China Law Library

Know Your Rights Against China Trademark Agent Negligence

CBL’s Introduction

Trademark filing agents in China are notorious for their negligence, abuse, and fraud. As a client, you are expected to protect yourself by knowing both the risks involved and your rights. Our American English translation of this official Chinese government guidance provides insight about the duties of trademark agents in China and your right to hold them accountable.

Administrative Bulletin on the Trademark Agent Regulatory Rules

The Trademark Agent Regulatory Rules have been issued under the PRC Trademark Act, its Administrative Regulations, and other applicable law. The 20th CCP Report mandates this agency improve intellectual property protection, thus the purpose of the Rules is to regulate the trademark agent services market to improve its quality and integrity.

Bulletin:

  1. Background and Goals

The Trademark Act and its Administrative Regulations regulates trademark representation practices and activities, improving service quality, and advancing industry development; now, surging volumes requires resolving issues with trademark representation.

First, evolving the laws governing trademark representation is necessary, particularly supplemental agency rules to implement the Act and its Administrative Regulations, such as the 2019 Trademark Act amendment addressing bad-faith trademark registration applications. These Rules enable regulating trademark Services and regulating emerging problems.

Second, unethical trademark representation practices have drawn public concern, as seen in recent years, a lowered bar has led to a surge in trademark representation services, increasing from just over 100 in 2003 to nearly 70,000.  Trademark services saw volatile demand, and resorted to illegal practices such as substandard service, deceptive registrations, mass trademark squatting, and disregard for client IP rights protection. Tightening trademark representation industry regulation and compliance is necessary because these practices harm clients and market integrity.

Third, current law lacks a specific enforcement basis to fully regulate trademark representation services, thus regulatory tightening is needed to make up for shortfalls in enforcement tools, resources, and credit controls; in this respect, the Rules provide practical solutions to support the trademark representation industry’s high quality growth.

  1. Drafting Process

Drafting the Rules was initiated in 2018 by the Trademark Office under its former parent agency, and continued within the new parent agency, the Intellectual Property Administration. Rulemakers took into account experiences from: patent agents, trademark representation regulators, local IP offices/associations, trademark services, and businesses. The draft was published for public comment on the Chinese government’s legislative information website between 9/24/20 to 10/24/20.

The Administration also sought input from all appropriate agencies, local IP agencies, trademark representation associations/services, and trademark representation industry experts and organizations, which developed into a final version of Rules, which was forwarded to the National Administration for Market Regulation in December 2020 for rulemaking review. Comments from various stakeholders were fully analyzed and the draft Regulations were revised in cooperation with the Administration, followed by approval during a meeting convened with the market regulator, which was issued via Order No. 63 on 10/27/2022, and took effect on 12/01/2022.

III. Drafting Considerations and Main Components

The Rules pursue three objectives: (1) improving the trademark representation system by implementing enforcement rules; (2) providing clear guidance for practice to encourage compliance, which improves quality; (3) and improving the regulatory process with continuous oversight, to protect parties’ rights. The Rules comprise five parts and 43 sections, covering the following main areas:

(a) General Provisions

The first part outlines the purpose of these Rules; and key trademark representation matters, providers, practitioners, and industry’s role. (Sections 1 to 4)

(b) Standardizing Filings for Trademark Service Providers

The Rules Protect clients by defining trademark services’ registration process, including renewal, amendment, and termination; expected outcomes are improve the filing system, encourage promptness, and make public disclosure. Services’ details should be updated every three years throughout the registration validity period, and they will be penalized for harming client interests or market integrity by failing to comply with registration, amendment, renewal, or termination filing requirements, or neglect ongoing representations. The section also requires the Administration publicly disclose filings to facilitate public oversight. (Sections 5 to 9, and Section 36)

(c) Setting Specific Guidelines for Trademark Representation Agencies

  1. The Rules lay down principles to govern Services, prohibiting them from engaging in deceptive or improper business practices, such as fraud or coercion, and must not harm national or public interest nor infringe upon others’ legal rights. Services are also prohibited from making unauthorized registrations or licensing trademarks, including by using the names of statutory representatives, shareholders, partners, ultimate controllers, or executives, nor do so through affiliates or new companies.
  2. Services are required to continuously develop and improve their management systems, focusing on quality assurance, conflict of interest reviews, bad-faith application reviews, and records management.

III. The Rules specify Services and trademark practitioner obligations, including notification, confidentiality, and liability for the accuracy and integrity of the documents they sign. Services must promptly send documents to their clients, and practitioners are prohibited from working part-time for more than two Services concurrently.

  1. Services must provide ethics and professionalism trainings, and follow the principles of informed consent, fairness, and integrity when charging fees, thereby minimizing unethical practices like underpricing and false advertising.
  2. Guidelines for the Disclosure of Provider Details and Business Records. (Sections 10 to 19)

(d) Diversifying Regulatory Methods for Trademark Representation

This section improves the trust management system for Services and implement tiered classification for intellectual property services and facilitates lawful submission of annual reports, and add any violators to a list of non-compliant and dishonest companies. It improves inter-agency cooperation between market and IP regulators with better shared systems, such as those used for information sharing, recording trademark representation violations, and guidance. Defines obligations of the parties involved in routine trademark representation oversight to improve the effectiveness of such oversight through methods such as interviews and feedback. (Sections 20 to 26)

(e) Improving Corrective Action for Trademark Representation Violations

This section specifies trademark representation violations under Section 68 of the Trademark Act and Section 88 of the Administrative Regulations, and takes regulatory action against bad faith applications exploiting emergencies, public figures, and current events. It also proscribes agency employee anti-bribery, revolving door prohibition violations, false advertising, selling bad faith trademarks, and facilitating trademark abuse, even if the agent does not know or should know of the violations.

This section prevents unethical competition among online trademark representation services by raising public awareness about typical violations and penalties, standardizes administrative procedures, such as those for suspending or reinstating a Service, and imposes practice restrictions to ensure that responsible persons, individuals directly responsible for the services, individuals, and controlling shareholders are not appointed to similar roles in new Services, thus preventing penalty circumvention with new entities. The Rules also prescribe IP regulators’ duties and the agency employee disciplinary accountability. Trademarks involved in crimes or violations of professional standards are subject to investigation, administrative action, and punishment. (Sections 37 to 39)

Furthermore, the Rules affirm Services may be held concurrently liable under other laws, thus law firms and attorneys providing trademark representation must concurrently follow potentially stricter professional practice rules, and individuals and organizations other than the Services committing trademark representation violations and other connected activities shall be governed by the Rules. (Sections 40 to 42)

The Rules provide specific solutions for filing systems, practice guidelines, regulatory methods, and penalties for violations, effectively addressing issues impacting market integrity and regulation, and sets standards for a high-quality trademark industry.

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Sources

Official government sources are often disorganized and difficult to navigate, so we consolidate them based on subject matter to make finding information easier.

Translated from the Chinese Intellectual Property Association’s website, using the User Centered Translation approach:

Guidance 1: “关于《商标代理监督管理规定》的说明” (https://www.cnipa.gov.cn/art/2022/11/4/art_66_180165.html)