On January 13, 2023, the China National Intellectual Property Administration (CNIPA) issued notification on soliciting public opinions regarding the draft revision to the China Trademark Law (the Draft). The Draft was published on the CNIPA's official website to solicit public opinions till February 27, 2023.
This will be the fifth revision of the China Trademark Law since 1983. The proposed draft is a comprehensive revision, and the total number of revised provisions of the Trademark Law has increased from 73 Articles to 101 Articles. However, there will still be a series of long procedures to go through before the Draft can be finally brought to the legislative authority. The current version will be substantially improved after listening to and accepting the suggestions of all stakeholders.
The revision aims to improve and perfect the trademark protection. Efforts have been made to reshape the law somehow to shift from the current registration basis system to be more use focused. Under the draft revision, statement of trademark use will be required, and repeat trademark registration will be forbidden, except for certain circumstances. Meanwhile, stronger protection will be given to well-known trademark, either registered or unregistered in China. Bad faith trademark filings are strictly forbidden and compulsory transfer to the legitimate trademark holder will be possible. In addition, the draft revision aims to improve the trademark examination efficiency, by shortening the opposition procedure.
We summarize some of the most important highlights in the Draft, as below:
Bad faith trademarks (Articles 22, 67 & 83)
The banning of bad faith filing has been specifically added in the draft revision. The following situations are considered as constitution of bad faith filing:
- Filing large number of trademarks without the genuine purpose of use and disrupts the order of trademark registrations;
- Filing trademarks by fraud or other improper means;
- Filing trademarks which cause damage to the state interests, public interests, or may cause other substantial negative influence;
- Filing trademarks that are in violation of Articles 18 [well-known trademark], 19 [preemptive registration of agents, representatives, and interested parties] and 23 [preemptively register other people's trademark that is used and has certain influence], or intentionally damage other parties' interests and rights.
The draft revision further lays down administrative punishment and civil compensation on bad faith trademark filings.
The draft revision stipulates that the parties which constitute bad faith filings will face warning from the trademark law enforcement departments or will be subject to a fine of no more than 50,000 yuan. For those with serious offenses, a fine of 50,000 yuan to 250,000 yuan will be imposed. And the illegal gains shall be confiscated.
For the bad faith filings that cause damage to other parties, the parties may initiate lawsuit with the Courts and claim civil compensation. The compensation may cover reasonable expenses to stop the bad faith filings. For the bad faith filings that cause damage to the state interests and public interests, the procuratorial authorities may initiate legal prosecution.
Compulsory transfer of trademarks registered in bad faith (Articles 45 & 46)
The draft revision provides that, if a registered trademark violates the relevant provisions of the Trademark Law, the prior right holder or interested party may request the intellectual property administrative department of the State Council to declare the registered trademark invalid. For those which violate the provisions of Article 18 of this Law on the protection of well-known trademarks, and Article 19 of this Law on the preemptive registration of agents, representatives, and interested parties, or violate the provisions of Article 23 of this Law to preemptively register other people's trademark that is used and has certain influence, the prior right holder may request to transfer the registered trademark to his own name.
If the intellectual property administrative department of the State Council considers that the reasons for requesting the transfer of the registered trademark are justified, and there are no other reasons for declaring the registered trademark invalid, and the transfer will not easily cause confusion or other adverse effects, it shall make a ruling for the transfer of the registered trademark. If it is believed that there are other reasons for the registered trademark to be declared invalid, or although the reasons for requesting the transfer of the registered trademark are valid, the transfer of the trademark is likely to cause confusion or other adverse effects, it shall make a ruling to declare the registered trademark invalid.
Well-known trademark protection (Articles 10 & 18)
One of the major proposed amendments concerning well-known trademark protection is that a well-known trademark, which is unregistered in China, can enjoy protection both on identical and similar goods, and on dissimilar goods. Under the current law, an unregistered well-known trademark can only enjoy protection on the same or similar goods.
The draft revision adds the principles on the protection of well-known trademarks, specifically the principles of determination on case-by-case basis, passive protection and on-demand recognition. It stresses that the scope and level of protection of well-known trademark shall be in line with the degree of distinctiveness and reputation of the trademark.
In consideration of whether a mark is well-known, aside from the popularity of the mark among the general public, the term of the consistent use of the mark, the promotion of the mark, the following elements are further added and stressed:
- the way of use the mark and the geographical scope of use;
- the situation of application and registration of the mark both in and outside China;
- the record of protection of the mark, especially the record that the mark is protected as well-known mark;
- the value of the trademark.
