Watered-down Administration of Trademark Agency

By Zhou Yi, China IP,[Trademark]

“Trademark agents refer to the practicing staff in trademark agency organizations,” while “trademark agencies refer to legal service agencies that accept entrustment of clients and handle application for registration of trademarks or other matters related to trademarks in the name of the clients.”

These two concise definitions are quoted from Measures for Administration of Trademark Agency, which formally came into force on November 11, 2009.

The difference is that Measures for Administration of Trademark Agency, which came into force on January 1, 2000, defined trademark agents as people who had obtained a trademark agent license and been engaged in trademark agency business.

Therefore, with the abolition of the two definitives, “obtained a trademark agent license” and “engaged in trademark agency business”, there is almost no threshold for people to become trademark agents. Similarly, there is almost no threshold to establishing a trademark agency under the new measures.

Actual threshold in the absence of threshold

“As a matter of fact, the measures are a continuance of the 2003 Decision of the State Council on Canceling the Second Group of Administrative Approval Items and on Changing the Management Methods of Some Administrative Approval Items”, Li Lei, Deputy Director with Unitalen Attorneys at Law (“Unitalen”), told our journalist.

In 2003, Decision of the State Council on Canceling the Second Group of Administrative Approval Items and on Changing the Management Methods of Some Administrative Approval Items cancelled the No. 179 and No. 182 administrative approval items, namely, “approval of trademark agencies” and “licensing of trademark agents.”

After the cancellations, the change in the trademark service remained fresh in people’s mind: there was a surge in the number of trademark agents and agencies.
Li Lei said, “I remember that many trademark agencies popped up, windows of office buildings close to the China Trademark Office (“CTMO”) were almost all posted with advertisements for trademark agencies.”

According to statistics from the State Administration for Industry and Commerce (“SAIC”), there were 150 trademark agencies across China by the end of 2002. While statistics from CTMO website showed that there were 4,775 trademark agencies across China by the time this article was concluded.

The surge in the number seemed to defy the rule of survival for the fittest through market competition. On the contrary, there were constant instances of low-price competition, cheats and other “frauds in trademark agency business.” In 2003 and 2004, chaos in the trademark agency business had attracted attention from the society and became a hot media topic at that time.

Wang Zhengfa, a partner with the Beijing Hylands Law Firm, told our journalist, “We found professional advice provided by some trademark agents to their clients quite ridiculous; for example, some promised that they were 100% sure that the trademark could be registered on the condition that a certain amount of money was given. Others often advised the clients to have a trademark registered in all classes. These were really ridiculous and to be quite frank, were only made for the sake of making money.”

Wang Zhengfa, attorney-at-law, concluded that the changes caused vicious competition in price, a lack in the ability to guarantee service quality and an increase in the amount of fraud.

The SAIC stated in its “Letter to Seek Advice on Regulations on Trademark Agency” as follows: “six years of practice have demonstrated that the country’s trademark agency business has plunged into complete chaos, resulting in a sharp decrease in service quality, no guarantee in protecting the interests of clients and created an adverse social impact.”
As Deputy Director of a well-known trademark agency in China, Li Lei thought that the trademark service business, in the absence of a threshold, has raised a “threshold” for itself from the micro point of view over the past six years. The threshold has obstructed the development of the trademark agency business. “The number of trademark filings in China has become stable, but till now, a number of large and medium-sized enterprises have emerged and their trademark status tends to be stable, thus demanding more value-added services associated with trademarks. However, the country’s trademark agency business has not developed that much accordingly.”

Li Lei pointed out that the understanding of trademark services offered by many of the country’s trademark agencies and business is confined to the simplest trademark services, such as searches, applications and receipts of acceptance notices. Even for such services, many trademark agencies have had chaos in management, loopholes in procedures and instability in working staff. The reason is that some middle stream agencies have to put a great deal energy in confronting business competition and don’t have the capital and time to care about the development of the agency itself. Therefore, till now, the upper stream trademark agencies has been scarce, and trademark agents capable of high-end services, such as trademark licensing and transfer, exploitation and analysis, are even scarcer. According to Li Lie, “It is extremely easy to enter this business. Varying levels of quality and disorderly competition have challenged the development and further expansion of the business.”

