Small and medium-sized enterprises (SMEs) whose intellectual property is violated are 34% less likely to survive after five years.

That is one of the findings in a new report “Risks of Illicit Trade in Counterfeits to Small and Medium-Sized Firms”, which was published by the EUIPO (through the European Observatory on Infringements of Intellectual Property Rights) and the OECD on 31 January.

The report also found that Chinese counterfeit goods are the most common source of counterfeit goods affecting the IP of SMEs. They represent 85% of seizures related to online sales and 515 of global seizures of offline sales.

Electrical machinery and electronics are the most frequently targeted fake products (accounting for 30% of seizures), followed by clothing (18%), perfumery and cosmetics (10%) and toys and games (10%).

Around half of the fake products seized at EU borders that infringed IP rights of SMEs were purchased online.

Read and download the full report on the Observatory website.

The latest issue of HouseMARQUES, the monthly MARQUES newsletter, has been published. It is available to read on the MARQUES website here.

The HouseMARQUES newsletter covers all the latest news about MARQUES events and activities, as well as brief reports and announcements from EUIPO, Observatory and WIPO; summaries of recent cases before the CJEU and EU General Court; and more

This month’s content includes:

• Registration open for Spring Meeting
• From the Observatory…
• Input into EU design review
• EUIPO launches SME Fund 2023
• WIPO Global Awards
• Recent rulings from the CJEU and General Court
• Draft revision to China Trademark Law
• Combating online piracy of live content

To ensure you receive the HouseMARQUES newsletter every month, and to benefit fully from all that MARQUES has to offer, consider becoming a MARQUES member. This will also entitle you to advantages when booking MARQUES events and webinars and enable you to apply to join the MARQUES Teams.

If you are not already a MARQUES member, find out more here.

The China National Intellectual Property Administration (CNIPA) issued Guidance on Registration and Use of Trademarks Containing Geographical Names on January 19, 2023 (available to read in Chinese here). Shufang Zhang and Ling Zhao explain more.

Aims of the Guidance

The Guidance aims to improve entities’ understanding of the regulations on marks containing geographical names, the risks lying in the stability of rights for marks containing geographical names and the boundaries of rights.

Marks containing geographical names are usually rejected from registration or prohibited from use as they violate Article 10.1.2 (containing names of foreign countries), Article 10.1.7 (deceptive description on the place of origin of goods/services), Article 10.1.8 (detrimental to socialist morals or customs), or Article 10.2 (containing geographical names of administrative divisions at or above the county level or famous foreign geographical names) of the China Trademark Law.

Prohibited from registration

The Guidance provides the situations where marks containing geographical names are prohibited from registration and use as follows:

• marks containing words identical with or similar to the state name of a foreign country, with the following exceptions: where consent has been given by the government of the country; where the mark bears different meanings and would not mislead the public as a geographical name; or where the state name is independent from the rest composing elements of the mark and just functions to indicate the country of origin
• marks containing words identical with or similar to geographical names of administrative divisions at or above the county level, specifically: marks composed of geographical names of administrative divisions at or above the county level; marks containing geographical names of administrative divisions at or above the county level; marks containing words similar to geographical names of administrative divisions at or above the county level; marks composed of abbreviations of two or more geographical names of administrative divisions at or above the county level;
• marks composed of words with meanings aside from geographical names, where the words are used in combination with words such as “city” or “county”, which highlight the meaning of geographical name;
• marks containing words identical with or similar to foreign geographical names well-known to the Chinese public, specifically: marks composed of foreign geographical names well-known to the Chinese public; marks containing foreign geographical names well-known to the Chinese public; or marks containing words similar to foreign geographical names well-known to the Chinese public
• marks containing geographical names of administrative divisions under the county level or foreign geographical names not widely known to the Chinese public, where such places are famous for producing certain goods or for provision of certain services 
• marks containing geographical names with political connotations
• marks containing names of state-level new areas or state-level development zones
• marks containing names of key state projects, which contain geographical names
• marks containing names of places or locations for religious activities
• marks containing names of mountains, rivers, tourist attractions, public buildings and etc., which are considered as public resources, with the following exceptions: the name of place is independent from the rest distinctive composing elements and the name of place just indicates the location of the applicant; or the name of place is one of the composing elements of collective mark or certification mark

Further details

The Guidance further specifies proper use, reasonable enforcement of rights and fair use of trademarks containing geographical names.

