Evaluating the treatment of geographical indications in China

China and the United States, two of the world's most important economies, with a GDP of more than 10 trillion US dollars, finally reached the first phase of the Sino US Economic and Trade Agreement (hereinafter referred to as the Sino-US Agreement) on January 15 2020. This eases the haze around world economic development and boosts the confidence of market investors. The first chapter of the Sino US Agreement focuses on intellectual property rights. This not only demonstrates the important position this issue holds in Sino US economic and trade negotiations, but also shows that both countries attach great importance to the protection of intellectual property rights and can continue to expand and deepen cooperation under the common interests of both sides.

In terms of intellectual property protection, the Sino-US Agreement splits into five parts: (1) the protection of trade secrets, (2) the patent link of pharmaceuticals, (3) the protection of geographical indications, (4) the treatment of malicious rush to register trademarks, and (5) the law enforcement and rights protection surrounding counterfeit products. Among them, the protection of geographical indications is one of the most interesting aspects. The relevant contents may cause disputes in the future international coordination of geographical indication protection rules, which has attracted special attention.

According to the Sino-US Agreement, the parties must ensure full transparency and procedural fairness with respect to the protection of geographical indications, including: 1) safeguards for generic terms (also known as common names); 2) respect for prior trademark rights; 3) clear procedures to allow for opposition and cancellation; and 4) fair market access for exports of a party relying on trademarks or the use of generic terms.

As for the protection of generic terms, the key point is the accurate identification of them. Article 10 of Provisions on Several Issues concerning the Trial of Administrative Cases involving Trademark Authorisation and Confirmation issued by the Supreme People's Court of China in 2017 stipulates that, in principle, the recognition of the generic term shall be based on the general knowledge of the relevant public nationwide, and in particular, on the common appellation in the relevant market. However, the recognition rules of generic terms in the Sino-US Agreement are obviously more detailed and stricter than the above provisions. In particular, it is emphasised that in determining whether a name is a generic term in China, the factors to be considered shall also include "whether the good in question is imported into China, in significant quantities, from a place other than the territory identified in the application or petition, and in a way that will not mislead the public about its place of origin, and whether those imported goods are named by the term". Obviously, the US side hopes to rely on some objective criteria when determining the generic term. However, it is worth exploring whether the above objective standards have legitimacy and rationality from the perspective of a third party to truly become a widely accepted universal standard.

Regarding respect for prior trademark rights, it should be noted that the State Intellectual Property Office of China revised the Measures for the Protection of Foreign Geographical Indication Products (hereinafter referred to as the measures) on November 27 2019. Article 5 of the new measures stipulates the objects to be protected by geographical indications in China, and additionally adds the provision that the geographical indication products to be protected shall not conflict with other prior rights. The so-called "other prior rights" naturally include trademark rights. This means that for new protected geographical indications abroad, if their owners seek to obtain extended protection in China, they will experience more rigorous examination than before, and the difficulty of obtaining rights will increase.

As for the opposition and cancellation of geographical indication products, Articles 12 to 16 and Articles 33 to 35 of the above measures stipulate the relevant procedures respectively, so that the procedure meets the provisions of the Sino-US Agreement. In addition, Article 16 of the measures also clearly stipulates that an application for review can be filed if the decision on opposition of geographical indication is not satisfactory. However, it should be noted that the opposition review decision is final. Therefore, the examination procedures for opposition, opposition review and cancellation of geographical indications are all done at the State Intellectual Property Office, which does not need to accept judicial review, so as to speed up the efficiency and authority of administrative examination of the application for registration of geographical indications.

