Consolidation of trademark actions is a much-needed procedural avenue in China, one that would make the country’s trademark system more efficient and fairer. Actions that concern the same trademark, such as applications, oppositions, and cancellations, are generally not consolidated, wreaking all sorts of havoc for brands. This even though the Trademark Law has provisions that allow for such consolidation to occur under some circumstances.
Let’s begin by illustrating the problem to be addressed through effective consolidation of trademark actions. Imagine that you want to register the trademark ABC, which you have been using on your goods for years in the United States and in other countries. As it turns out, the ABC mark was registered in China five years ago by China Co. However, China Co. has never used the trademark, making it vulnerable to a non-use cancellation (NUC) request.
You go ahead and file an NUC request against China Co.’s registration in January. On the same day, you file your own application to register ABC. The problem is that, while your application will almost certainly be examined relatively quickly (perhaps as early as April, given the China National Intellectual Property Administration’s (CNIPA) current rocket docket), the NUC request will probably not be considered until August or September. That means that, at the time your trademark application is examined, China Co.’s registration for ABC will remain valid and block your own application.
Consolidation of your trademark application and the NUC request under such circumstances would make a lot of sense. If CNIPA found that the NUC request has merit and canceled China Co.’s registration, CNIPA could then proceed with its examination of your trademark application – without considering China Co.’s registration, since it would have been cancelled for non-use. On the other hand, if CNIPA rejected the NUC request, it could proceed to examine your application, and reject it because of China Co.’s prior right.
But that’s not the way it currently works, which is why we call for effective avenues to seek consolidation of trademark actions. In the scenario described above, CNIPA would almost certainly consider your trademark application and NUC request separately (even if you asked for consolidation), which in practice will mean that your trademark application will be denied, requiring you to file a new application if you still want to register your trademark. See China Trademark Cancellations: Strategy and Timing for further discussion of these issues and why the possibility of consolidating actions would be welcomed.
Wait, you might be thinking. Why not just file the NUC request first and wait to see if it’s granted before filing the trademark application? The problem with that approach is that someone else might file an application for ABC in the interim. And there not being a prior application filed by you, that application will have a senior right.
Consider a possible scenario that would take place if you filed an NUC request against China Co.’s ABC registration but did not accompany it with a trademark application of your own to register ABC, as you want to wait and see what happens with the NUC action. In October, while still waiting to hear from CNIPA regarding the NUC request, a Zhongguo Co. files an application to register ABC. At that point, Zhongguo Co.’s application is next in line after the original China Co. registration. Adding insult to injury, if CNIPA grants the NUC request that you bankrolled and cancels China Co.’s registration, it’s Zhongguo Co. that stands to benefit, not you. Thanks to your successful NUC request, the path will have been cleared for approval of Zhongguo Co.’s registration application for the ABC trademark. What’s worse, as opposed to China Co.’s, Zhongguo Co.’s new registration will not be vulnerable to an NUC action for at least three years – and that’s assuming they don’t in fact use the mark.
It may be that Zhongguo Co. is related to China Co. and doing its bidding by filing a new application to register ABC (which, if China Co. filed themselves, probably wouldn’t get approved). Or perhaps Zhongguo Co. took notice of the fact that someone filed an NUC request against China Co’s mark and figured it was a valuable mark. Maybe they had been coveting the mark, and figured that at some point you might try to cancel China Co.’s mark, given that it’s a mark you use in other countries. Or it could even be the case that it’s just a coincidence that Zhongguo Co. applied at the right moment to take advantage. It doesn’t matter. The bottom line is that now there is a new obstacle between you and registration of the ABC trademark. Consolidation of trademark actions would help address this issue.
To avoid issues, brands will often file more than one trademark application while they wait for an action against a blocking mark to be decided. In this way, they ensure that they are always first in line. However, this is unnecessarily wasteful. It would make far more sense for CNIPA to allow trademark applications and cancellation actions against conflicting marks to be consolidated (which under some circumstances is already permitted by the Trademark Law). This would be easy to accomplish, plus CNIPA could consider levying consolidation fees that would make up for any lost revenue from application fees. Trademark applicants should also be allowed to stay their application while they prosecute cancellation actions against trademarks cited in a CNIPA refusal – it isn’t always possible to ascertain which marks will present an obstacle to registration of your marks at the time you file an application.
The provisions in the current Trademark Law don’t go as far as what we suggest, but their effective application would be a start. At the same time, Chinese lawmakers should take advantage of the revision of the Trademark Law that is currently underway to expand the procedural vehicles for parties to consolidate actions. Moreover, they should establish definite rights to invoke them, rather than relying on a CNIPA discretion that rarely delivers positive results for parties seeking redress against bad faith actors.