September 2024
Trademark Protection (6) – Key Points of Trademark Assignment (Mainland China)
September 2024
Lihui Jiang and Jane Tsai
Generally, the primary way to acquire a trademark is by submitting a registration application to the Trademark Office. However, in commercial activities, companies may also acquire trademarks through purchase due to various reasons, such as strategic partnerships, expansion into new businesses, trademarks being preemptively registered, or the relatively long and uncertain trademark application process. Unlike ordinary goods transactions, trademark assignment involves specific conditions and administrative procedures, making the entire process more complex and potentially risky. This article will outline the main process of trademark assignment and the potential risks involved.
I. Overview of the Transfer Process
In China, the laws and regulations governing trademark transfers include the Trademark Law, the Implementation Regulations for the Trademark Law, and the Measures on Registration and Administration of Collective Trademarks and Certification Marks, etc. Additionally, in order to help business entities better understand the legal provisions for trademark transfers and to facilitate the reasonable transfer of registered trademarks or trademark applications, the National Intellectual Property Administration issued the Guidelines on Trademark Transfer Procedures (hereinafter referred to as the "Guidelines") in September 2023. According to the Guidelines, "trademark transfer" refers to the act of a trademark registrant or applicant transferring trademark rights or trademark application rights to an assignee, with the assignee acquiring the corresponding rights through the transfer.
The transfer of ordinary goods mainly involves the actions of the transferor and the transferee, but since trademark rights are intangible assets, their transfer requires adherence to specific administrative approval procedures. The process starts with the assignor and assignee signing an Assignment Agreement to clarify their respective rights and obligations. Subsequently, both parties need to jointly submit a trademark transfer application to the Trademark Office. Upon receiving the application, the Trademark Office will perform both formal and substantive examinations of the submitted materials. If the examination is approved, the Office will issue an approval certificate and announce the transfer. The assignee will then enjoy exclusive trademark rights from the date of the announcement. It is worth noting that while the Trademark Law stipulates that the transfer application should be jointly filed by both parties, in practice, it is usually handled by the assignee.
Additionally, according to the Guidelines and the China Trademark Network's Application for Transfer of Registered Trademark[1], the materials required for a transfer application mainly include the Trademark Transfer/Assignment/Registration Application Form, copies of identification documents of the assignor and the assignee with seals or signatures, and the entrustment documents of the agency, etc. Although the Trademark Law specifies that an assignment agreement should be signed by the assignor and assignee, neither the Guidelines nor practical procedures enforced by the Trademark Office mandate the submission of this agreement. Therefore, some companies may not attach importance to its signing and may even only make verbal agreements between affiliated companies.
II. Trademark Assignment Agreement
As mentioned above, the assignee only enjoys exclusive rights to the trademark after the application has been approved and announced. Any issues arising during the application, formal examination, or substantive examination stages could potentially result in the application not being approved, thus hindering the successful completion of the assignment. By signing a detailed and reasonable Assignment Agreement, both parties can clarify their rights and obligations at each stage, and make prior arrangements for potential unexpected situations and other relevant matters, thereby ensuring the smooth completion of the entire trademark transfer process.
At present, there are no specific regulations in China regarding agreements related to trademark assignments. Therefore, such agreements should still comply with the provisions of the Civil Code. When preparing an Assignment Agreement, in addition to the precautions for general contracts, it is also necessary to pay attention to the following risks due to the particularity of trademark assignments:
Overall Transfer: The primary function of a trademark is to identify and distinguish the source of goods or services. Companies sometimes register a series of trademarks for the same or similar goods. If only some of these trademarks are transferred, it may cause confusion among consumers regarding the source of the goods. Article 42 of the Trademark Law stipulates that, in the case of the transfer of a registered trademark, any similar trademark registered by the trademark registrant for the same type of commodities, or any identical or similar trademark for similar commodities shall be transferred together. Additionally, Article 31 of the Implementation Regulations for the Trademark Law indicates that in the event of the transfer of a registered trademark, where the trademark registrant does not transfer its identical or similar trademark(s) registered on identical or similar goods concurrently, it shall be ordered by the Trademark Office to make corrections within the stipulated period; where correction is not made within the stipulated period, it shall be deemed to have forfeited the application for the transfer of the said registered trademark. Therefore, when preparing the Assignment Agreement, it is necessary to include appropriate clauses for overall transfer and/or guarantees as applicable.
Transfers That May Cause Confusion or Have Other Adverse Effects: Article 42 of the Trademark Law also stipulates that transfers which may easily cause confusion or any other adverse impact shall not be approved by the trademark office. According to the Guidelines, common circumstances include Application is filed for the transfer of a trademark containing a geographical name to an assignee located outside the region; an application is filed for the transfer of a trademark containing an enterprise name to another enterprise; Application is filed for the transfer of a trademark with special meaning, but the transfer may have a negative and adverse impact on social and public interests, public order or good morals such as politics, economy, culture, religion and ethics of China; the applicant has a relatively large number of registered trademarks cumulatively and transfers trademarks to scattered assignees cumulatively for many times without justifiable reasons.
