CHINA: The New Trademark Law in Detail

The long-awaited amendment to the People’s Republic of China (PRC) Trademark Law was finally passed and published on August 30, 2013. The new law will come into effect on May 1, 2014.

Improved Efforts to Counter Infringement

• The new law includes a bad-faith clause that goes far beyond the previous language, which referred to bad-faith behavior only in the context of relationships between two parties. That language has now been extended to any relationship in which there is evidence of bad faith, thus greatly reducing the burden of proof on legitimate trademark owners in fighting infringement.
• Trademark agents are prohibited from acting as representative on any trademark application that demonstrates bad faith or infringes others’ prior rights, such as copyright, trade name or well-known trademark.
• Registration and use of a trademark shall follow the good-faith principle.
• For oppositions based on conflicts with prior rights, only the prior right owner or an interested party may initiate the action. Under the current law, anyone may file such oppositions, which often causes bad-faith delays in registration of a legitimate trademark.

Statutory Time Limits for Authorities

• For a new trademark application, examination must now be completed within nine months.
• Appeals against the rejection of a trademark application must be completed by examiners within nine months, with the possibility of extension for another three months under special permission.
• Oppositions and appeals against decisions sustaining oppositions must be completed within 12 months, extendable for another six months under special permission.
• Invalidation based on inherent registrability of a trademark must be completed within nine months, extendable for another three months under special permission.
• Invalidation based on prior rights must be completed within 12 months, extendable for another six months under special permission.
• Cancellation based on non-use of a trademark must be completed within nine months, extendable for another three months under special permission.

Restriction of Trademark Rights Based on Registration

• Good-faith use of a trademark in a generic or descriptive manner will not be prohibited by an existing registration of an identical or similar trademark.
• Bona fide prior use of a trademark “of certain fame” may continue within the existing scope of goods/services despite registration of identical or similar trademarks by others.
• Non-use of a trademark for over three years may result in failure of a damages claim with respect to trademark infringement.

Higher and Clearer Reference for Damages Claims and Fine Against Infringement

• Infringement generating illicit business revenue over RMB 50,000 (EUR €6,000/US $8,000) may incur fines up to five times of the profit value, while infringers showing illicit business profits under that amount may be fined up to RMB 250,000 (EUR €30,000/US $41,000) .
• Where a trademark owner’s losses or the infringers’ profits resulting from the infringement cannot be determined, royalties under a trademark license may be used for assessing damages, which may be raised by up to three times the license royalty in cases of serious infringement.
• The court has the discretionary power to grant compensation up to RMB 3 million (EUR €361,000/US $490,000) in cases where no basis at all for calculating damages is available.

Scope of Protectable Trademarks Expanded

• In addition to three-dimensional designs and color combinations that are registrable under the current law, more nonconventional marks, such as sound marks, can now be protected.

Procedural Efficiency

• Multiclass applications will be available.
• E-filing will be available.
• Official action for clarification or amendment of a trademark application during the examination process will be available.
• The Trademark Review and Adjudication Board may suspend its examination of an appeal or invalidation proceeding pending the result of another relevant proceeding.

Existing Practice on Well-Known Trademarks Codified

• In trademark disputes, anticounterfeiting actions and civil or administrative suits, the trademark owner may apply for recognition of well-known trademark status.
• The use of a registered trademark or unregistered well-known trademark as part of a trade name constitutes unfair competition, which is prohibited under the PRC Anti-Unfair Competition Law.
• INTA Policy Development and Advocacy Committees have provided the views of international trademark owners throughout the legislative process on the Trademark Law revision, and currently are working on providing comments to the relevant authorities on drafts of the Implementing Regulations.

(Source: INTA)