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Trade Mark Reviews in China – Some Encouraging Successes

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The general principles in determining whether a trade mark can be registered in China are to a large extent the same as in most other countries, considering China is also one of many jurisdictions in the WIPO Madrid International Registration system. Indistinctive or descriptive marks which fail to achieve registration in the European Union will probably have no chance of registration in China. Yet it does not mean that trade marks which are clearly distinctive and registered in most places around the world will naturally be accepted for registration in China because certain technical or special grounds can withhold registration, putting aside the relative ground due to existence of prior similar marks.

For example, a mark will likely have its registration declined in China if it comprises a country name or any foreign geographical name widely known to the public. During the course of substantive examination, the Examiner may not look at every aspect to find out if the relevant name has any other meanings or references in the whole context of the mark. Upon refusal, the Applicant will have to resort to the review process to explain and justify that the mark in its entirety can satisfy the requirements for registration.  

There are 3 scenarios where a mark comprising a geographical name may be registered: –

  1. the name has another meaning
  2. the name forms part of a collective or certification trade mark
  3. the name is not a dominant element of the mark and it only serves to indicate the corresponding place of origin of the applicant    

Marie France Van Damme

Fashion designer Marie France Van Damme uses her own personal name for branding purposes and has been trading under the mark  . However, this was initially declined for registration in Class 25 for “clothing” in China because of the word “FRANCE” within the trade mark. Ms Van Damme succeeded in the review by convincing the review adjudicator that the word “France” is generally perceived by consumers, in the context of her brand, as the name of a living person instead of referring to the country of France.  

URAL

The mark  was initially declined for registration in Class 9 for “loudspeakers” in China because of the word “URAL” in the mark being associated with the Ural Mountains located along the East European and West Siberian plains. The applicant succeeded in the review by convincing the review adjudicator that the word “URAL” can also be a surname and a specie of owl. The evidence of pre-application use of the mark by the extensive sales of the goods in China might have supported this case. However, as it is not expressly entered as a condition of registration in China whether or not a mark has been granted based on acquired distinctiveness through use, such unreported precedent gives us a useful hint or guidance that this approach can work in some cases.    

Car And Driver

Suggestive marks are often just categorically seen as descriptive marks in China. The application for   was initially declined registration in Class 4 for ‘fuels’ as the words ‘CAR’ and “DRIVER” seem closely associated with the products of “fuels” for automobiles but if we look at these words more carefully, they are not directly connected to the essential characteristics and functions of the goods. The Applicant succeeded in the review by convincing the review adjudicator that the mark as a whole is not directly descriptive of the goods sought to be registered and it is capable of functioning as a trade mark to indicate the source of origin of the goods.  

China has a tremendously high number of trade mark applications filed on a daily basis. We just need to bear with a reasonable degree of discrepancy, fluctuation and inconsistency between different examiners in assessing the inherent registrability of a trade mark. The good news is we can always rely on the review mechanism to share our views and analysis with the more senior examiners to reassess whether a mark, which is usually unique on its own, can satisfy the requirements for registration as laid down in the Trade Mark Law. We are seeing good progress as China becomes more aligned with rest of the world in the administration of the trade mark regime.  

What do we do now? – A Quick Guide to Administering an Estate

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Managing and administering an estate may be a complex matter and most people are unsure even where to begin. It is hard enough to accept the loss of a loved one. The last thing we want to do is to hurry about in search of key papers and statements, as well as information as to the proper process to handle the estate of your loved one. We see every day the stress this incurs. Here we summarise the usual procedures for obtaining Probate to validate the will and administer an estate. Hopefully this step-by-step guide can act as a starting point which could make this process simpler and more manageable. 

Step 1: Registering the Death 

After the death you should first register such at the registrar of births and deaths and obtain a death certificate. You will need to produce a medical certificate of the cause of death to obtain the death certificate. 

Step 2: Making Funeral Arrangements 

After the death certificate has been obtained, you may begin making funeral arrangements.  