The proper use of trademarks containing geographical names requires:

• using the mark on its designated goods and services
• no altering, highlighting, abridging, adding elements to, deforming or splitting the geographical name contained in the mark
• if the trade mark is used on goods/services aside from its designated goods/services, or there is a change on the mark sample, new applications shall be filed.  

The reasonable enforcement of rights over trade marks containing geographical names means the registrant shall follow the principle of good faith, and should not abuse their rights when they enforce their rights and protect their interests.

The fair use of trade marks containing geographical names requires the entities to use them in good faith, to pay full respect to trade mark rights, and to use them within proper boundaries in the use of geographical names, to avoid misleading consumers regarding the origin or source of the goods.

The Guidance stipulates that the transfer of a trade mark containing a geographical name is not allowed if such transfer would cause confusion among consumers regarding the origin or source of goods/services. In addition, for the transfer of collective or certification marks, assignees are required to meet the requirements on qualifications of holders of collective or certification marks.  

The authors are Shufang Zhang and Ling Zhao CCPIT Patent and Trademark Law Office. Ling Zhao is a member of the MARQUES China Team

In one year’s time, trade mark revocation proceedings will be possible before the Turkish Patent and Trademark Office (TPTO). Güldeniz Doğan Alkan and Cansu Evren discuss the changes.

Article 26 of the IP Code

After years of proceeding with a Decree Law, the Intellectual Property Code no. 6769 entered into force in Turkey on 10 January 2017. Article 26 of the IP Code regulates the revocation of a trade mark registration. It foresees that the trade mark shall be revoked in the following conditions:

• Absence of genuine use (as per Article 9/1 of the IP Code).
• The trade mark having become generic or a misleading indication.
• Use of the trade mark contrary to the technical specifications for the guarantee mark or collective mark (as per Article 32 of the IP Code).

Contrary to the (abolished) Decree Law and the established implementation, Article 26 of the IP Code determines that the revocation of a trade mark will be requested from the TPTO.

However, the legislator (with the provisional clause 4 of the IP Code) postponed the entry into force of this concerned article for seven years, i.e., until 10 January 2024. A provisional article stated that until 10 January 2024, revocation requests are filed directly before the civil IP courts.

Preparations for entry into force

Now that one year remains until the article’s entry into force, the Office has started to make serious preparations. The article’s entry into force has been long-awaited since it is a new practice that has not been introduced in Turkey before.

It is also eagerly awaited since it is in parallel with the execution before the EU. Indeed, the provisional clause 4 of the IP Code corresponds to Article 38 of EU Directive No 2015/2436. Therefore, during the preparation of this new practice until 10 January 2024, the Office will have many examples to learn from.

Considering that opposition proceedings take around four to eight months to be completed, revocation requests are also expected to be finalised in a similar timeframe, which is time- and cost-effective compared to a court action. Therefore, it is worth watiing for Article 26’s entry into force rather than filing a court action now since the court actions take two to four years to be finalised.

Controversial questions

However, several controversial issues have arisen. Due to the wording of Article 26, it is understood that as of 10 January 2024, revocation requests can only be filed before the Office and cannot be directly filed before the courts. Although this is the common practice in most countries, the admission of this authority solely to the Office brings various issues in Turkey:

1. Although the revocation proceedings before the Office are expected to be time effective, as the decisions of the Office can be challenged before the Ankara IP courts and the dispute will most likely be brought before the court anyway, the finalisation of a revocation proceeding may become longer.
2. Another issue is the evaluation of the use evidence. It is well known that invoices are the most valued evidence of proof of use. However, in the current practice as a great number of invoice/sales figures are filed and in order to confirm the accuracy of invoices/sales figures filed, the commercial books are reviewed by the court-appointed experts by visiting the defendant’s premises. It is not yet known whether the Office will be able to conduct discovery in the premises of the trademark owner, if needed. Indeed, trademark owners cannot be expected to file their commercial books to the Office.
3. Following this, whether the examiners of the Office are competent to review financial data is another question. Indeed, the courts appoint experts from the relevant sectors related to the parties and the evidence filed. There may be technical/specific necessities depending on the goods/services concerned and examiners will need to be able to make necessary evaluations.

The Office, having enough time to cover these issues, has already started preparations for early 2024. Assuming that the issues will be solved by 10 January 2024, we believe that the handling of revocation requests by the Office will be practical and time- and cost-effective compared to the length and costliness of a court action.

Güldeniz Doğan Alkan and Cansu Evren are members of Gün & Partners in Turkey. Güldeniz is a member of the MARQUES Designs Team

On 13 January this year, the China National Intellectual Property Administration (CNIPA) issued a notification on soliciting public opinions regarding the draft revision to the China Trademark Law. The draft is published on CNIPA’s website (in Chinese) to solicit public opinions until 27 February 2023.

The first part of this report introduced the draft and summarised the proposed changes to substantive examination. In this second part, Ling Zhao, Shufang Zhang, Xiaoping Wei, Qin Li and Lei Fu focus on procedural changes.

Procedures

Non-acceptance of trade marks found to have significant negative effects

The draft provides that if the IP administrative department of the State Council finds that the trade mark applied for registration obviously has significant negative effects, it shall not accept the application during the formality examination stage.

Preliminary examination opinion

The draft provides that during the examination process, if the IP administrative department of the State Council believes that the content of the trade mark registration application needs to be explained or amended, it may issue a preliminary examination opinion to require the applicant to make an explanation or amendment.

If the applicant fails to make an explanation or amendment, it will not affect the examination decision made by the IP administrative department of the State Council.

Revocation of publication of preliminary approval

For trade marks that are found to violate the provisions of Article 15 [signs not allowed to be used as trade marks] after the preliminary approval, the draft provides that the publication of the preliminary approval can be revoked ex officio.

Opposition procedure

The draft shortens the publication period of a preliminarily approved application to two months for filing opposition (Article 36).

The draft cancels the procedure of review of opposition totally. If the IP administrative department of the State Council makes a decision to disapprove of registration, and the opposed party is not satisfied, they may file a lawsuit in a people's court within 30 days from the date of receipt of the decision (Article 39).

Suspension of procedure

The draft unifies the provisions on the suspension of the procedure and adds provisions that the people’s courts do not apply the principle of change of circumstances in the trial of administrative cases of trade mark authorisation and confirmation.

In the processes of trade mark examination and trial, the IP administrative department of the State Council may suspend the examination and review if the determination of the prior rights involved must be based on the results of another case that is being tried by the people's court or being handled by the administrative agency.

After the reasons for the suspension are eliminated, the examination and review procedures shall be resumed in a timely manner.

When the people's court hears the decision of refusal review, decision of non-registration or ruling of invalidation made by the IP administrative department of the State Council, it shall take the factual status at the time of the relevant decision or ruling being made as the basis.

If the status of the relevant trade mark changes after the decision or ruling is made, it will not affect the trial of the decision or ruling by the people's court, unless it clearly violates the principle of fairness.

Watch this space

The current version of the draft is published for public opinions and further improvements and amendments will be made. Based on previous experiences, we expect the draft will be substantially improved after listening to and accepting the suggestions of all stakeholders.

The MARQUES China Team will continue to report on developments as they happen.

The authors are Ling Zhao, Shufang Zhang, Xiaoping Wei, Qin Li and Lei Fu, who are trade mark attorneys with CCPIT Patent and Trade mark Law Office. Ling Zhao is a member of the MARQUES China Team

MARQUES takes this opportunity to send all Class 46 readers best wishes for the Year of the Rabbit!

