Trademark assignment, as an important means of transferring trademark rights, helps revitalize trademark resources and boost the development of the brand economy. However, not all trademark assignment applications can be approved. Pursuant to the relevant provisions of the Trademark Law of the People's Republic of China, a trademark assignment that is likely to cause confusion or adverse effects shall not be approved. “Confusion” means the assignment may cause the relevant public to misidentify or confuse the origin or source of the goods or services. “Adverse effects” means the trademark assignment may exert negative or harmful impacts on China’s political, economic, cultural, religious, ethnic and other social public interests, public order and good morals. In accordance with relevant provisions of the Trademark Law, assignments likely to cause confusion or adverse effects mainly fall into the following categories.
I. Assignee Lacks Proper Qualifications
Whether the assignee is legally qualified under Chinese law is an important part in the examination of trademark assignment. The following assignment application shall not be approved as the assignee is not qualified:
1.Assignment of collective or certification marks to unqualified assignees Collective marks and certification marks have special functions and legal attributes with specific requirements for their registrants. A collective mark must be registered by a group, association or other organization; a single enterprise or an individual operator shall not act as the assignee. The registrant of a certification mark must possess the capacity to supervise the specific quality of the relevant goods or services. An assignment of such mark to an unqualified entity may not only distort the function of the marks but also harm consumer interests, and thus the application shall not be approved.
2.Assignment of geographical indication trademarks to entities outside the region The core value of a geographical indication lies in its connection with the natural and humanistic factors of a specific region. If a geographical indication trademark is assigned to a producer outside that region, goods bearing the mark may no longer possess the original specific qualities, which is likely to mislead the public about the origin of the goods. Thus producers or operators whose domicile or business place is outside the corresponding region shall not be assignees of geographical indication trademarks.
3.Unlawful assignments to trademark agencies
Under Chinese law, a trademark agency shall not apply for trademark registration for goods or services other than “agency services”. Similarly, if a trademark agency, in violation of relevant provisions, accepts the assignment of trademarks other than those for its agency services, the assignment application shall not be approved.
II. Trademarks Unsuitable for Assignment
Some trademarks have special meanings in their signs, and their assignment may cause confusion or adverse effects: 1.Assignment of ordinary trademarks containing geographical names to entities outside the corresponding region In addition to geographical indication trademarks, the assignment of ordinary trademarks containing geographical names may also cause confusion. For example, “Kweichow Moutai” is a well-known trademark for liquor products; where ”Kweichow” refers to the province Guizhou of China. Assignment of this trademark to an entity outside Guizhou Province will easily cause consumers to misidentify the origin of the goods.
2.Assignment of trademarks containing enterprise names to unrelated entities Trademark containing enterprise names embody the business reputation of specific enterprises. Assignment thereof to unrelated parties may confuse consumers and harm public interests. For example, the trademark “Shanxi XX Group Company and device” includes the full enterprise name of Shanxi XX Group Company. If assigned to Hebei XX Co., Ltd., it will easily lead the relevant public to believe that the goods originate from the Shanxi company or an affiliated entity therewith.
(Shanxi and Hebei are both province names)
3.Other circumstances likely to cause adverse effects
Certain trademark assignments may negatively affect China’s political, economic, cultural, religious, ethnic and other social public interests, public order or good morals. Examples include assigning marks containing China’s national name, national flag, national emblem or other state symbols to foreign entities, or assigning marks with religious or ethnic connotations to irrelevant parties.
III. Malicious Hoarding and Assignment for Improper Profit Trademark registration shall be based on a genuine intention to use. Malicious hoarding of trademarks for improper profit through assignment shall be prohibited. For example, a natural person filed a large number of trademark applications (over 700), and conducted multiple assignments with scattered assignees, while failing to provide justifiable reasons or use evidence. Such acts exceed normal business needs and undermine the trademark registration order therefore the assignment shall not be approved.
Conclusion
Although trademark assignment is a disposal of private rights, as commercial signs linking goods and consumers, the use and assignment of trademarks concern market order and public interests. Applicants for trademark assignment shall establish a correct awareness of trademark registration and use, abide by the principle of good faith, and avoid confusion or other adverse effects arising from the assignment. Before accepting a trademark assignment, the assignee shall also fully assess the assignment risks to avoid unnecessary losses caused by failure to obtain approval after investment.
