On August 26, 2015, the Trademark Office of The State Administration For Industry & Commerce of the People’s Republic of China (“TMO”) issued revised guidelines entitled Applications for Recordal of Licenses of Registered Trademarks, Recordal of Licensor/Licensee Name Change, Recordal of Early Termination of Trademark Licenses and Recordal of Withdrawal of Trademark Licenses (“2015 Guidelines”). The 2015 Guidelines are a slightly revised version of guidelines issued in 2014 that were intended to bring the license recordal regime in line with the 2014 Trademark Law and its Implementing Regulations. The TMO has not indicated whether the 1997 Measures for the Filing of Recordals of Trademark License Contracts (“1997 Recordal Measures”) will remain in effect after the establishment of new recordal procedures and the issuance of the 2015 Guidelines, but it is clear that a number of provisions of those earlier measures have been rendered moot under the new regime.
Perhaps the most noteworthy change introduced under the new recordal regime is the elimination of the requirement that Trademark License Contracts be submitted to the TMO, and that those agreements meet certain substantive criteria. Since the 2014 Trademark Law and its Implementing Regulations came into effect, the trademark license recordal process has been simplified to entail the filing of a standard application form that contains basic information on the licensor, licensee, term, scope, etc. Under the earlier regime, however, the TMO would review Trademark License Contracts for compliance with substantive requirements set out in the 1997 Recordal Measures, and would often reject recordal applications on the basis of non-compliance. In effect, this earlier practice introduced a substantive review procedure into the recordal process, and it often forced licensors to alter the language of standard license contracts or submit PRC-specific short-form license contracts that were compliant with the TMO review criteria. The fact that this practice has been abandoned should come as good news to brand owners with PRC licensees.
Under the 2001 Trademark Law and its Implementing Regulations, trademark license recordals with the TMO were required within three months of execution of a trademark license agreement, but this is no longer the case under the new regime. Under the 2014 Trademark Law and its Implementing Regulations, license recordals continue to be required, but only “within the valid period of the contract.”
While license recordal certificates are occasionally requested of licensees by the administrative authorities (e.g., Administrations for Industry & Commerce) and other third parties (such as landlords) to confirm use authorizations for relevant trademarks, the only enumerated “penalty” for failure to record is the inability to invoke licensed rights against a third party acting in good faith. The State Administration for Foreign Exchange no longer requires the submission of trademark license recordal certificates by licensees when processing foreign currency royalty payments through PRC banks, so even with the procedural streamlining under the 2015 Guidelines, the limited practical benefits of trademark license recordals may no longer justify the costs of recordal for all licences, or all licensed marks under a license that covers multiple PRC registered trademarks.