Defects in Trademark Rights: Although some trademarks may have been successfully registered, it is important to be aware that they may still be subject to defects that could lead to their invalidation or cancellation. For instance, prior right owners or interested parties can request the Trademark Review and Adjudication Board to declare a registered trademark invalid within five years from the date of registration. However, this five-year limit does not apply in cases of preemptive registration or for well-known trademarks. Additionally, if a trademark has not been used continuously for three years without legitimate reason, any organization or individual can apply to the Trademark Office for the cancellation of the registered trademark. Sometimes, trademark owners may also neglect to renew their registration upon expiration.
Additionally, when transferring trademark application rights, it is important to be aware of the potential risks of rejection, opposition, and non-registration. Both parties should pay attention to the allocation of risk and liability for damages when preparing the Assignment Agreement.
Conclusion
In summary, as an intangible asset, the transfer process of a trademark has certain particularities. Both parties should be cautious in each process, especially in submitting the transfer application to the Trademark Office. In addition, the Assignment Agreement signed based on the transferred trademarks and each party's own needs can help reduce risks and protect their respective legitimate rights and interests, ensuring the smooth completion of the trademark transfer.
[1] Trademark Office of China National Intellectual Property Administration: Application for Transfer of Registered Trademark：https://sbj.cnipa.gov.cn/sbj/sbsq/sqzn/202303/t20230331_26240.html
Related Articles
The contents of all newsletters of Shanghai Lee, Tsai & Partners (Content) available on the webpage belong to and remain with Shanghai Lee, Tsai & Partners. All rights are reserved by Shanghai Lee, Tsai & Partners, and the Content may not be reproduced, downloaded, disseminated, published, or transferred in any form or by any means, except with the prior permission of Shanghai Lee, Tsai & Partners.
The Content is for informational purposes only and is not offered as legal or professional advice on any particular issue or case. The Content may not reflect the most current legal and regulatory developments. Shanghai Lee, Tsai & Partners and the editors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The contributing authors' opinions do not represent the position of Shanghai Lee, Tsai & Partners. If the reader has any suggestions or questions, please do not hesitate to contact Shanghai Lee, Tsai & Partners.
Lihui Jiang and Jane Tsai
Generally, the primary way to acquire a trademark is by submitting a registration application to the Trademark Office. However, in commercial activities, companies may also acquire trademarks through purchase due to various reasons, such as strategic partnerships, expansion into new businesses, trademarks being preemptively registered, or the relatively long and uncertain trademark application process. Unlike ordinary goods transactions, trademark assignment involves specific conditions and administrative procedures, making the entire process more complex and potentially risky. This article will outline the main process of trademark assignment and the potential risks involved.
I. Overview of the Transfer Process
In China, the laws and regulations governing trademark transfers include the Trademark Law, the Implementation Regulations for the Trademark Law, and the Measures on Registration and Administration of Collective Trademarks and Certification Marks, etc. Additionally, in order to help business entities better understand the legal provisions for trademark transfers and to facilitate the reasonable transfer of registered trademarks or trademark applications, the National Intellectual Property Administration issued the Guidelines on Trademark Transfer Procedures (hereinafter referred to as the "Guidelines") in September 2023. According to the Guidelines, "trademark transfer" refers to the act of a trademark registrant or applicant transferring trademark rights or trademark application rights to an assignee, with the assignee acquiring the corresponding rights through the transfer.
The transfer of ordinary goods mainly involves the actions of the transferor and the transferee, but since trademark rights are intangible assets, their transfer requires adherence to specific administrative approval procedures. The process starts with the assignor and assignee signing an Assignment Agreement to clarify their respective rights and obligations. Subsequently, both parties need to jointly submit a trademark transfer application to the Trademark Office. Upon receiving the application, the Trademark Office will perform both formal and substantive examinations of the submitted materials. If the examination is approved, the Office will issue an approval certificate and announce the transfer. The assignee will then enjoy exclusive trademark rights from the date of the announcement. It is worth noting that while the Trademark Law stipulates that the transfer application should be jointly filed by both parties, in practice, it is usually handled by the assignee.
Additionally, according to the Guidelines and the China Trademark Network's Application for Transfer of Registered Trademark[1], the materials required for a transfer application mainly include the Trademark Transfer/Assignment/Registration Application Form, copies of identification documents of the assignor and the assignee with seals or signatures, and the entrustment documents of the agency, etc. Although the Trademark Law specifies that an assignment agreement should be signed by the assignor and assignee, neither the Guidelines nor practical procedures enforced by the Trademark Office mandate the submission of this agreement. Therefore, some companies may not attach importance to its signing and may even only make verbal agreements between affiliated companies.
