Recent Developments in China

Dan Plane and Joe Simone of SIPS (China) outline the major changes to the administration of IP in China.

Trademark Law Amended

The Trademark Law of the People’s Republic of China (PRC) was amended on April 23, 2019, by the Standing Committee of the National People’s Congress (NPC), with the changes scheduled to enter into effect on November 1, 2019. 

The revised law dramatically increases the maximum level of statutory and punitive damages against infringers, but the most exciting provisions in the law are those intended to address the chronic problem of bad-faith trademark registration. 

The new law explicitly prohibits bad-faith filings where evidence of intent to use is lacking and grants administrative authorities the power to reject such filings rather than merely dealing with them incidental to oppositions and invalidations. The revised law also prohibits trademark agents from knowingly assisting applicants to file such applications.

Beyond these promising changes, the revised law makes China a pioneer in global efforts to address bad-faith registration by granting administrative authorities the power to impose fines and other penalties against trademark warehousers and their trademark agents. The law also grants civil courts the power to impose penalties against “malicious trademark litigants”—no doubt with the aim of deterring registry pirates from filing civil actions against victim brands for the purpose of extorting compensation.

It is unclear whether draft implementing regulations to the new law will be issued for public comment. The implementing regulations are in any case expected to be issued before the revised law enters into effect on November 1, 2019.

Draft Provisions against Bad Faith Registration

In February 2019, the China National IP Administration (CNIPA) issued draft rules for public comment that would offer new procedures and penalties for dealing with bad-faith filings.  

The draft “Provisions on Standardizing Applications for Registration of Trademarks” would allow IP owners to file petitions to CNIPA to request effective blacklisting of so-called “abnormal” filers, with the following potential consequences:

• A requirement that the applicant submit evidence confirming its use or intent to use of new marks;
• Rejection by the Trademark Office of applications for assignment; and
• Penalties under China’s emerging “social credit” system (which currently include bans on an individual’s access to plane and high-speed train tickets).

It is unclear if the draft Provisions will be issued on their own or incorporated into the future implementing regulations to the recently revised Trademark Law. But further clarity in this regard should be forthcoming in the next few months.

Restructuring of IP Bureaucracies

The Chinese government has merged all national departments responsible for IP matters—excluding copyright—under the State Administration of Market Regulation (SAMR), and as such, the bodies responsible for trademark registration and policy matters have taken on new names.

Primary responsibility for registration and policy matters relating to trademarks, patents and unfair competition now lies with the newly formed CNIPA, which will handle work previously performed by the Trademark Office, the Trademark Review and Adjudication Board (TRAB), and the patent-focused State Intellectual Property Office. Responsibility for copyrights remains with the National Copyright Administration for reasons which have not been disclosed.

The Trademark Office, operating under CNIPA, has retained its name and most of its functions, with day-to-day examination work handled by its Trademark Registration and Examination Department (TRED). Meanwhile, the TRAB, which handled administrative appeals and invalidations, has been renamed the Trademark Review and Adjudication Department (TRAD) of CNIPA. 

Acceleration of Timelines

Over the last year, the Trademark Office and TRAB/TRED have significantly accelerated the timelines for processing new applications, renewals, and other matters. 

 

Table 1: Timelines for processing of new applications, renewals, etc

Action	Timeline (from filing date)
Official filing receipt for new application	15 days to one month
Notice of amendment	2 months
Notice of refusal or internal approval	5 to 7 months
Publication/gazettal of application	6.5 months
Non-use cancellation	8 to 9 months
Opposition	13 months
Change of name/address	2 to 3 months
Change of agent	2 months
Renewal	1 month
Assignment	5 to 6 months
Certified copy of registration certificate	2 months
Application appeal	6 to 8 months
Invalidation	11 months
Non-use cancellation appeal	9 to 11 months
Evidence exchange notice for invalidation	7 months
Notice to defend against opposition	5 to 6 months from filing of the opposition
Re-issuance of registration certificate	1 month
Withdrawal	2 months

New Ecommerce Law

China’s first Ecommerce Law entered effect on January 1, 2019, and covers a wide range of matters, including antitrust, data protection, consumer protection, payment and delivery services, and of course, IP infringements—although not to the extent many hoped. 

Provisions relating to IP that appear to mark a change in existing law and practices include the following: 

• New requirements for vendors to register their businesses and display their business licenses;
• Clarification that platforms may be held jointly and severally liable if they allow continued sales of goods that fail to meet relevant standards for the protection of personal safety or property;
• Obligations on platforms to discontinue IP enforcement measures against a vendor of allegedly infringing goods upon receipt of a counter-notice from the vendor that makes a prima-facie case of non-infringement, unless the complaining IP owner files a complaint with local courts or administrative enforcement authorities.

Implementing regulations to the new law are yet to be issued, and as such, Chinese trade platforms are claiming that absent clarity on the precise scope of their obligations, they are unable to fully comply with the new law. 

New Evidence Preservation Rules Issued by Supreme People’s Court

nvolving IP rights. To encourage courts to be more generous in this regard, the Supreme People’s Court issued new rules that entered into effect on January 1, 2019: the “Supreme People’s Court Regulations on Certain Issues Concerning the Application of Law for Conducting Preservation of Assets in Intellectual Property Disputes” (SPC Rules).

The SPC Rules provide greater clarity on a number of issues, including definitions of “urgent circumstances” and “irreparable harm.” 

Notably, the SPC Rules explicitly permit parties that have submitted disputes to arbitration to apply for preliminary injunctions pending issuance of arbitral awards.

Impact of Pending Trade Deal

As of this writing, the Chinese and U.S. governments have been negotiating a range of issues, including those focused on the enforcement of IP with the aim of concluding a bilateral agreement. 

Media reports suggest that the main IP-related “asks” of the U.S. government have focused on trade secrets and so-called “forced technology transfers,” and it remains unclear whether the final agreement will address trademark counterfeiting, bad-faith registrations, and other problems routinely faced by IP owners in China. 

Regardless, the PRC government has begun reaching out with more intent to foreign and domestic companies in order to better understand their IP problems.

Dan Plane is a Partner at SIPS. He can be contacted at: danplane@sips.asia

Joe Simone is a Partner at SIPS. He can be contacted at: joesimone@sips.asia