With regard to fair market access, the US is concerned about the possible negative impact of agreements on geographical indication protection signed between China and other international regions. The EU-China Agreement on cooperation on and protection of geographical indications (hereinafter referred to as the China-EU Agreement) reached on November 4 2019 should not hinder the export of US goods and services using trademarks and generic terms to the Chinese market. According to the published text of the China-EU Agreement, the agreement contains only 14 articles, but in fact, it sets quite a high level of protection requirements and rules for geographical indications. In the appendix of the statement, 275 geographical indication products (175 of these will be added by China and the EU as planned four years after the agreement comes into force), with regional characteristics that need to be protected are also included. It should be noted that the Sino-US Agreement requires that if a part of the composite name that requires protection of geographical indications is a generic term, it shall not be protected. Although the geographical indication products listed in the China-EU agreement meet the definition of geographical indication regulated by TRIPS, they may not meet the requirements of the Sino-US Agreement, for example, the most famous Greek dairy products and iconic food, feta. According to the provisions of the China-EU agreement, after the end of the transition period (eight years after the entry into force of the agreement), the term "feta" will not be used in the people's Republic of China as a generic term for cheese. It is unclear whether there will be conflicts in practice. How to carry out the above agreements and the contents of the respective obligations in the agreements needs to be further observed and clarified.

Since China joined the Paris Convention for the Protection of Industrial Property in March 1985, it has started to protect geographical indications at home and abroad. For example, the first geographical indication product to apply for registration and protection in China is Florida Citrus from the United States. As the foreword of the Sino-US Agreement states "China recognizes the importance of establishing and implementing a comprehensive legal system of intellectual property protection and enforcement as it transforms from a major intellectual property consumer to a major intellectual property producer." For a country with a long history, vast territory, complex landform and climate, China does not lack qualifying geographical indication products.

Since China joined the Paris Convention for the Protection of Industrial Property in March 1985, it has started to protect geographical indications at home and abroad

In China, the former General Administration of Quality Supervision, Inspection and Quarantine of China is responsible for the protection of geographical indication products as a special protection system, while the Trademark Office of the State Administration for Industry and Commerce is responsible for the protection of geographical indication trademarks, both of which have been in operation for nearly 20 years. It should be said that the protection concepts of the two systems are obviously different. The protection of geographical indication products emphasises the relationship between product quality, characteristics and origin conditions, while the protection of geographical indication trademarks tend to protect the regional reputation of the mark. The two protection modes complement each other in practice. In the latest reform of government institutions in China, the functions and powers of the protection of geographical indication products and geographical indication trademarks are centralised in the State Intellectual Property Office, which acts as a precondition for the integration of geographical indication protection. According to official statistics, by the end of 2019, 2,385 geographical indication products and 5,324 registered trademarks were approved in China. Of course, most of them are owned by Chinese businesses.

Quantity itself is a kind of quality. The fact that such a large number of geographical indication products and/or geographical indications are seeking to be protected and registered means that geographical indications can bring real, and potentially huge, commercial benefit to economic entities. Furthermore, China can become as important as Europe and the United States in the protection of geographical indications, a sensitive and important issue of in the realm of intellectual property rights, but more importantly it can become an independent and balanced power. On several occasions, the Chinese government has vowed to continue to be committed to maintaining the rule-based free trade system, jointly building an open world economy and promoting economic globalisation. Therefore, it is not in China's own interest to protect geographical indications improperly if it limits competition and leads to more trade barriers. In order to avoid being trapped in the dilemma of being bound by bilateral agreements between China and the United States as well as China and the EU, China also needs to take more active and positive action when it comes to maintaining the general pattern of global free trade rules. For the protection of geographical indications, especially for reasonable scope of protection, China should put forward its own compromise. In the global market, we need to advocate a more rational, pragmatic and intelligent attitude to looking at the real needs and expectations of consumers, and continue to promote the formation of a more balanced and reasonable scheme and criteria for geographical indication protection that can be accepted by all parties.

Hu Gang
		Mr Hu is the director of the international trademark department at CCPIT. He has more than 20 years’ post-qualification experience working on contentious and non-contentious IP issues. Some of the influential cases he handled were widely reported by a variety of media and recent IP litigation cases he was involved in were listed as annual guidance cases by the Supreme People’s Court. He also regularly advises clients on strategy and managing corporate portfolios across various industries. He has published many articles in professional law reviews and periodicals and has been consecutively ranked as a leading trademark practitioner by various domestic and foreign professional rating agencies.