II. Trademark Assignment Agreement
As mentioned above, the assignee only enjoys exclusive rights to the trademark after the application has been approved and announced. Any issues arising during the application, formal examination, or substantive examination stages could potentially result in the application not being approved, thus hindering the successful completion of the assignment. By signing a detailed and reasonable Assignment Agreement, both parties can clarify their rights and obligations at each stage, and make prior arrangements for potential unexpected situations and other relevant matters, thereby ensuring the smooth completion of the entire trademark transfer process.
At present, there are no specific regulations in China regarding agreements related to trademark assignments. Therefore, such agreements should still comply with the provisions of the Civil Code. When preparing an Assignment Agreement, in addition to the precautions for general contracts, it is also necessary to pay attention to the following risks due to the particularity of trademark assignments:
Overall Transfer: The primary function of a trademark is to identify and distinguish the source of goods or services. Companies sometimes register a series of trademarks for the same or similar goods. If only some of these trademarks are transferred, it may cause confusion among consumers regarding the source of the goods. Article 42 of the Trademark Law stipulates that, in the case of the transfer of a registered trademark, any similar trademark registered by the trademark registrant for the same type of commodities, or any identical or similar trademark for similar commodities shall be transferred together. Additionally, Article 31 of the Implementation Regulations for the Trademark Law indicates that in the event of the transfer of a registered trademark, where the trademark registrant does not transfer its identical or similar trademark(s) registered on identical or similar goods concurrently, it shall be ordered by the Trademark Office to make corrections within the stipulated period; where correction is not made within the stipulated period, it shall be deemed to have forfeited the application for the transfer of the said registered trademark. Therefore, when preparing the Assignment Agreement, it is necessary to include appropriate clauses for overall transfer and/or guarantees as applicable.
Transfers That May Cause Confusion or Have Other Adverse Effects: Article 42 of the Trademark Law also stipulates that transfers which may easily cause confusion or any other adverse impact shall not be approved by the trademark office. According to the Guidelines, common circumstances include Application is filed for the transfer of a trademark containing a geographical name to an assignee located outside the region; an application is filed for the transfer of a trademark containing an enterprise name to another enterprise; Application is filed for the transfer of a trademark with special meaning, but the transfer may have a negative and adverse impact on social and public interests, public order or good morals such as politics, economy, culture, religion and ethics of China; the applicant has a relatively large number of registered trademarks cumulatively and transfers trademarks to scattered assignees cumulatively for many times without justifiable reasons.
Defects in Trademark Rights: Although some trademarks may have been successfully registered, it is important to be aware that they may still be subject to defects that could lead to their invalidation or cancellation. For instance, prior right owners or interested parties can request the Trademark Review and Adjudication Board to declare a registered trademark invalid within five years from the date of registration. However, this five-year limit does not apply in cases of preemptive registration or for well-known trademarks. Additionally, if a trademark has not been used continuously for three years without legitimate reason, any organization or individual can apply to the Trademark Office for the cancellation of the registered trademark. Sometimes, trademark owners may also neglect to renew their registration upon expiration.
Additionally, when transferring trademark application rights, it is important to be aware of the potential risks of rejection, opposition, and non-registration. Both parties should pay attention to the allocation of risk and liability for damages when preparing the Assignment Agreement.
Conclusion
In summary, as an intangible asset, the transfer process of a trademark has certain particularities. Both parties should be cautious in each process, especially in submitting the transfer application to the Trademark Office. In addition, the Assignment Agreement signed based on the transferred trademarks and each party's own needs can help reduce risks and protect their respective legitimate rights and interests, ensuring the smooth completion of the trademark transfer.
[1] Trademark Office of China National Intellectual Property Administration: Application for Transfer of Registered Trademark：https://sbj.cnipa.gov.cn/sbj/sbsq/sqzn/202303/t20230331_26240.html
Related Articles
- Trademark Protection (1) – Brand Protection and Trademark Registration (Mainland China)
- Trademark Protection (2) – Recourses for Preemptive Trademark Registration (Mainland China)
- Trademark Protection (3) – Outlook on Metaverse Trademark Protection (Mainland China)
- Trademark Protection (4) – Punitive Damages for Trademark Infringement (Mainland China)
- Trademark Protection (5) – Judicial Practice of Punitive Damages for Trademark Infringement (Mainland China)
The contents of all newsletters of Shanghai Lee, Tsai & Partners (Content) available on the webpage belong to and remain with Shanghai Lee, Tsai & Partners. All rights are reserved by Shanghai Lee, Tsai & Partners, and the Content may not be reproduced, downloaded, disseminated, published, or transferred in any form or by any means, except with the prior permission of Shanghai Lee, Tsai & Partners.
The Content is for informational purposes only and is not offered as legal or professional advice on any particular issue or case. The Content may not reflect the most current legal and regulatory developments. Shanghai Lee, Tsai & Partners and the editors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The contributing authors' opinions do not represent the position of Shanghai Lee, Tsai & Partners. If the reader has any suggestions or questions, please do not hesitate to contact Shanghai Lee, Tsai & Partners.
