China: Specific Guidance on Protection of the Exclusive Right to Registered Trademarks Offered by the Revised Implementing Regulations of the Trademark Law

Last Updated: 17 June 2014
Article by Ding Xianjie

The State Council promulgated the revised Implementing Regulations of the Trademark Law of the People's Republic of China (Revised in 2014) (the "New Regulations") on April 29, 2014 to better coordinate the implementation of the third revision of the Trade Law of the People's Republic of China (the "Trademark Law").The New Regulations, containing 98 Articles in ten Chapters, mainly supplements and details related systems according to the modified content in the Trademark Law, adds the established practices that already existed in the works of trademark review, adjudication and management based on the practical requirement, and further clarifies issues concerning protection of the exclusive right to registered trademarks and trademark agency, etc. The New Regulations and the Trademark Law will take effect from May 1, 2014.

Compared with the Old Regulations, the New Regulations provides more instructions focused on protection of the exclusive right to registered trademarks. There are 8 Articles of Chapter 8 "Protection of the Exclusive Right to Use Registered Trademarks" of the New Regulations, corresponding to Chapter 7 of the Old Regulations, 3 more Articles are added. In fact, 3 (the fair use, the amount of the fine and the registration of the well-known trademark as an enterprise name by another person) of the 5 Articles of the Old Regulations are moved into the Trademark Law and are deleted from the New Regulations. Therefore, the number of the changed and added articles in Chapter 8 of the New Regulations is reached 6.

The article which is completely reserved in the New Regulations from the Old Regulations is Article 77 (Article 51 in the Old Regulations) "With regard to any act of infringement of an exclusive right to use a registered mark, any person may file a complaint with or report to the administrative department of industry and commerce."; Article 76 of the New Regulations only made few changes on the words partly reserved from the second Item of the 50 Article of the Old Regulations, "Act that is deemed as an infringement of the exclusive right to use a registered trademark as mentioned in Item 2 of Article 57 of the Trademark Law include using a sign identical or similar to the registered trademark owned by another person on identical or similar commodities as the name or decoration of a commodity in a way that the general public are misled."

It is worth to notice that the Article 75 of the New Regulations extends the content of the Article 50 of the Old New Regulations, which specifies that, "Circumstances of providing convenience as specified in Item 6 of Article 57 of the Trademark Law include facilitating an infringement by another person or party of an exclusive right to use a registered trademark through providing storage, transportation, posting, printing, concealment, business place, online trading platform and similar." From which, Article 75 deletes the word "intentionally" and adds providing "printing","business place"and "online trading platform" three infringement acts. The new version offers typical measures targeted on the emerging trademark infringements.

Besides, to coordinate the implementation of the Article 60 of the Trademark Law, the New Regulations lists some factors that may be taken into account when calculating the income from illegal business focused on cracking down upon trademark infringements in actual practice,

  • sales price of infringing goods;
  • marked price of infringing goods unsold;
  • average selling price of infringing goods that have been confirmed;
  • middle market price of infringed goods;
  • operating revenue received by the infringer from infringement; and
  • other factors that can help to calculate the value of infringing goods reasonably.

The directive guidance on calculating the income from illegal business provided by the New Regulations solves the former problems that lacking of reference evidence, offers practice basis on the fine during the administrative department of industry and commerce cracking trademark infringement and which also effectively combats trademark infringement.

The New Regulations also provides specific instructions on reasonable source defense, Article 79 explores the circumstances that can prove the goods are legally acquired are as follows:

  • the supply list and payment receipt with legal signature or seal of the supplier have been obtained and they have been conformed to be real or have been recognized by the supplier;
  • the purchasing contract between the supplier and the seller has been concluded and the relevant obligation has been fulfilled after confirmation;
  • the legal invoice for purchase has been received and matters recorded thereon are in consistent with the goods concerned; and
  • other circumstances that can prove the goods concerned are legally acquired.

Under the circumstance of reasonable source defense, Article 80 of the New Regulations states that the administrative department of industry and commerce will "report the case to the local administrative department of industry and commerce in the place where the provider of infringing goods is located" which is good to crack down upon trademark infringement at the source.

The New Regulations makes rules concerning the obligation of cooperation of the trademark owners during the period of handling trademark infringement cases, "In the process of investigating a trademark infringement case, the administrative department of industry and commerce may request the trademark right owner to identify whether the goods involved in the case are produced by it or produced under its authorization." This Article helps with requesting the trademark right owner to provide legal basis, solving the issues that the trademark right owner refuses to cooperate when the administrative department of industry and commerce investing infringement cases in actual practice, and cracks down upon trademark infringement with more legal support.

Regarding the suspension issue in investing trademark infringement cases, the New Regulations explores that "Where the registered trademark right involved in a case is currently trailed by the Trademark Office, Trademark Appeal Board or the people's court and the trial result may influence the nature of the case" to coordinate the implementation of Item 3 of Article 62 of the Trademark Law, which can be decided that there is a dispute over trademark right and the case investigation can be suspended. To some extent, this Article avoids the circumstance that the trademark squatters put pressure on the real owner of the trademark with the malicious cybersquatting registered trademark, and offers a solution to the problem that when an opponent brings an invalid request, the opposed party rising a litigation or complaining about trademark infringement after trademark opposition procedure or the trademark under dispute is permitted to register because of the injustice towards the opponent.

In all, the New Regulations contains many updated and targeted Articles regarding protection of the exclusive right to use registered trademarks to coordinate with the implementation of the new Trademark Law. A series of regulations on trademark indicate that China intends to strengthen its striking power against trademark infringement act and given more reasonable protection to trademark.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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