China recommends trademark law overhaul

China has announced tough new measures to protect trademarks in the country, including doubling the maximum level of damages for infringement.

According to amendments to the country’s trademark law, entities could now be charged up to 2 million Yuan, the equivalent of $325,000.

Initially a maximum fine of 1 million Yuan was outlined, but a second draft, currently being read at a meeting of the Standing Committee, a body within the National People’s Congress (NPC), has recommended the higher amount.

The Standing Committee, which modifies legislation set out by the governmental body the NPC, is also demanding that trademark agencies ensure they inform clients if they suspect a trademark may infringe on others’.

According to Thomas Pattloch, partner at Taylor Wessing LLP, the proposed changes show that China is willing to “change direction” in its efforts to combat trademark infringement and squatting.

Pattloch, who specialises in Chinese IP rights, told WIPR: “The level of trademark infringement, trademark squatting and multiple attacks on well-known brands continues to be very prominent in China.

“The increase [in fines] certainly is a deliberate sign by the government. It says that counterfeiting is no longer welcome.”

However, concerns have been expressed over the proposed increase in fines, with fears that it may not have a strong impact on trademark infringement, given that decisions on suspected infringement are often made by local officials.

“In reality, fines - especially against domestic infringers - tend to be very low, even if the law allows much higher punishment, as much is left to the discretion of local officials,” Pattloch added.

“It will depend on their [local officials] willingness to change old perceptions and actively apply the new law whether it can produce the desired effect of a better trademark environment."

The draft also offers protection for renowned trademarks, giving owners the power to ban others from registering their trademarks or using similar ones, even if theirs are not registered in China.

Pattoch added: “Many of the proposals go in the right direction and try to enhance trademark protection. As Chinese industry matures, a more predictable and reliable trademark system is needed, not only for foreign brand owners, but even more for upcoming domestic enterprises.”

The amendments should be passed by the Standing Committee this year and could be formally introduced by the middle of 2014.