If there is a will (as further explained below), it is the responsibility of the person named therein as executor(s) to arrange for the funeral. It is possible that the deceased may have indicated his/her wishes in the will as to their preference for burial or cremation. The executor should take into account such wishes when making funeral arrangements. 

The expenses incurred in arranging the funeral and disposal of the body is payable from the deceased’s estate. However, it is usually not permitted to deal with the deceased’s assets at this early stage as a has not been obtained from the Probate Registry. Therefore, in practice, the family members of the deceased will pay for such expenses and be reimbursed from the estate after a grant of representation is obtained.  

Step 3: Looking for a Will and Inspection of Safe Deposit Box 

You should check carefully to see whether the deceased made a will and if there is a will, whether it is the latest will or if it has been subsequently revoked. (This step can be taken earlier so that the deceased’s family members will know whether there is an executor to handle the funeral arrangements.)  

You could start by checking the personal documents of the deceased and/or enquiring with the deceased’s other family members. Often, you will also have to check the deceased’s safe deposit box.  

To gain access to the safe deposit box, the following individual could make an application to the Director of Home Affairs for a Certificate for Necessity of Inspection of Bank Deposit Box: 

  1. An executor or one of the executors of the deceased; 
  2. A person who is entitled to administer the estate; or 
  3. The surviving renter if the safe deposit box is jointly rented by the deceased with another person.  

After the certificate of inspection is obtained, the holder of the certificate should make an appointment with the Secretary for Home Affairs and the bank for inspection of the safe deposit box.  

If a will is found in the safe deposit box and the holder of the inspection certificate is named as the executor under the will or the holder is the surviving renter of the safe deposit box, the holder can remove the will after taking a copy and returning the copy to the safe deposit box. The holder should also make an inventory of the contents in the safe deposit box.   

If there is no will found or if there is a will but i) the holder of the inspection certificate is not the executor, or ii) there is no executor appointed in the will and the holder is not the surviving renter of the safe deposit box, the bank staff should immediately close the safe deposit box after obtaining a copy of the will (if any) and giving the copy to the public officers. 

It should be noted that you should not remove any item, save and except a will (if possible), from the safe deposit box during inspection.  

Step 4: Obtaining Grant of Representation 

Thereafter, it is usually necessary to obtain a grant of representation in order to deal with the deceased’s assets.  

If the deceased passed away with a will appointing an executor, the executor should apply for a Grant of Probate. If the deceased passed away without a valid will (e.g. no will was found or the will has been revoked), persons entitled e.g. wife, children should apply for a Grant of Letters of Administration.  

The application for a grant is made to the Probate Registry of the High Court using specific forms supported by relevant documents, including:- 

  1. An affirmation or affidavit by Executor/Administrator; 
  2. An affirmation or affidavit verifying the Schedule of Assets and Liabilities, and the Schedule of Assets and Liabilities of the deceased in Hong Kong as at the date of death, together with other supporting documents (e.g. death certificate of the deceased, will of the deceased, certificate showing the relationship of the applicant and the deceased, filing fees etc.)   

After making the application, the Probate Registry may raise requisitions on the application to obtain further information or seek clarification. If the Probate Registry is satisfied with your answers to the requisitions, the grant will be issued.  

Step 5: Distribution of the Estate 

After the grant of representation is obtained, the personal representative of the estate (i.e. the executor under the will or the administrator appointed if there is no will) will first need to collect the assets of the deceased under the estate and then make payment of the deceased’s debts, funeral and other expenses in relation to the estate. Thereafter, the estate may be distributed accordingly.  

If there is no valid will, the administrator should distribute the estate in accordance with the Intestates’ Estates Ordinance. The order of entitlement depends on the relationship of the surviving relative with the deceased. (It should be noted that the rule of intestacy only benefits people who have direct blood relations with the deceased and does not benefit unmarried partners, step-children (unless legally adopted) and in-laws.  