Self-discipline and supervision

Attorney-at-law Zhao Lei, currently head of Unitalen’s Legal Division, introduced that though Unitalen did not require a trademark agent to pass the trademark agent qualification exam, the firm demanded that he pass the National Bar Exam to obtain qualification certificate to practice in the legal profession.

“Trademark agency business is quite a serious legal service,” Zhao Lei told our journalist. “I have worked in the business for many years. I personally think that sometimes something seems to be rather small to us, but it is a very big matter to our clients or enterprises. If there is no professional qualification, I find it difficult to do a good job.”

Since there is no uniform threshold in the country, requirements vary greatly from agency to agency in their recruitment of trademark agents. The minimum requirement of Unitalen is the passage of the National Bar Exam; however, many trademark agencies have no requirements. Our journalist did searches for “trademark agent” openings on www.zhaopin.com and www.51job.com, and the results showed that many trademark agencies, particularly those domiciled outside Beijing and Shanghai, require nothing more than “college” in their academic requirements for trademark agents and do not require work experience. Whether the candidate has a lawyer’s qualification certificate or not is almost not considered. Generally, “the candidate, who is a lawyer or has legal professional qualifications, is eligible for priority considerations.”

“Currently even a nursemaid is required to have relevant qualifications or university degree” joked Zhao Lei.

The qualifications of trademark agents need to be regulated by the agencies themselves; it requires self-discipline. For trademark agency business, it is very awkward to be self-disciplinary.

 “Currently there are no trademark agents associations except one trademark agency branched under the China Trademark Association,” said Wang Zhifa. “The branch has contributed a lot in regulating the business, such as organizing and, from time to time, discussions with trademark agencies who seek advice on administration. However, it has very limited power, and most important of all, it does not have any enforcement power. Therefore, it is very difficult for the branch to exercise material effects on the business. In addition, the measures have not granted it power to exercise self-disciplinary administration within the business,” he added. 

The newly promulgated measures seem to take notice of the current situation in the trademark agency business. It has delegated supervision power and changed the former provincial level by stating that “the administrative departments for industry and commerce above county level shall supervise and regulate the agency behavior of trademark agencies and trademark agents under their jurisdiction by law.”

“This is a positive change. There are too many trademark agencies, and delegation of power is helpful to strengthening supervision of the business,” commented Zhao Lei.

Wang Zhengfa recognized the need for the change, but expressed his unease that “the varying enforcement criteria will cause chaos for a certain period of time.”

Patent agency and trademark agency

In China there is a very interesting comparison as to agency between the two intellectual property fields, patent agency and trademark agency: A patent agent has to pass the qualification exam, which has a very low rate of passage. There is a call for a relaxation of the entrance requirements. While at the same time, a trademark agent does not need to pass any examination at all. There are currently only more than 700 patent agencies in China; just a “tiny part” of the number of trademark agencies. Patent agencies have their own association, the All-China Patent Agents Association, while trademark agents don’t have their association. Currently there are plans and guidelines for patent agencies, but there are no such plans and guidelines for trademark agents.

The patent agency business is a strictly regulated business in China, while the trademark agency business seems to be completely marketized and subject to free market competition.
“I don’t think regulation by the market is omnipotent. Market regulation refers to the configuration and regulation under certain rules within a certain extent. For example, for supervision of listed companies, the companies must be listed. Currently the conflicts or problems arising from the business are a result of the failure to compete on the same level, because some, who are not eligible for entry, are permitted enter the business and compete. In the absence of a basic threshold, there will be no efficient supervision and allocation of resources. Take the legal profession for example, if there is a threshold, there will be competition through market regulation. Therefore, high-end and professional services have been currently developing at a fast pace over the past years, completely meeting the trend for increasing lawsuits in China, However, such a trend does not exist in trademark agency business,” Li Lei told our journalist.

As mentioned above, the SAIC internally handed out a “Letter to Seek Advice on Regulations on Trademark Agency.” The letter contained contents that resumed thresholds for the qualification exam for trademark agents and for the establishment of trademark agencies, and that the trademark branch was granted the power to exercise self-disciplinary administration over the business.

“Currently the measures are low in efficiency level as a matter of fact. If there are regulations like Regulations on Patent Commissioning in the patent agency business, that may be helpful to the development of trademark agency business,” commented Wang Zhengfa.

(Translated by Wang Hongjun)

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