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14 May 2014Trademarks

Interpreting China's new Trademark Law

The Trademark Law of the People’s Republic of China was adopted in 1982 and amendments were made in 1993 and 2001. On August 30, 2013, the Standing Committee of the National People’s Congress, China’s top legislative body, concluded its session, adopting a third amendment to the Trademark Law. This new amendment will become effective on May 1, 2014.

Updated Implementing Regulations for the Trademark Law were published online on January 10, 2014 for public comment, and the final text will be available on or before May 1, 2014.

The main changes are summarised below:

Expansion of scope of registrable trademarks

The new amendment accepts applications for the registration of sounds. According to the draft regulations, it is necessary to submit a musical sample, with a description of it using a staff or numbered musical notation and an indication of how it is used.

Addition of multiclass applications

Concerning national filing, after May 1, 2014 an applicant can submit one application to register a mark in multiple classes. Because multiclass applications are permitted, divisional applications will also be allowable if the initial applications encounter problems.

Addition of letter of examiner’s opinion for the applicant’s explanation

During examination, if the China Trademark Office (CTMO) thinks it necessary for the applicant to explain or make an amendment to the content of the application, it can ask the applicant to make such an explanation or amendment, although the applicant’s failure to do so does not result in the abandonment of its application.

Explanation of timeframes for examination and review procedures

As an example, the CTMO shall complete an examination of an application for registration within nine months of the receipt of the application documents. Where there is an opposition, the CTMO shall make a decision within 12 months of the date of expiration of the publication of the preliminarily approved mark. In special situations, an extension of six months can be approved.

Appeals to the TRAB are available but the strict 15-day appeal deadline, not extendable, remains unchanged. Moreover, according to the draft regulations, the timeframe for supplementing additional arguments and evidence is shortened from three months to 30 days. The TRAB’s decisions are still appealable to the court, within 30 days of receiving them.

Allowance of earlier filing of renewals

An application for renewal of the registration can be made within 12 months of the date of expiration; the old law stipulates six months.

Addition of articles on combating bad faith registration

The new amendment incorporates the “principle of honesty and good faith” of Civil Law into Article 7, which stipulates that “when applying to register and use a mark, an applicant must abide by the principle of honesty and good faith”. However, it is looked at as a general principle and cannot be solely applied.

Besides the prohibition of the unauthorised registration and use of a trademark in the name of an agent or a representative of the owner of the trademark in Article 15, the new amendment adds a second paragraph: “Where the application is for the registration of a trademark identical or similar to another party’s unregistered trademark which was used earlier for the same or similar goods, and the applicant clearly knows another party’s trademark due to non-agent/representative contract, business or other relations between the applicant and another party, the applicant’s application for registration shall not be allowed if another party opposes it.”

Therefore, an applicant does not need to be an agent or representative in this situation. However, it is still unclear whether the earlier use is restricted to within China’s territory.

Revised grounds of opposition and simplified opposition procedures

Under the old law, anyone can file to the CTMO an opposition to a preliminarily approved mark within three months of the date of the publication. Under the new amendment, within the same time limit, anyone can still file an opposition based on absolute grounds, but only a prior right holder or a party with an interest can file an opposition based on other available grounds.

If the CTMO rejects an opposition, the opposing party cannot appeal against the CTMO’s decision to the TRAB, but it can apply to the TRAB to invalidate the mark after it is registered. By contrast, if the CTMO allows an opposition, the applicant of the opposed mark can appeal against the CTMO’s decision to the TRAB.

Added invalidation procedures

The dispute procedure under the old law is conceptually broad and vague. Under the new amendment, cancellation and invalidation are clearly separated. The grounds under which invalidation actions against registered marks can be initiated are similar to the opposition grounds mentioned above.

"An application for renewal of the registration can be made within 12 months of the date of expiration; the old law stipulates six months."

The differences in invalidation procedures are (1) based on absolute grounds, whereby the CTMO can announce invalidation at any time or anyone can file to the TRAB at any time for its announcement of invalidation; and (2) based on other available grounds, prior rights holders or a party with an interest can file to the TRAB for its announcement of invalidation within five years after registration (exception: no time limit for invalidation against bad faith registration of a well-known trademark).

Simplified cancellations

Any entity or individual may apply to the CTMO to cancel a registered mark if the mark has become generic in respect of the designated goods, or if the mark has not been used for three consecutive years without proper excuse.

Clarified protection for well-known marks

Provisions for the recognition and protection of well-known marks are essentially the same as under the old law. The new amendment provides clarification on the venues for asserting well-known mark rights, including the CTMO, the TRAB and the relevant courts.

The new amendment also adds that manufacturers and dealers shall not use the wording “well-known mark” on goods, packages of goods or containers of goods, or in advertising, promotions, exhibitions or other commercial activities. Violations are punishable by fines of RMB100,000 ($16,100). This is to prevent anyone from using “well-known mark” to mislead consumers into believing the goods or services using the mark are well regarded by the country.

Added and redefined types of infringement

The new amendment adds another act of trademark infringement: facilitating infringement. The draft regulations stipulate that “providing others with storage, transportation, mail, print, concealing, marketing place or internet services for the infringing goods are considered as facilitating infringement.”

Other than trademark counterfeiting (ie, using identical marks on identical goods), a modification to the list of acts of registered trademark infringement is the addition of a “likely consumer confusion” requirement to determine infringement if, without the registrant’s authorisation, similar marks are used on identical goods or identical or similar marks are used on similar goods.

Strengthened administrative protection measures

The new amendment grants China’s Administration for Industry and Commerce (AIC) a right to issue more severe punishments against infringers. More significantly, an infringer who conducts infringing activities and is punished by the relevant AIC twice within five years shall have a heavier punishment imposed.

Improved judicial protection measures

Punitive damages

In a case of trademark infringement, the amount of damages is determined by the loss suffered by the right holder, the profits earned by the infringer, or the referred multiple of the licence fee. The new amendment imposes punitive damages against wilful infringement and stipulates that the amount of the punitive damages could triple the amount of damages determined in accordance with the methods mentioned above.

Increasing statutory damages

Under the old law, the cap for statutory compensation is RMB 500,000 ($80,600). The new amendment raises the compensation ceiling for trademark infringement to RMB 3 million ($484,000), six times the previous limit.

Alleviation of the burden of proof for the right holder

Where the right holder has tried to provide evidence but the infringement-related accounts or other materials are held by the infringer, the court, in order to determine the amount of compensation, can order the infringer to provide the accounts or other materials. If the infringer does not provide them or provides false information, the court can refer to the right holder’s petition and evidence to determine the amount of compensation.

Added non-use demurrer

Where a holder of a registered trademark asks for compensation and the accused party argues non-use of the registered trademark, the court may ask the holder to provide evidence of actual use of the registered trademark during the preceding three years. If the holder cannot prove use in the preceding three years or cannot prove any other loss suffered, the accused party does not bear responsibility for compensation.

Xiang Gao is a partner at Peksung Intellectual Property Ltd and head of its trademarks department. He can be contacted at: gxiang@peksung.com

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