A further step in the right direction – China introduces significant changes to trade mark law
Following on from our legal update on 9 July 2013 “China makes a step in the right direction to prevent brand hijacking but will any action come to pass” , the long awaited amendment to the Chinese trade mark law was finally passed and published on 30 August 2013.
Once these changes come into effect, it is hoped that trade mark owners will see a significant improvement in the way that their trade mark applications are processed in China, in addition to swifter resolutions of trade mark infringement, opposition and cancellation matters.
This update provides a summary of the main changes, which will come into effect on 1 May 2014.
Filing
Currently a separate application must be filed for each class of goods/services of interest. Under the revised law, multi-class trade mark applications will be permitted.
Non-conventional trade marks, such as sound marks, will be available for protection.
Examination
All new trade mark applications must be examined within nine months from filing.
The People’s Republic of China Trademark Review and Adjudication Board (“TRAB”) will be able to suspend its examination of appeal or invalidation proceedings pending the result of other relevant proceedings.
Opposition
The Trade Marks Office (“TMO”) shall decide a trade mark opposition within 12 months from the date of opposition. In exceptional cases the time limit can be extended by six months, subject to approval by the People’s Republic of China State Administration for Industry and Commerce (“SAIC”).
Currently anyone can file a trade mark opposition, which has led to numerous oppositions being filed without any real merit for so doing, which in turn can lead to significant delays in the progress of an application. Under the revised law only a “prior right holder” or “interested party” may initiate an opposition on relative grounds. Anyone can still object on absolute grounds.
A prior unregistered trade mark user can oppose a malicious pre-emptive trade mark application. The opposition will succeed if the applicant knew about the existence of the unregistered trade mark because of some contractual, business or other relationship with the prior rights holder.
Invalidation
A trade mark may be declared invalid after registration if 1) the trade mark triggers any absolute grounds for refusal or 2) it has been discovered that the trade mark was applied for in a deceptive manner or by other improper means. Based on these reasons, anyone is allowed to request the invalidation of the trade mark. The TRAB should complete the invalidation proceedings within nine months from the date of request, although in exceptional cases this can be extended for a further three months subject to approval by the SAIC.
Under the revised law, only prior right holders or interested parties may apply for invalidation on relative grounds and the request must be filed within five years after registration is granted. The TRAB should complete the invalidation proceedings on these grounds within 12 months from the date of request, although in exceptional cases this can be extended for a further six months subject to the approval of the SAIC.
Revocation
Under the revised law it will be possible to apply for revocation on the grounds that a mark has become generic. Anyone may file the request. Revocation proceedings on these grounds and also on the grounds of non-use must be completed within nine months from the date of the request, although in exceptional cases this can be extended for a further three months subject to the approval of the SAIC.
Well Known Trade Marks
The protection of a well known trade mark in China can be extended to goods or services other than those similar to the well known trade mark.
No authority is allowed to acknowledge any well known status of a trade mark on its own initiative. Only the TMO, TRAB or the courts designated by the Supreme People’s Court may acknowledge the well known status of a trade mark in China if it is requested by the trade mark owner.
Even after a trade mark has been acknowledged as well known, the trade mark owner cannot indicate the term “well known trade mark” on its products or packaging nor use it in advertisements, exhibitions or other business activities. The local office for Administration for Industry and Commerce may order a rectification and impose a fine of approximately EUR 12,500 for each violation.
Bad faith
Under the revised law, the application of a trade mark squatter shall be rejected so long as the owner of the trade mark has evidence proving that the trade mark squatter obviously knew about the mark because of a contractual, commercial or other relationship with the trade mark owner.
Local trade mark agents are prohibited from representing any trade mark application if they know, or should know, that the application is being filed in bad faith. Furthermore, local trade mark agencies will be explicitly prohibited from registering any trade marks in their own name.
Likelihood of confusion
Likelihood of confusion is, for the first time, regarded as one of the factors to be considered when making an assessment on trade mark infringement. This will bring China in line with international practice on determining trade mark infringement.
Higher damages
Damages for trade mark infringement shall be either the trade mark owner’s loss or the infringer’s gain. If these damages are difficult to calculate the court may determine the damages based on a multiple of the licence fees for use of the relevant registered trade mark. If this is also difficult to calculate then the court may use its discretion to award statutory damages. Under the revised law, the maximum amount of statutory damages has increased from RMB 500,000 to RMB 3,000,000 (approximately EUR 375,000).
Defence
The revised law introduces a defence to trade mark infringement on the basis of prior use. Defences based on non-use of the mark and generic use of the mark also become available.
Trade Mark Licenses
A trade mark licence should be recorded with the TMO. Unless a trade mark licence is recorded it is not binding on a legitimate third party acting in good faith.
Please contact your usual Trade Mark attorney if you have any questions about these changes or have any issues in China that you would like to discuss.
