China gives trademark law changes the green light
Lawmakers in China have approved the third and final reading of the latest revisions to the country’s trademark law.
The Standing Committee of the National People’s Congress, China’s top legislative body, passed the revisions on August 30. The law will go into effect in May next year.
Under the changes, courts can issue statutory damages of up to three million RMB ($490,000), six times the current maximum, for trademark infringement. The previous draft suggested increasing fines to two million RMB ($327,000).
There are provisions preventing trademark agents – which must be used by foreign companies wishing to file Chinese applications – from acting in bad faith. If an agent knew or should have known the application was in bad faith, it may be liable for infringement.
Among some of the other changes, single colours and sounds can be registered as trademarks.
Increasing fines is probably the most significant change, said Horace Lam, partner at law firm Jones Day in Beijing, but their deterrent on infringers will depend on courts and judges, who rarely issue maximum damages under existing laws.
“It is complicated – unless there is ample evidence for serious infringement, judges often won’t go to the highest amount. And in practice, a lot of damages are against Chinese companies, and deep down the judges think about this and know that awarding a huge amount would probably kill these enterprises.
“But, raising the bar could leave more room to award higher damages,” he said. “We will see how it is implemented in practice.”
The changes to reduce bad faith filing are also being closely watched by practitioners.
Catherine Wolfe, president of the UK-based Institute of Trade Mark Attorneys and a regular visitor to China, said it may become easier to oppose “what we politely term an ‘entrepreneurial third-party trade mark application’”.
“Opposition will be possible if a mark’s applicant has had any prior relationship with the first trademark user, or if the application is not made in good faith. We do not know how broadly these criteria will be taken, yet, and this is what I am most excited about. I look forward to the first cases in 2014 and 2015 as the Chinese trademark registry draws new lines between business opportunity and piracy.”
This is the third time China has amended its trademark law, created in 1982, following changes in 1993 and 2001.
Lam said: “The current law is so old, so it certainly needed an update. But most of the updates are not surprising, as they represent a general evolving of the law."
