China: Upcoming Changes In Chinese Trademark Law

Last Updated: 1 August 2014
Article by Ekkehard Heinze and Axel Kockläuner

On 1st May 2014, comprehensive changes to Chinese trademark law will come into force in the People's Republic of China. We have compiled the most important changes for you

I. Preliminary remark

Chinese trademark law, which came into force in 1982, has so far been amended three times, namely in 1993, 2001 and 2003. Additional amendments were then agreed on in 2013, which will come into force on 1st May 2014.

In addition to several changes to the process, various regulations will be introduced that are meant to prevent mala fide (bad faith) trademark applications, and strengthen the rights of the trademark owner in the event of trademark infringements.

The most important changes for you are as follows:

II. Trademark applications possible for several classes

Previously, it has been necessary when filing a national Chinese trademark to apply for a separate trademark for each goods or service class.

Under the new regulations, it will be possible to claim protection for several goods and service classes with a single trademark application. With this amendment, Chinese trademark law approaches the majority of other legal systems, especially German and EU practice as well as the system of international registrations.

This has the initial advantage that costs will be reduced. In addition, you will benefit from a simplified registration process.

III. Adoption of official notices in the registration process

The current practice in the registration procedure provides that the auditor of the Chinese Trademark Office can only enact procedural notices if the list of goods and service does not correspond to the requirements for the classification – while the application must be rejected in the event of other defects. This rigid system often leads to the rejection of trademarks owing to small defects.

In the future, it will be possible for the auditor to issue an official notice in the application procedure in order to draw attention to defects of the application as regards form and content. With this notice, you will then have the opportunity to explain the issues raised or to remedy the complaint.

As in most cases this approach will mean that the formal rejection can be avoided and a subsequent appeals procedure can be obviated, this will also simplify and accelerate the procedure and reduce costs.

IV. Streamlining Administrative Procedures

So far there are no specific regulations regarding the duration of application, opposition, nullity and cancellation proceedings, including the respective appeal procedure. The Chinese trademark law to date only provides that this process occurs in a "timely" manner. Currently, for example, the duration of an application process lasts about 12 to 18 months, or even longer.

These procedures should be significantly streamlined with the amendments now adopted. In the future, mandatory time limits will apply for the processing of trademark applications, as well as for additional procedures (including appeal proceedings related to this), which can only be extended in individual cases. Under the new regulations, the following normal time limits will apply:

  • Application procedure, nullity proceedings or cancellation proceedings: 9 months
  • Opposition proceedings: 12 months
  • Appeal procedure for rejection, nullity or cancellation proceedings: 9 months
  • Appeal procedure for opposition proceedings: 12 months.

The criticisms of many applicants regarding the current long processing times is taken into account with this amendment (and the employment of additional personnel). The phases of legal uncertainty will thus be substantially shortened.

Attention: The appeal period remains unchanged for decisions unfavourable for you. This time period is still only 15 days from the receipt of the notification of the official decision. Compliance with this short time period will still pose a great challenge for the trademark applicant and their legal representatives.

V. Mala fide (bad faith) applications

To protect against mala fide applications, several new provisions will be introduced into Chinese trademark law:

Initially, the registration and use of a trademark should be subject to the principle of honesty ("good faith"). This new regulation aims to prevent registrations of trademarks by mala fide applicants. However, it remains to be seen how this provision will actually work in practice.

In addition, the previously valid regulations will be expanded by a standard, which is used to protect the licenser or business partner of the applicant. In accordance with this, the owner of an older (in China) designation used, such as the licenser or business partner of the applicant of a trademark, can object to the application of a confusable trademark if the applicant was made aware of this designation through contractual, business or other relationships.

Another new regulation will allow the trademark owner to proceed against use of their trademark as a name of a Chinese company. This instrument is, in particular, meant to prevent deception of the market participants.

Overall, it is to be expected that the new regulations will significantly strengthen the position of foreign companies on the Chinese market vis-à-vis their local sales partners and licensees or even "trademark pirates."

VI. Right of prior use

To date, Chinese trademark law accepted no right of prior use for those who used a trademark name for certain goods or services with regard to those who applied for the same, or a confusingly similar designation, as a later trademark registration. Incidentally even in German trademark law, there is not such a right of prior use.

In the future, those who have used a trademark (in China) for certain goods or services may also continue to use this for their goods and services if a third party later applies for an identical or confusingly similar trademark. This, however, only applies under the condition that the trademark has achieved a high level of awareness through its use.

The right of prior use therefore only results under the prerequisite of a particularly long and intensive use, and is practically limited to those goods and services for which this use takes place.

VII. Sanctions for trademark Infringements

As a result of the current law change, numerous new regulations and sanctions for combating trademark infringements will be introduced. This applies, in particular, to official punishment proceedings as well as for trademark infringement proceedings before courts of law.

The following applies for official punishment proceedings: If the competent authority determines a trademark infringement, they can set higher fines than before. The amount of these fines depends on the profits achieved and on the frequency of trademark infringements. If the profit is over 50,000.00 RMB (approximately equivalent to 6,000 EUR), a penalty of up to five times the profit achieved can be imposed on the trademark infringer. If no profits were made, or if the profit falls below 50,000.00 RMB, a penalty of up to a maximum of 250,000.00 RMB (approximately equivalent to 30,000 EUR) can be imposed on the trademark infringer. If the trademark infringer is a so-called repeat offender who has committed more than two trademark infringements within five years, or if there are other grave circumstances, higher penalties can also be imposed.

In trademark infringement proceedings before courts of law, the calculation of damage compensation that the trademark infringer must pay to the trademark owner takes place either based on the loss incurred by the trademark owner, or based on the profit that the trademark infringer achieved through the trademark infringement. If neither the loss of the trademark owner nor the profit of the trademark infringer can be determined, the damage compensation can be calculated based on a normal license.

In the future, compensation payments of up to 3 million RMB (corresponding to nearly 400,000 EUR) can be set. This is a much higher amount than under the current regulations.

One must take into account, however, that in trademark infringement proceepage dings, where the so-called usage grace period has expired and the infringer has claimed non-use, the use of the infringed trademark in a manner such as to preserve the rights attached must be proven for the last three years. If the owner of the infringed trademark cannot prove use, or if he cannot prove that he had suffered losses due to the trademark infringement, he shall not receive any damage compensation.

Other changes affect the burden of proof allocation in infringement proceedings. If a trademark infringement exists, the court may assign the infringer to issue accounting documents and other materials in order to determine the sum of indemnity. If the infringer refuses to issue these documents or provides false information, the court can set the damage compensation based on the requests and evidence of the trademark owner. This reduces the barriers for the trademark owner to prove the amount of the damages incurred.

Overall, these new regulations may lead to deliberate trademark violation being curtailed and also the requirements for proving damage being significantly reduced. The future maximum sums of indemnity can represent very severe penalties according to the Chinese price level.

VIII. Conclusion

It is expected that the application, opposition, nullity and cancellation proceedings as well as the related appeal procedure will be significantly streamlined and made more cost-effective. It is also expected that the registration process will be much more transparent than before.

The unlawful acquisition of trademark law-related positions of power by sales or licensing partners or trademark pirates will, in general, be more difficult; in other words, it will be easier for owners of established trademarks and company designations to inhibit their abusive registration by third parties in China.

The increase in penalties and sums of indemnities in the event of trademark infringements also appears quite suitable for more effectively combatting trademark piracy cases in China.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
CCPIT Patent & Trademark Law Office
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
CCPIT Patent & Trademark Law Office
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions