China’s New Trademark Law And The Law Of Unintended Consequences

China’s new Trademark Law went into effect on May 1, 2014, to great fanfare from the international IP community. The law ostensibly improves several aspects of China trademark practice: more ways to combat bad-faith filings, more protection of well-known marks, and formal time limits for decisions on trademark applications and appeals, to name a few. But as with, well, everything in China, the devil is in the details. The way a law plays out in practice may have little relation to how it is written. And although it is too early to tell how the new law will change trademark practice in China, the early indications are less than reassuring.

Consider the new time limits. Before the new law went into effect, the Chinese Trademark Office (CTMO) took its own sweet time to review a national trademark application; during the past year most applications were reviewed within 15-18 months from the date of receipt, but more than two years wasn’t unheard of. Now, under the new law, the CTMO must complete its initial review within nine months of receipt. (This brings national trademarks in line with Madrid Protocol applications, which have always been reviewed within a strict nine-month timeframe. Who says China shirks its WTO obligations?)

The time limits seem like an obvious win for trademark applicants, but the (presumably) unintended consequences became apparent even before the new law took effect. In the months leading up to May 1, the CTMO hired hundreds of new trademark examiners and completed initial reviews of trademark applications at a record pace. The CTMO examiners then began “clearing the decks” of all outstanding trademark applications, with what appeared to be a de facto nine-month time limit for reviewing such applications.

So far so good. Except that rapid-fire decisions made by barely trained staff make as much sense as an elevator in an outhouse. In the past three months, we have received several decisions from the CTMO that had no basis in either logic or law. My favorite, although I hesitate to use that word, was the decision that rejected a Spanish-language trademark that contained the article “Las” because a previously registered trademark also contained the article “Las.” This would be like rejecting “The Hobbit” because “Back to the Future” had been previously registered and both trademarks included the word “The.”

Though we can (and do) appeal these decisions to the Trademark Review and Adjudication Board (TRAB), the TRAB is also under a nine-month deadline, and we have received confounding decisions from the TRAB in the past few months. Other practitioners report similar results across the board.

The silver lining in all this is that the CTMO and TRAB are clearly taking the 9-month deadline seriously. Currently the result is another case study for the “good, fast, and cheap: pick any two” paradigm, but an optimist would say that as the new examiners become more experienced and everyone at the CTMO becomes more comfortable with the deadlines, the decisions will become more rational and we will truly be living in the best of all possible worlds.

I would not hold my breath for the above outcome, but deciding not to file trademarks in China is hardly a realistic option either. Like many things in China, Chinese trademark practice can be irrational, crazy, and absurd, but what can we do? We need the eggs.