on tobacco products is now expressly prohibited.

Under the Administrative Regulations on Instructions and Product Labels of Pharmaceuticals of 2006 and the Administrative Measures on Product Labels of Farm Chemical and Instructions of 2017, trade marks for human drugs and farm chemicals are also required to be registered, but non-compliance with these industry regulations is not be subject to penalties from Chinese IP authority.

Use of an unregistered mark with multiple meanings

Article 14 of the Administrative Rules provides that where an unregistered trade mark with multiple meanings is used, it may be considered as violation of the law if one of the possible meanings conveyed by the mark is:

1. ethnically discriminatory; and/or
2. deceptive and likely to give rise to confusion as to the quality or other characteristics of the goods or place of origin; and/or
3. detrimental to socialist morals and customs, or having other negative social influence;

Comments: The assessment of whether a mark is discriminative/deceptive/offensive in the context of Chinese political/cultural environment, particularly when it has multiple meanings, is a subjective exercise for CNIPA examiners and the criteria for the assessment remains rather opaque. To avoid non-compliance risk, consultation with local trade mark counsel before registration/use in China is recommended.

Use of marks rejected by the CNIPA

Article 15 of the Administrative Rules states that where a trade mark application has been refused registration by CNIPA under Article 10 (see below) of the Trade Mark Law and the applicant insists on using the mark after the relevant decision, the relevant trade mark enforcement authority shall investigate and address such violation.

Comments: Article 10 identifies a wide range of signs that are prohibited from use as trade/service marks in China, including marks deemed to be “deceptive”. Foreign rights holders are often frustrated that marks registered in their home country are deemed “deceptive” in China, sometimes seemingly unreasonably.  Some applicants persist with use despite such refusal. However, thus use could attract investigation and penalties from the local trade mark enforcement authority.

Alteration to registered marks

Article 49 of the China Trade Mark Law provides that any alteration to a registered trademark without approval shall be subject to penalties from the trade mark enforcement authorities.

Article 18 of the Administrative Rules clarifies that alteration to a registered mark means partial alteration to or adjustment of positioning between the constituent elements of the mark, including the characters, devices, letters, numbers, three-dimensional signs, combination of colours, and sound. If the alteration affects recognition or identification of the mark and the altered mark still carries the registration symbol ® in actual use, use of the altered mark is deemed illegal by the CNIPA.

Comments: The owner of a Chinese registered mark needs to be cautious when making even non-substantive adjustments/changes to the elements comprising its registered mark because the changed mark may be deemed a new unregistered mark. So use of registration symbol on the altered form is not permitted.  A new registration should be sought.

Use of marks with registration symbols

Article 23 of the Administrative Rules provides that any of the following acts will be deemed as passing off an unregistered mark as a registered mark:

1. use of a trade mark with a registration symbol ® where no application has been filed with the CNIPA;
2. use of a trade mark with a registration symbol ® where the application had been filed but was rejected;
3. use of a cancelled, invalidated, expired or deregistered trade mark with a registration symbol ®, except where the trademarked products have already been distributed before the registered trade mark becomes invalid;
4. use of a registered trade mark with the registration symbol ® in relation to goods/services beyond the scope of the registration;
5. use of a registration symbol ® where the identifying feature(s) of the registered trademark has/have been altered;
6. use of more than two registered trademarks in a combined form with registration symbol ® without attaching the symbol separately to each mark;
7. use of the registration symbol ® on a foreign registered mark on imported products where the mark remains unregistered in China.

Comments: Consultation with local trade mark counsel is strongly recommended.

In China, registration of a trade mark implies official endorsement of use of the mark in the local market.  Use of a registered mark raises far fewer risks than use of an unregistered mark.  However, it can be increasingly difficult task for foreign rights holders to achieve registration given the opaqueness and inconsistency of the local examination system.  So, often there is no viable alternative to using a mark in an unregistered capacity or using an existing registered mark with slight alterations. While there may be compelling commercial imperatives behind these decisions, they do involve some level of risk and trade mark owners are advised to proceed with caution and seek local expert advice where there is any doubt.