NAIP Patent Blog

Article 10 of China Trademark law states that the following signs shall not be used as trademarks:

(1) those identical with or similar to the State name, national flag, national emblem, military flag, or decorations, of the People's Republic of China, with names of the places where the Central and State organs are located, or with the names and designs of landmark buildings;

Explanation:
A sign that bears any similarity to the State name, even in abbreviated or contracted form, both in English (such as CN, CHN, P.R.C., China or PR of China, etc...) or Chinese, will be rejected. The same applies to signs with similarities to China's national flag (red with five yellow stars); emblem (circular in shape, with grain-borders and featuring Tiananmen gate under the five stars); military flag, (the flag of the People's Liberation Army consisting of a single yellow star and the Chinese characters for "8" and "1" on a red background); and "decorations", which refers to any medals or decorations awarded by China's government to individuals or organizations who have contributed to the State or society. Finally, similarities to places with Central and State organs or landmark buildings, including Tiananmen Square, Xinhua Gate, the Great Hall and so on, is prohibited.

(2) those identical with or similar to the State names, national flags, national emblems or military flags of foreign countries, except that the foreign state government agrees otherwise on the use;

Explanation:
Using the name of any country, in Chinese, English or the original language, in a trademark, such as "France Bags", is prohibited. Agreement on use from the foreign government must be in written form. A successful trademark application in its "native" country is considered agreement/approval from the government.

(3) those identical with or similar to the names, flags or emblems or names, of international intergovernmentaI organizations, except that the organizations agree otherwise on the use or that it is not easy for the use to mislead the public;

Explanation:
Examples include the United Nations, European Union, World Trade Organization and so on, inclusive of full names, as well as abbreviated or contracted forms.

(4) those identical with or similar to official signs and hallmarks, showing official control or warranty by them, except that the use thereof is otherwise authorized;

(5) those identical with or similar to the symbols, or names, of the Red Cross or the Red Crescent;

(6) those having the nature of discrimination against any nationality;

(7) those having the nature of exaggeration and fraud in advertising goods;

Explanation:
Any sign that overly-expresses the characteristics or the quality of the goods or services, and easily causes the public to misinterpret the characteristics or quality of the goods or services is prohibited. For example, trademarks such as "National Liquor" white wine or "Ultimate" mineral water, etc., are not allowed.

(8) those detrimental to socialist morals or customs, or having other unhealthy influences.

Explanation:
"Socialist Morals" refers to the generally accepted standard behavior and norms of the Chinese people, as well as the positive customs and habits in a certain period of time. "Unhealthy influences" are when the text, graphics or other elements of the trademark adversely affect China's political, economic, cultural, religious, ethnic and other social and public interests and public order.

The geographical names as the administrative divisions at or above the county level and the foreign geographical names well known to the public shall not be used as trademarks, but such geographical terms as have otherwise meanings or are a part of collective marks/or a certification marks shall be exclusive. Where a trademark using any of the above-mentioned geographical names has been approved and registered, it shall continue to be valid.

Furthermore, Article 11 states that the following signs shall not be registered as trademarks:

(1) those only comprising generic names, designs or models of the goods in respect of which the trademarks are used;

Explanation:
This refers to signs that are similar to China' standards, industry standards, or conventional names, graphics or shapes. Full names, acronyms, abbreviations and common nicknames are included. Examples include as China's "502 glue", "Korea White Ginseng", and "S" clothing.

(2) those having direct reference to the quality, main raw materials, function, use, weight, quantity or other features of the goods in respect of which the trademarks are used; and

(3) those lacking distinctive features.

The signs under the preceding paragraphs may be registered as trademarks where they have acquired the distinctive features through use and become readily identifiable.

Explanation:
Simple lines, common geometric shapes, or unembellished combinations of letters (for example, "C" Clothing).

In addition to pointing out the provisions, the Standards further clarified the reasoning behind examinations:

1. Trademark applications comprised of, or containing the terms "'National' + name of good" will be rejected due to "constituting exaggeration and fraud", "lack of distinctive features" and/or "having adverse impact".