For example, if the deceased leaves a widow/widower only but leaves no children, parents or other close relatives, then the surviving spouse is entitled to the whole of the deceased’s residuary estate. Another example is where the deceased leaves a spouse and a child, the surviving spouse is entitled to all of the deceased’s personal chattels, and a sum of HK$500,000 from the residuary estate, thereafter, if there is any remaining asset, it would be divided in half and distributed equally between the surviving spouse and the child of the deceased.  

On the other hand, if there is a valid will, the executor should distribute the estate in accordance with the deceased’s wishes under the will. In the event that there is partial intestacy (i.e. where there is a will which does not completely dispose of the deceased’s assets), the Intestates’ Estates Ordinance will govern the distribution of those undisposed assets.  

Conclusion 

The above is only a brief summary of the process of handling one’s post-death matters and dealing with the deceased’s estate. In reality, complications may arise in any stage of obtaining probate and administering the estate. If you have any questions regarding the above or would like to obtain further information on our probate and estate planning services, please contact one of the members of our Probate and Estate Planning team.   

This article is for information purposes only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances. 

March 2021

OLN IP’s Benjamin Choi Ranked in 2021 WTR 1000

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Congratulations to Benjamin Choi, Managing Director of OLN IP, who is a ‘Ranked Individual’ in the Silver Tier for Prosecution & Strategy in 2021 World Trademark Review 1000 – the world’s leading trade mark professionals.

Benjamin Choi recently joined our legal and business solutions platform as Managing Director of OLN IP Services (OLN IP), a new venture that expands OLN Oldham Li & Nie’s intellectual property services. OLN IP is a consultancy offering tailored, commercially-driven advice to intellectual property owners, across the different IP asset classes, including IP portfolio management. 

Congratulations again to Benjamin for his ranking.

About OLN IP

OLN IP consultancy is dedicated to providing bespoke, commercially-driven advice to owners of Intellectual Property from assisting with technology-based IP, trade marks, copyright, patents and designs to managing IP portfolios on an ongoing basis. OLN IP is led by Benjamin Choi as Managing Director, and Vera Sung, both veterans in the IP space, and backed by a seasoned team of intellectual property experts from our Hong Kong and Shanghai offices, who together bring formidable experience and depth of knowledge to provide clients with nuanced and precise IP advice tailored to their business needs. 

OLN IP is a member of the legal, corporate and financial services platform of OLN Oldham, Li & Nie Solicitors, a leading Hong Kong law firm, with offices in Hong Kong and mainland China, whose commitment to professional excellence has driven its growth and development since 1987.

March 2021

Hong Kong Trade Mark Practice Goes International

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Hong Kong is expecting the launch of the International Registration (IR) of Trade Marks under the WIPO Madrid System by tentatively end of 2022 or early 2023. This will be in addition to the long established and territorial based trade mark registration system, whereby trade mark owners domiciled or incorporated in Hong Kong can designate their marks registered in Hong Kong for extended registration in selected multiple countries or jurisdictions worldwide within the Madrid network. This eliminates the necessity for individual national filings to obtain registration in each of the countries intended for protection. Overseas trade mark owners can also extend their home registrations through the IR system for designation in Hong Kong to save them the need for separate registration in Hong Kong.      

On 19 June 2020, the Trade Marks (Amendment) Ordinance 2020 came into force to pave the way for the administration and examination of IR trade marks under the Madrid System. The Hong Kong Intellectual Property Department (IPD) has revamped the trademark law and practice, and taken the opportunity to simplify or modify certain processes, work flows and formality requirements enabling trade mark owners and their trade mark service providers to handle and administer their portfolios with better ease and convenience.  

The chart below illustrates the changes that have already been implemented or that we may expect going forward. 

