Trademark assignment in China : all or nothing

In France, trademark transfers are frequently contemplated. Trademark assignment in China follows different rules. All identical or similar trademarks covering identical or similar goods must be assigned together! Below is the detailed explanation.

Understanding Trademark assignment in China

Trademark assignment in China can result from an agreement between trademark owners, inheritance, or a court decision. Any assignment application must be filed with the China Trademark Office (CTMO). The examination of the application can take between 6 and 8 months.

The assignment certificate

The CTMO approves or rejects the assignment and, if applicable, issues an assignment certificate.

This assignment certificate is a key document that must be carefully preserved, alongside the trademark registration certificate. It serves as official proof of the transfer and is essential for:

• Establishing ownership rights
• Enforcement actions against infringers
• Future licensing or assignment transactions
• Due diligence in mergers and acquisitions

Essential pre-assignment verifications

Important: The Trademark Office does not verify the validity of the assigned trademark. Therefore, several verifications must be carried out in advance :

• Validity status: Is the trademark registration valid or has it been cancelled?
• Renewal status: Has the trademark been duly renewed?
• Ownership verification: Is the assignor the actual owner of the trademark?
• Encumbrances: Are there any licenses, pledges, or other encumbrances on the trademark?
• Litigation status: Is the trademark subject to any pending disputes or oppositions?

Furthermore, the assignee must conduct a comprehensive search of the assignor’s trademarks to obtain assignment of all identical or similar trademarks.

The “All or nothing” rule: comprehensive assignment of similar marks

Article 42 of the Chinese Trademark Law provides that a trademark owner must simultaneously assign all other similar or identical trademarks covering similar or identical goods and services. This obligation applies to both registered trademarks and those pending registration.

The rectification request mechanism

If this requirement is not satisfied, the Chinese Trademark Office will issue a rectification request during examination of the assignment application.

The rectification process typically involves:

• Official notification from CTMO identifying missing trademarks
• Deadline to submit supplementary assignment agreements (typically 30 days)
• Risk of rejection if rectification is not completed
• Additional fees and extended processing time

Consumer protection rationale

The objective pursued is consumer protection. By requiring assignment of all similar trademarks, the office prevents the creation of a risk of confusion among the public.

This policy ensures that:

• Consumers are not misled about the origin of goods
• Market clarity is preserved following a change of ownership
• Similar trademarks do not end up with competing owners
• Brand integrity is preserved across product lines

The corporate name conflict: a critical exception

Warning: This obligation to assign all similar trademarks may conflict with other legal rules. In particular, the prohibition on assigning a trademark that consists wholly or partially of the company’s corporate name.

Understanding the paradox

It is therefore advisable to avoid registering multiple versions of the same trademark, some including the mark with its corporate name.

Indeed, on one hand, all trademarks must be assigned together… on the other hand, the assignment application will be rejected if one of them includes the assignor company’s corporate name.

Example scenario:

• Company A owns trademark “PHOENIX” (word trademark)
• Company A also owns “PHOENIX BEIJING CO., LTD.” (including corporate name)
• Company A wants to assign “PHOENIX” to Company B
• Problem: Must also assign “PHOENIX BEIJING CO., LTD.” which is not permitted due to the presence of its corporate name
• Result: Assignment may be entirely blocked

Best practices for portfolio management

To avoid these difficulties:

• Strategic filing approach: Separate brand trademarks from corporate name marks
• Class selection: File corporate name trademarks in limited classes if necessary
• Exit planning: anticipace future assignment scenarios when building a trademark portfolio
• Alternative solutions: Use licensing arrrangements instead of assignment where appropriate
• Pre-transaction review: Conduct thorough analysis prior to M&A negotiations

Assignment timeline and process

Step 1: Preparation (1-2 months)

• Conduct comprehensive trademark search
• Verify validity and renewal status
• Identify all similar/identical marks requiring joint assignment
• Negotiate and execute assignment agreement

Step 2: Filing (1 week)

• Prepare application documents
• Legalize and notarize documents if required
• Submit to CTMO with official fees

Step 3: Examination (6-8 months)

• CTMO reviews application for completeness
• Rectification requests issued if necessary
• Respond to any office actions within deadlines

Step 4: Approval and Publication

• Inssuance of the assignment certificate
• Publication in Trademark Gazette
• Update internal records and notify stakeholders

Expert guidance is essential

To adopt an effective trademark strategy in China, it is essential to rely on the advice of an intellectual property law firm with recognized international experience. Our firm benefits from a network of reliable partners worldwide.

The unique “all or nothing” rule in China requires careful planning and comprehensive portfolio analysis. Working with experienced counsel ensures compliance with Chinese trademark law while protecting your valuable intellectual property assets through ownership transitions.

Stéphane Bellec, Partner

Intellectual Property Attorney

Email: sbellec@debaecque-avocats.com

Tel: +33 (0) 1 53 29 90 00