2. Trademark applications with "National" as the first word, but without the "'National' + name of good" combination, will be treated differently and rejected due to its harm to fair competitiveness, fraud or negative political influence.

So if a trademark application with "China" or "National" in the sign does not contradict any of the above provisions, can it be trademarked? Not quite yet. The applicant must also satisfy the following conditions:

• The applicant's qualifications must be approved by the State Council or a competent authority. The applicant's (company) name must be the same as the name on the trademark registration information.
• The trademark must be identical to the applicant's (company) name or its abbreviated version, which must have also been approved by the State Council or a competent authority.
• The trademark and the applicant must have close corresponding relationship.
• The scope of the goods or services referred to by the applied trademark must be consistent with the approved business scope of the applicant (his/her business).
  

Although China's Trademark Law contains hints of socialism, the Law itself shows development on par with those of other countries. After all, the purpose of trademarks is to prevent confusion between domestic or international names, or create false, exaggerated assumptions. These are the basic tenets of trademarks that every country must have.

TIPO Design Patent Fee Structure

Source: TIPO Public Hearing
Note: Effective on 1 July 2011
Units: NTD

Well, that depends on who you ask. Here, we will take a quick, simplified look at this question from an economist's perspective to answer this question, hopefully once and for all.

A Economist's Definition of Patents: Monopolies Granted & Enforced by a Government

In economics, a government-granted monopoly is also called a de jure monopoly, which is a coercive monopoly. Potential competitors are excluded from the market owing to regulations or other governmental mechanism of enforcement. This coercive power comes from an exclusive privilege granted by a government to a private individual or firm to be the only provider of a good or service. Patents are examples of government-granted monopolies; so are copyright and trademarks.

How Does a Monopolist Maximize Profit?

To understand how a monopolist maximizes its profits (and acts all evil in the process), first we must understand a fundamental tenet of economics: The lower the price of a normal good, the higher the overall demand for that good. This states an inverse relationship between price and demand and a downward-sloping demand curve. Furthermore, suppliers of a product produce more as the price goes up, and less if the price goes down. This means an upward sloping supply curve. The intersection of these two curves is the market price. In a market where supply is controlled by a monopolist, however, the supply curve is comparatively steeper—meaning the price at which a product is sold in the market is higher, but the quantity sold is lower. The monopolist does this simply because it wishes to maximize its profits. For those interested in a brief discussion of that math and economics involved, please see the addendum.

Monopolies Are Evil – The Evidence

Monopolies are considered evil because they cause a net loss to a society's welfare or wealth, which is called "dead weight loss"（see graph 2）.

Graph 2

Deadweight loss is the inefficiency caused by, for example, monopoly pricing. By causing a difference between the pre-monopoly price received by a monopoly firm and the post-monopoly price paid by consumers, the monopoly firm secures a profit, or "surplus", represented by the pink area labeled monopoly revenue. This revenue comes at the expense of the consumer surplus (in yellow) and producer surplus (in blue) that would have existed in the free market equilibrium. The blue "gone" triangle of deadweight loss goes to no one because the monopoly pricing has prevented those transactions. This loss represents the inefficiency and vice of patent monopolies claimed by anti-patent advocates.

But… Not All Monopolies Are Not Evil

In economics, a more benign denotation for "dead weight loss" exists: Rent.

Whereas the term "dead weight loss" suggests that monopoly pricing results in overall waste, the term "rent" suggests that society is somehow subsidizing the monopoly's existence. These terms have undoubtedly caused much contention in economic studies. But which one is more accurate for a patent monopoly?

The following is the profit maximization formula for a monopolist:

TR(Q) is the monopolist's total revenue and TC(Q) is the total cost. π(Q) represents the profit level of a monopoly producer when the production quantity reaches Q.