PastPresent or Near FutureBenefits
Only the Applicant’s name and address need to be provided in the Application form.The Applicant’s country and state (for the US) of incorporation need to be specified in the Application form, apart from its name and address.This helps to better identify the origin and incorporation status of the Applicant or Owner of the trade mark based on the official records. 
Original letter of consent signed by the owner of an earlier mark cited was strictly required.Now a scanned or photocopy of a letter of consent is considered satisfactory to resolve a relative ground of refusal based on an earlier mark.This saves the Applicant the time to wait for the postage of the original letter of consent from abroad and the effort of the grantor posting the original letter especially during the Covid restriction. 
Certified priority document (extract of filing issued in the first filing country) required in support of a Paris Convention priority claim. Certified priority document is dispensed with unless specifically requested by the Registry.This saves the Applicant the time and cost to arrange for issuance of the certified priority document.
The Trade Marks Registrar will maintain the Applicant’s own earlier registered marks bearing a different and former address as conflicting marks due to the address difference unless the Applicant properly enters change of address for all the marks concerned in the Register.Now an applicant is not required to record address change for its own earlier registered marks (bearing a different address) as and when cited as conflicting prior marks due to the address discrepancy. 
The applicant or its agent can simply inform the TMR in writing that the applicant is the same entity as the owner of the cited trademarks (subject to documentary proof).		This saves the Applicant the costs of recording address change for its older trademark records. 
All opposition forms and documents must be printed, signed and filed at the Trade Marks Registry office. Now a Notice of Opposition and Extension of Time for Opposition can be filed through the IPD online portal.This saves the need for the Opponent or its agent to attend the Registry’s office to file opposition documents within the office hours. 
All hearings before the Trade Marks Registry conducted in person unless a party opted for paper submission. Hearings may be conducted on paper, orally or via video conferencing or other electronic means.This copes with the Covid social distancing requirements in the past year.
An Applicant seeking to revoke a third party’s registered mark on the ground of non-use has to produce prima facie evidence of non-use usually by engaging a private investigator to conduct market intelligence. In the near future, an Applicant seeking to revoke a third party’s registered mark will not be obliged to produce prima facie evidence of non-use when filing the non-use revocation.  It is solely the owner’s responsibility to prove actual use of the mark to defend a non-use claim. This saves the costs and time of the Applicant to conduct the pre-revocation filing investigation which can be quite costly. 
   

The IPD is still working on the Trade Marks (Amendment) Rules 2021. We will monitor the changes in the trade mark regime and keep you up-to-date on our practice. 

26 February 2021

There Is A Caveat to The Will – What are the Next Steps?

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What can be done if there are disputes over the validity of a will or the administrator of the estate? Provided that the ‘Grant of representation’ has not yet been issued by the Hong Kong Probate Registry, which would indicate that it has already validated the will, a concerned party may enter a ‘Caveat’. This will ensure that the “Caveator’, that is the person who lodges the caveat, will be informed if any application is made for the issue of a grant of representation.

While the existence of a caveat may indicate there are genuine concerns in a probate or administration process and therefore a sign of potential disputes, the effect of entering a caveat is not necessarily contentious in itself. Nevertheless, caveat proceedings do start when a caveat is lodged with the Probate Registry against an estate of a Deceased. The Probate Registry only process non-contentious applications for grant. If the application has become “contentious”, the contention must be resolved first. In theory, the entering of a caveat can be contentious, and the caveat must be dealt with first before the application can be processed further.

A caveat is a notice preventing a grant of representation being issued by the Registry without notice to the caveator. Some of the common reasons to enter a caveat are:-

•    To allow more time for the caveator to make enquiries, obtain further information or evidence to:

o    Oppose proof of a will
o    Challenge the validity of a will
o    Oppose the issue of the grant of representation to the person entitled
o    Ascertain entitlement where there is no will (the deceased died intestate)

•    To act as a preliminary step to a probate action, or to citation (for more information, see our article on citations)
•    To be a first step in an application by people who have equal entitlement to the grant of representation

Once entered, a caveat remains in force for 6 months from the date of entry and then automatically ceases to have effect, unless withdrawn or removed prior to such date. There is no limitation to the number of further caveats and extensions that can be made. 

How to Handle a Caveat?