On 13 January this year, the China National Intellectual Property Administration (CNIPA) issued a notification on soliciting public opinions regarding the draft revision to the China Trademark Law. The draft is published on CNIPA’s website (in Chinese) to solicit public opinions until 27 February 2023.

In the first of a two-part analysis, Ling Zhao, Shufang Zhang, Xiaoping Wei, Qin Li and Lei Fu look at the proposed changes to substantive examination.

The second part of the analysis will be posted on Class 46 shortly and will focus on procedural changes.

A comprehensive revision

This will be the fifth revision of the China Trademark Law since 1983. The proposed draft is a comprehensive revision, and the total number of provisions in the Law has increased from 73 articles to 101 articles.

However, there will still be a series of long procedures to go through before the draft becomes legislation. The current version is published for public opinions and further improvements and amendments will be made.

The revision aims to improve trade mark protection. Efforts have been made to reshape the law to shift from the current registration-based system to be more use-focused.

Under the draft revision, a statement of trade mark use will be required, and repeat trade mark registration will be forbidden, except in certain circumstances. Stronger protection will be given to well-known trade marks, either registered or unregistered in China. Bad faith trade mark filings are strictly forbidden and compulsory transfer to the legitimate trade mark holder will be possible.

In addition, the draft revision aims to improve the efficiency of trade mark examination, by shortening the opposition procedure.

Substantive examination

Regulation of bad faith trade mark filings

The banning of bad faith filing has been specifically added to the draft revision. The following situations are considered as constituting bad faith filing:

• Filing a large number of trade marks without the genuine purpose of use and disrupting the order of trade mark registrations;
• Filing trade marks by fraud or other improper means;
• Filing trade marks which cause damage to the state interests, public interests, or may cause other substantial negative influence;
• Filing trade marks that are in violation of Articles 18 [well-known trade mark], 19 [preemptive registration of agents, representatives, and interested parties] and 23 [preemptively register other people's trade mark that is used and has certain influence], or intentionally damage other parties’ interests and rights.

The draft revision further lays down administrative punishment and civil compensation for bad faith trade mark filings. The draft revision stipulates that parties that constitute bad faith filings will face a warning from the trade mark law enforcement departments or will be subject to a fine of no more than 50,000 yuan.

For those with serious offences, a fine of 50,000 yuan to 250,000 yuan will be imposed and illegal gains will be confiscated.

For the bad faith filings that cause damage to other parties, parties may initiate a lawsuit with the courts and claim civil compensation. The compensation may cover reasonable expenses to stop the bad faith filings. For bad faith filings that cause damage to the state interests and public interests, the procuratorial authorities may initiate legal prosecution.

Compulsory transfer of trade marks registered in bad faith

The draft revision provides that, if a registered trade mark violates the relevant provisions of the Trademark Law, the prior right holder or interested party may request the IP administrative department of the State Council to declare the registered trade mark invalid.

For those who violate the provisions of Article 18 of this Law on the protection of well-known trade marks, and Article 19 of this Law on the preemptive registration of agents, representatives and interested parties, or violate the provisions of Article 23 of this Law to preemptively register another person’s trade mark that is used and has a certain influence, the prior right holder may request to transfer the registered trade mark to his own name.

Establishment of credit and good faith

The draft clarifies that oppositions and invalidations can be filed based on bad faith filings and stipulates administrative punishments on dishonest behaviours in trade mark filings such as providing false documents. The credit supervision has also been introduced in trade mark registration and use.

The draft also strengthens the supervision and management of the trade mark agencies, laying out the admission requirements and obligations.

Strengthening of well-known trade mark protection

The draft reinforces the protection on unregistered well-known trade marks, adding anti-dilution protection to the well-known trade marks. It adds the principles on the protection of well-known trade marks, specifically the principles of determination on case-by-case basis, passive protection and on-demand recognition.

The draft stresses that the scope and level of protection of a well-known trade mark shall be in line with the degree of distinctiveness and reputation of the trade mark.

One of the major proposed amendments concerning well-known trade mark protection is that a well-known trade mark, which is unregistered in China, can enjoy protection on both identical and similar goods and dissimilar goods. Under the current law, an unregistered well-known trade mark can only enjoy protection on the same or similar goods.

