Many people know about trademark filings, but have you ever heard about trademark refilings?
Before 2023, registering a trademark in China often involved filing several iterations of the same trademark application consecutively (so-called “refilings” of the original mark) before one of the marks proceeded to registration. This was often quite frustrating for those not used to the practice. To add to this headache, many brand owners have been told they should refile a trademark after it has already registered. As a result, it isn’t unheard of to have 5-10 filings for the same mark (and the costs definitely add up).
While refilings may seem like a strange concept to those new to Chinese IP, this common practice begins to make a little more sense once you understand that (1) China’s trademark examination procedures previously did not allow for suspension of examination and (2) refilings are often cheaper than the cost to defend against a nonuse cancellation action. Fortunately for brand owners, the Chinese Intellectual Property Office (CNIPA) has recognized that the current law is outdated and is now making efforts to bring Chinese trademark law into alignment with modern practice. Brand owners are already seeing benefits from this initiative in the form of the New Rules of Suspension of Examination during Trademark Review Procedures, but as we will soon see, refilings still hold a valuable place in China’s trademark landscape.
The Old Way
To understand just how helpful the New Rules of Suspension of Examination are, let’s look at the way the CNIPA examination process used to work. Prior to June 2023, the CNIPA did not allow suspension of examinations for trademark applications. This was especially problematic when considering that examinations typically concluded in 6-8 months, while actions to remove registered marks (such as nonuse cancellations or invalidations) could take 1-2 years. In practice, this meant that an application that was blocked by another cited trademark would be almost guaranteed to lose validity, even if the cited mark was pending on a nonuse cancellation action. While the blocked mark could be kept alive by filing an appeal with the CNIPA, this process was more expensive than simply refiling the mark, meaning that cost-sensitive applicants often had no option but to refile.
Consider the following scenario:
Tom has filed a trademark for “Mighty Traps” in Class 25 in China. During examination of this mark, the CNIPA discovers that another induvial, Jerry, already holds a trademark for “Fighty Traps” in Class 25. Jerry’s mark is similar enough that the CNIPA issues a refusal for Tom’s mark, citing the fact that Tom’s mark might be confusing for customers who believe that it is Jerry’s mark. Tom now has three months to respond to the refusal. Fortunately for Tom, Jerry has not used the mark in eight years, so Tom can remove the senior mark by filing a nonuse cancellation. However, the nonuse cancellation will take about nine months to render a decision, which means that Tom’s first filing will already have been expired for six months when Jerry’s mark is finally removed. Tom therefore needs to refile at least once (and often twice), just to keep a valid filing while he waits for the decision to issue. Even though Tom is almost guaranteed to eventually get his mark registered, he will have to pay for each one of these refilings as if it was a new mark, doubling or tripling the cost unnecessarily.
It doesn’t take an expert to realize that this is an unnecessarily complicated and expensive process, especially when many other trademark systems allow for suspension of examination. Fortunately, the CNIPA agreed that this whole process could be improved and now allows for the suspension of examination of a mark in cases where there is a pending action against a cited mark. More details on this exciting development can be found here.
The New Rules are Good—But Refilings May Still Have Value
However, the CNIPA’s New Rules of Suspension of Examination don’t do away with the value of refilings altogether. Under China’s trademark law, nonuse cancellation actions can be filed against marks that have been registered for more than three years. Nonuse cancellation actions require the owner of the targeted mark to demonstrate that the mark has been used on the relevant goods or services in a substantive capacity at some point during the three years prior to the nonuse filing. If use cannot be shown (or if the use is deemed insufficient by the CNIPA), the mark will be invalidated. However, there is currently no requirement in China’s trademark law that marks be filed with an intent to use the mark. As such, if a brand owner wants to hold on to a mark but knows they cannot show use of the mark to survive a nonuse challenge, they may refile the mark to “refresh” the date that the mark would become vulnerable to nonuse. This is because the nonuse cancellation opening date is calculated as three years after the registration date of a mark; while the original mark may be targeted by nonuse cancellation, the new refiling won’t be vulnerable for another three years. As there is currently no restriction on this procedure, a mark may be refiled indefinitely every 6-8 months before the nonuse vulnerability of the previously filed iteration of the mark.