Issuing of any grant of representation shall not be allowed if the Probate Registry has knowledge of an effective caveat. Where an effective caveat is in place, the applicant for grant of the relevant estate would be asked by the Registrar to deal with the caveat. This can sometimes come as a surprise to grant applicants as they may not have been previously aware of the caveat.

Depending on the circumstances, there are various ways of handling an estate with a caveat. In any event, given the many potential contentious issues that may arise and the sensitive nature of probate or administration in general, legal advice should be sought and the matter should always be handled with care.

A caveat can only be removed:-

•    By withdrawal of the caveat by the caveator giving notice at the Probate Registry, as long as an appearance to a warning has not been entered
•    By the non-appearance of a caveator to the warning to caveator
•    By an order of the High Court that the caveat does cease to have effect and a grant of representation be issued
•    By the expiration of 6 months form the date of entry or effective extension

It may be worrying to discover that a caveat has been lodge, but it is not unusual to find occasions where the caveat process is misused and caveats are simply lodged to stall for time, or even where parties have no grounds to contest a will or the administration of an estate. Where there is no valid reason to lodge a caveat, there could be costs consequences for the caveator. 

Whether you discovered a caveat or you are thinking of entering one, it should be reminded that caveat proceedings are by nature contentious and can well be the start of a litigation. Any step taken after the commencement of a caveat proceedings could cause legal consequences, including costs. It is therefore recommended that you seek independent legal advice before taking any step in dealing with a caveat.

If you have any questions regarding the above or would like to obtain further information on our probate and estate planning services, please feel free to contact our Probate and Estate Planning team.  

This article is for information purposes only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances.

February 2021

Family Trusts: Spending Legal Fees Wisely

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How early advice can significantly mitigate future costs

It is deep rooted in Chinese culture that all family problems should be resolved within ‘the four walls’, perfectly illustrated by the old adage ‘Do not wash your dirty linen in public’. Often families and private wealth managers find it daunting to contact lawyers, and when a problem eventually (as a last resort) reaches the legal advisor it is most likely to have evolved into a disastrous problem that could cost a significant part, if not all, of the family’s wealth to fix it. This bulletin seeks to provide practical pointers on the legal ringfences that could be put into place at the early stages to avoid such future nightmares.

Structure formation

A diverse range of services and products are being marketed to and consumed by high-net-worth individuals and families in Hong Kong. Hong Kong remains the hub for a large number of super-rich individuals and families with private wealth, predominantly comprising of easily investable assets, most of which is held in private trusts, the primary vehicle used for wealth and estate planning. This may sound simple but as the pool of high-net-worth individuals expands, wealth and estate planners in Hong Kong are seeing increasing demand from second and third tier wealthy individuals for sophisticated planning, particularly for intergenerational transmission of wealth, succession for family-owned businesses and long-term philanthropic goals.

Clients’ preference (or in many cases, preference of their service provider), and legacy reasons are often the governing factors for selecting structures and jurisdictions. However, poorly designed structures and inappropriate choice of jurisdictions could lead to drastic compliance issues, immobility of assets, unnecessary administrative costs, or impediments to business operations. It is therefore important to work closely with legal advisors to frame appropriate structures at the most suitable jurisdiction, based on the following key factors:

1.    Specific needs of the beneficiaries

The relevant questions include:

a)    Whether on-going support is required and for how long (e.g., for minor and old age beneficiaries)? In that case, what is the best way to ensure part of the assets remains mobile?

b)    Is it necessary to have segregated wealth portfolios, and if so, would an offshore fund be suitable?

c)    Is there any specific jurisdictional matter (e.g., a US citizen issue) that warrants more protection for certain beneficiaries?

d)    Do they have any role in the family business? Are conflicts from wearing multiple hats foreseeable if a private trust company will be used? 

2.    Tax efficiency

Entities and activities in popular offshore jurisdictions (such as BVI and Cayman) do not attract tax, which is ideal for those who require their assets to be easily transferrable, coupled with a high level of confidentiality concerning ownership. In Hong Kong, while there is no capital gain tax for local entitles, profits arising in or derived from trading activities, a profession, or business undertakings carried out in the city are subject to profits tax. Therefore, remuneration or profits, even via offshore vehicles, received by a related Hong Kong entity in the structure might still be taxable.

