On September 2, 2011, the Legislative Affairs Office of China's State Council released a circular seeking public comments on proposed revisions to the Trademark Law of the People's Republic of China (the "Draft Revisions").
The most notable amendments in the Draft Revisions are provisions aimed at preventing bad faith filings and changes to the trademark opposition procedures.
The Draft Revisions provide that if a trademark applicant, due to a contractual relationship, business contacts, geographic location, or other relationship, obtains knowledge of an owner's prior rightful use of a trademark in Mainland China and nonetheless applies to register that same trademark in bad faith, such an applicantion may be rejected or have its registration canceled. Such rejection or cancellation may occur even if the rightful owner's trademark has not gained the required influence through use by the filing date of the bad faith trademark. Moreover, if the rightful owner's trademark is strongly distinctive and gained a certain level of influence, the bad faith filing of a confusingly similar trademark may be refused for registration even on dissimilar goods. Thus, the Draft Revisions may serve to reduce the numerous bad faith trademark filings that violate basic principles of honesty and credibility, but in our view such changes will not entirely prevent such violations in the future.
The Draft Revisions have also simplified China's trademark opposition procedures, though such matters still have to be accepted and heard by the China Trademark Office (CTMO). If the CTMO approves the opposed trademark for registration, the opposing party is no longer entitled to request an appeal; the CTMO's decision will be final. Whereas, if the CTMO refuses to register the opposed party's trademark, the opposed party is entitled to further appeal to the China Trademark Review & Adjudication Board (TRAB), and if still dissatisfied with the TRAB's decision, may further appeal to the courts. Clearly these provisions are contrary to the basic principle of judicial supervision over administrative activities, as well as the principle of equal procedural rights being offered to all involved parties, which we think makes this procedure unfeasible.
Other important amendments include:
- colors (instead of color combinations) and sounds would be permitted as registrable trademarks for the first time;
- famous trademarks that have not achieved the level of recognition that would qualify them to be well-known trademarks would nonetheless receive certain protections in the law for the first time, which would be recognized by the Administration for Industry and Commerce (AIC) at the provincial level;
- if the CTMO finds that the registration of a trademark violates the law, or that the trademark was obtained through fraudulent or other improper means, the CTMO would have the power to cancel the preliminary approval and publication of such a trademark;
- the maximum amount of statutory compensation for trademark infringement would increase from RMB 500,000 to RMB 1,000,000;
- if the infringer commits more than two acts of trademark infringement within a five year period, heavier penalties would be determined thereon;
- infringement complainants must claim compensation based on their losses during the infringing period; only if such losses are difficult to determine, may they claim relief based on the profit of the infringer during the infringing period (disgorgement);
- although the decision to cancel a registered trademark is not retroactive to the date that the judgment, ruling or decision comes into force, if the compensation for trademark infringement, the royalty and the assignment fee are not refunded to the injured party, the basic principle of fairness will be violated - such payment should be wholly or partially refunded; and
- the time period for appealing against the CTMO's decision to the TRAB would be extended from 15 days to 30 days.
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