In the scenario above, if Jerry had made sure to refile every three years, he would have been able to keep registered rights to the mark “Fighty Traps”, even without use of the mark.
It is easy to imagine a scenario where a trademark squatter may use this practice in bad faith to hold rights to a mark indefinitely without intent to ever use the mark. This does happen and is certainly a drawback of the current refiling loophole in China. However, the refiling loophole also provides two significant benefits for brand owners acting in good faith.
First, the cost to refile a mark is often significantly lower than the cost to defend against a nonuse cancellation action. For marks with actual commercial use in mainland China, refiling is theoretically not necessary — provided there is sufficient local transaction evidence (e.g., sales contracts and invoices) to defend against nonuse cancellations. However, it is essential to ensure the evidence is China-specific and meets CNIPA’s requirements; in practice, most American brands have a tough time coming up with local China-specific use evidence to defend a nonuse action. Even if a brand owner does have sufficient use evidence, refiling is often the cheaper and more efficient option, especially for service marks. The potential costs saved through refiling grow even larger when considering that prevailing in a nonuse cancellation proceeding does not immunize a mark from further nonuse challenges. As soon as a nonuse decision in favor of a mark is issued, a party can simply file another nonuse cancellation against the same mark, forcing the mark holder to incur the costs to defend the mark all over again. While the mark holder likely will not need to produce new evidence in defense of the mark (as they would need to have use evidence to prevail in the first proceeding), they will still incur significant legal fees to defend a mark that the CNIPA has already determined to be effectively in use. While it is true that successfully defending against a nonuse cancellation may discourage some parties from challenging the mark further, there nonetheless exist cases where a mark has been challenged for use multiple times over the course of a few short years.
Second, refilings allow brand holders to maintain defensive rights for non-essential subclasses in key classes. As China uses a subclass system, simply filing a mark in a class does not guarantee that all goods or services in the class are protected by the mark. Instead, the mark will need to be filed for coverage of specific subclasses under the class, while other subclasses may be less important and therefore not filed for. When examining marks for similarity, the CNIPA looks at the subclass level, not the broader class level. The effect of this is that two different parties can hold an identical mark in an identical class, provided the marks are registered on different subclasses. While this makes sense for the CNIPA’s purposes, the reality is that this means that a bad actor can register a popular and established mark in an obscure subclass and then trade on the brand’s popularity. The subclass issue is so nuanced that even major e-commerce sites that require trademark rights to be recorded for retail often do not recognize this distinction. As a result, many counterfeiters on sites like Alibaba actually hold trademarks for the brands that they are knocking off, but these trademarks are registered on obscure subclasses. To combat this, brand owners will often file for broad protection in subclasses that they do not intend to use, for the purpose of preventing trademark squatters and infringers from registering similar marks. Obviously, these brand owners rarely have use to support these defensive filings, so refilings have become an invaluable tool to maintain pre-emptive coverage and to minimize, but not eliminate, ecommerce exploitation.
More Change Ahead?
If this all seems a little silly to you, the CNIPA may be inclined to agree. The CNIPA released a Draft of the Fifth Amendment to the China Trademark Law for public comments in January 2023. While it will likely be several more years before this draft matures to new law, the proposals in the draft signal that the CNIPA could be warming to the idea of enforcing an “intent to use” regime. Some of the proposals take this idea even further, threatening to make evergreen refilings obsolete — or even risky. One of the proposals, for example, defines “bad faith” as “hoarding” trademarks without intent to use them. However, in China, legitimate reasons exist for maintaining multiple filings due to the widespread issue of bad-faith trademark applications.
If these additions make it into the final law, excessive refilings may be challenged or scrutinized by authorities under what is known as the “Article 4 challenge.” That said, brands that take precautions to avoid excessive refiling (which sometimes numbers in the hundreds of applications) may reduce the risk of scrutiny. At this early stage, these proposals and the practical enforcement thereof are still largely speculative.
In the meantime, refilings are likely to continue serving a valuable and admittedly strange role in the Chinese trademark landscape.