Another aspect of tax consideration is the potential personal liability of individual beneficiaries, especially in receiving distributions.

3.    Compliance issues

With the joint effort to combat money laundering and financial crimes globally, it is impossible to avoid compliance requests – from provisions of basic personal particulars to details regarding source of funds and income. Terms such as “beneficial ownership”, “economic substance” and “FATCA” make headlines frequently in all popular wealth parking jurisdictions. Selection of a jurisdiction based on the incentive of non-compliance of a reporting duty is unrealistic, as one would simply end up at a jurisdiction with little or no financial and professional infrastructure, and even then, such a jurisdiction would eventually develop and become regulated.

The correct approach towards compliance requests is to ask a legal advisor to map out the actions and information that would be required to fully comply with all reporting duties each year. Logically, the cost of proper planning and preparation would be significantly lower than the cost for handling the consequences of failing to comply with certain duties.   

Key Documents

Trusts have been the default setting for asset protection and succession planning in Hong Kong for many years. Despite understanding the benefits, families are generally not willing to give up their control over the assets and will often seek to reserve certain powers. Recent court cases (e.g. JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2017] EWHC 2426 (Ch)) however proved that trusts that are controlled by settlors are vulnerable to attacks, with courts having developed ways to enable third parties (usually creditors or divorcing spouses) to enforce orders against trust assets. 

In contrast, numerous jurisdictions have introduced specific provisions intended to enable the reservation of a wide range of powers by the trustmaker (settlor). A Hong Kong trust will not be invalid solely because the settlor has reserved for themselves the powers of investment or asset management. The statutory protection in Hong Kong however does not include the reservation of powers of revocation or powers to appoint and remove trustees or beneficiaries, which are available in offshore regimes including in Singapore.
 
It is therefore important to understand that all documents must always be drafted in a fact-specific way. However, as a general principle, the key is to reserve only the powers that are necessary for the settlor in question. For example, a settlor who has settled a business into the trusts may wish to retain the power to veto a proposed sale or other disposition of the business. Note, however, if this is combined with other extensive powers such as the power to replace trustees, the right to determine who is to be a member of the beneficial class and, for example, a right of veto over any disposition of trust assets, then it is likely for a Court to say that the settlor has the means to control the disposition of the trust assets and, in practice, to ensure that they have in place trustees who will bend to their will. Another general rule is that retaining the right of veto over actions is likely to be safer than positive powers. By merely being able to prevent actions taking place, a settlor is far less likely to be held as having retained beneficial ownership as they cannot by exercising those powers of veto alone bring about any disposition of the property.

Mitigating litigation risks

Disputes are inevitable and would often put trustees in a conflicted position. Typical contentious scenarios include the spouse of a beneficiary demanding disclosure of details of a trust during a divorce, beneficiaries unable to reach consensus on distribution or disagreement between the trustee and the beneficiaries regarding the dealing of certain assets. 

The idea of taking a matter to court may sound intimidating, but most courts have statutory supervisory jurisdiction to give orders to deal with trust assets. Section 56 of the Hong Kong Trustee Ordinance allows the trustee to make an application to the court for the necessary power to manage or administer property vested in the trustee. This is a relatively narrow jurisdiction when compared to the much wider discretion that the offshore courts may exercise. The author acted for a trustee based in Hong Kong of a Cayman trust to seek an order from the Cayman court pursuant to s.48 of the Trusts Law to sanction a distribution proposal that the beneficiaries could not agree upon. It is therefore a good practice to seek directions from the court which has jurisdiction over the trust during the early stage of a dispute to mitigate the risk of full-blown litigation.  

Conclusion

With the variety and complexity of issues revolving around private wealth management, as highlighted by the questions and scenarios set out above, wealth managers should work closely with legal advisors at early stages of planning, drafting, and also at the first sign of any potential dispute. 

February 2021