If for any reason the profit function π(Q) is (or is predicted to be) 0, the production quantity Q of a monopoly will be zero. No rationale producer would be willing to continue any production activity without profit. And as strange as it seems, some situations do exist in which without any government subsidies or "rents", producers would not produce anything—even if buyers do exist.

Imagine a subway system. Would any business be willing to build an extensive system that, once completed, could be utilized by any other company without fees? Furthermore, would any company build that subway system if the population of that city were only 1000 people? The issue is in fixed costs and market uncertainty—two areas for which patents and their potential are notoriously unreliable.

Patents Are Monopolies that Need Special Care

Each year, inventors and organizations spend billions of dollars to develop and file their inventions as patents. Each year, some of these inventions go on to revolutionize (or create) markets, even changing the way societies run. But only some. The rest of these ideas, even if they become patents, sit stacked and unused, representing billion of dollars wasted and countless producers run out of business. The reasons why ideas and patents go unused vary, but regardless of the exact reason, the result is simple: despite a potential market existing and potential gain available for capture, the producer sees no potential for profit and therefore does not produce.

Fortunately, the potential of ideas are so strong, governments have implemented policies, subsidies and many more methods to encourage their continual generation and commercialization. Patents are simply one of these methods. And, therefore, in this light, we can see that some monopolies, such as patents, do require these "rents". The utility, innovation, and novelty offered by a successful patent can potentially bring huge benefit to society. And these benefits justify paying "rent" to a patent owner for its monopolistic existence.

So are patent monopolies evil? With this basic understanding of economics and the nature of market monopolies, we can easily see that "evil patent monopoly" is an overstatement.

Conclusion

Patents do demonstrate some characteristics of a monopoly, specifically: exclusive ownership as a sole provider of a technology through legal privilege and command of supply. The key point, however, is that a patent, which is a government-granted monopoly, differs from a market monopoly, government monopoly, state monopoly or government-sponsored cartels. Unlike a general monopoly with unlimited life span, a patent may easily become outdated before even making the owner any profit. This may be due to the pace of the technological development. It may be due to the official granted time limit. But to ensure that an idea can spread its benefits to others, governments have instituted systems that have created what we now know as Patents. Which are definitely not evil. Just misunderstood.

Addendum:

Profit Maximization for a Monopoly – The Math

Any supplier must be aware of two things: Marginal cost (MC), which signifies the increase increment in total cost by producing one more unit; and marginal revenue (MR), the incremental increase in total revenue by producing and selling one more unit.

A rational supplier therefore attempts to maximize its profits by producing at the point where its marginal cost is equal to its marginal revenue (MC = MR). A monopolist is no exception.

There is a single seller in a monopoly. A monopolist can affect the price and quantity of goods to maximize its profit unlike a price taker whose marginal revenue (MRm) is given by the competitive market price (see graph 1).

Graph 1: monopoly market

In a market monopoly, though, the scenario is a lower quantity (Qm) of goods sold at a higher price (Pm). The slope of a monopolist's marginal revenue curve (MR) is twice the slope of the market demand curve, compared to the competitive market situation (quantity Qc at price Pc). Consumers have to pay more for the same good, and there are less available. Under this market structure, a monopolistic producer therefore gains profits that a competitive producer could not.

In economics, the total revenue and the total cost of a monopoly are expressed by functions TR（Q）and TC（Q）, respectively. π(Q) represents the profit level of a monopoly producer when the production quantity reaches Q. The profit maximization of a monopoly can be shown as follows.

--------------eq. 1

The necessary (but not sufficient) condition for the profit maximization of a monopoly is:

-----------eq. 2

Furthermore the production quantity of a monopoly for profit maximization is greater than zero: > 0

and are the marginal revenue marginal cost of a monopoly respectively.

1) The Origin of Innovation: The Agricultural Age

2) Standardization of Innovation: The Industrial Age

3) The Business of Patents - The Information Age

4) The Future of Patenting - The Conceptual Age

1. Can my service/product be outsourced?
2. Can my service/product be automated?
3. Does my service/product serve a need that goes beyond functionality?