Emphasis on the obligation of trade mark use

A statement of use shall be filed every five years after the registration of the mark. More circumstances are added as the basis of cancellation of a registered trade mark, such as: the use of a registered trade mark is misleading in respect to the quality or origin of goods.

Repeat trade mark registration forbidden

The draft provides that the trade mark registration applied for shall not be the same as one already applied for or registered by the same applicant on the same goods, or the same as a trade mark that is removed, cancelled or declared invalid within one year, except if the applicant agrees to remove its prior registration, or under certain circumstances.

Cancellation of trade mark registration

More circumstances are added for the cancellation of a registered trade mark, in addition to the circumstances of generic name and three years’ non-use as stipulated in the current law.

According to the draft, anyone can file a petition of cancellation, wherein the use of a registered trade mark is misleading to the relevant public in respect to the quality or origin of goods; wherein the registrant of collective mark or certification mark violates the obligations of collective mark and certification mark, with extremely serious circumstances; and wherein the use or enforcement of a registered trade mark severely damages the public interests and causes significant negative influences.

Trade mark infringement related to e-commerce activities

The infringement of the exclusive right to use registered trade marks through e-commerce activities is added in the draft. The scope of trade mark use covers the use of information networks such as the Internet.

The draft provides that trade mark infringement activity includes using signs identical or similar to the registered trade marks of others in e-commerce related to the same or similar goods without the permission of the trade mark registrant and causing consumers confusion.

Public interest litigation concerning trade mark infringement

The procuratorial authorities may initiate litigation against the infringement of the exclusive right to use a registered trade mark with the people’s court according to the law under the conditions that:

• The infringement of the exclusive right to use a registered trade mark causes damages to the interests of the State or the society and public;
• The holder of a right to exclusively use a registered trade mark or the interested party does not initiate litigation against the trade mark infringement; and
• The administration responsible for enforcement of the trade mark law has not dealt with trade mark infringement.

Counterclaim for malicious litigation

The people’s court shall punish according to the law anyone who files trade mark litigation maliciously. If this litigation causes losses to another party, there should be compensation for the losses.

The amount of compensation shall include reasonable expenses paid by the other party for stopping the trade mark litigation in bad faith.

Trade mark agencies

The draft intends to stipulate the admission requirements for trade mark agencies and further regulates trade mark agency behaviour. It strengthens the supervision and management of trade mark agencies, clarifies the admission requirements of trade mark agencies, and improves the quality of trade mark agency services (Article 68).

It also strengthens the responsibilities and obligations on trade mark agencies and practitioners, and standardises trade mark agency behaviour (Article 69); improves the duties and obligations of the trade mark agency industry organisation, and requires the organisation to better play the role of industry self-discipline (Article 70).

It further clarifies the illegal acts of a trade mark agency, and increases the restrictive requirements on the person in charge of an illegal trade mark agency, the person directly responsible, and the shareholder with management responsibility for new positions (Article 86).

The authors are Ling Zhao, Shufang Zhang, Xiaoping Wei, Qin Li and Lei Fu, who are trade mark attorneys with CCPIT Patent and Trade mark Law Office. Ling Zhao is a member of the MARQUES China Team

The Ideas Powered SME Fund 2023 will be launched on 23 January, EUIPO has announced. It will run until 15 December 2023.

From this date, European small and medium-sized enterprises (SMEs) can apply for voucher 1 (IP Scan, when applicable) and voucher 2 (trade marks and designs).

The SME Fund provides financial support to SMEs in the EU for the protection of their IP rights, by allowing them to apply for partial refunds of the IP pre-diagnostic service (IP Scan), trade mark and design applications and national patent applications.

In 2022, the second year of operation, there were 22,479 applications to the SME Fund from 27 EU countries. This was almost double the number of applications in 2021.

Spain was the top country for applications in 2022, followed by Poland, Italy, France and Germany, and three-quarters of the SMEs who applied were micro SMEs.

More information is available on EUIPO’s website here, from where the picture is taken.