Aside from prohibiting registration of trademarks similar with other parties' well-known trademarks, the draft further stresses the prohibition of the use of trademarks similar with other parties' well-known trademarks.
The draft revision also clarifies that the use and registration of trademarks which copy, imitate or translate other parties' well-known trademarks, and may mislead the consumers regarding the relations between the mark and the well-known mark, or may weaken the distinctiveness or diminish the well-known mark, or improperly take advantage of the reputation of the well-known mark are forbidden from use and registration.
Repeat trademark registration forbidden (Article 21)
The draft revision provides that the trademark applied for registration shall not be the same as the one already applied for or registered by the same applicant on the same goods, or the same as the trademark that is removed, cancelled or declared invalid within one year, except that the applicant agrees to remove the prior registration, or have the following circumstances:
（1） Due to the need of production and operation,
make minor changes on the basis of the previous trademark actually
used, and the applicant can explain the difference;
（2） For reasons not attributable to the applicant, the previous trademark cannot be renewed;
（3） The prior registration is cancelled for failing to submit the trademark use statement in time, while the trademark has been used;
（4） For reasons not attributable to the applicant, the prior registration is cancelled for non-use, as the applicant fails to submit use evidence in the non-use cancellation procedure, while the trademark has been used;
（5） The prior trademark registration is declared invalid for being in conflict with others' prior rights or interests, while said prior rights or interests no longer exist; and
（6） Other justifiable reasons.
Cancellation of trademark registration (Article 49)
More circumstances are added for the cancellation of a registered trademark, in addition to the circumstances of generic name and three year's non-use as stipulated in the current law. According to the draft revision: anyone can file a petition of cancellation, wherein the use of a registered trademark is misleading to the relevant public in respect to the quality or origin of goods; wherein the registrant of collective mark or certification mark violates the obligations of collective mark and certification mark, with extremely serious circumstances; and wherein the use or enforcement of a registered trademark severely damage the public interests and cause significantly negative influences.
Statement of trademark use (Article 61)
This is a new proposed article, stipulating that trademark registrant shall voluntarily file statement of use with the intellectual property administrative department of the State Council within a time limit after his trademark is registered.
According to the proposed article, the trademark registrant shall file a statement to the intellectual property administrative department of the State Council within 12 months every 5 years after the trademark obtains registration, showing the use status of the mark or giving justified reasons for non-use. The statement can include the use status of multiple registered trademarks in a lump. If no statement is filed by the time limit, the intellectual property administrative department of the State Council shall notify the registrant. If there's still no response made within 6 months since notification, then the mark will be deemed as abandoned and the intellectual property administrative department of the State Council will remove its registration.
The intellectual property administrative department of the State Council shall conduct spot check on the authenticity of the statement. The intellectual property administrative department of the State Council can request the trademark registrant to file supplementary evidence or entrust local intellectual property management department to conduct the examination if necessary. If the statement is found inauthentic after spot check, the trademark registration will be cancelled.
Legal liability for changing registered trademark without approval (Article 64)
Changing of the registered trademark or other registered items without approval can be fined, and if such change constitutes trademark infringement, the trademark registrant will be subject to administrative punishment, civil liabilities and even criminal liabilities.
Where, in using a registered trademark, the trademark registrant changes the registered trademark, the name or address of the registrant, or any other registered items without approval, the trademark enforcement department shall order correction within a time limit and may impose a fine of no more than 100,000 yuan. If no correction is made by the time limit, the trademark registration shall be cancelled by the intellectual property administration department of The State Council.
If the violation of the above stipulation by the trademark registrant infringes other's registered trademark right, Article 74 [trademark infringement disputes] and Article 85 [Criminal liability] shall be applied.
No right to preclude others' descriptive use (Article 62)
The draft revision provides that the holder of the right to exclusively use a registered trademark shall have no right to preclude others from carrying out the following acts conforming to commercial practices, besides the fair use and prior use regulated in the current Trademark Law:
- Use of own personal names, names and addresses in good faith;
- Use of place names, common names of goods in dispute, designs, models, technical terms, or other related signs for descriptive purposes in a registered trademark, to describe the type, nature, quality, function, usage, weight, quantity, value, geographical origin and other characteristics of the goods;
- Use of the registered trademarks only to indicate the usages, the application targets and application scenarios of the goods, except for the use misleading the public.
Trademark infringement related to e-commerce activities (Articles 59 & 72)
The infringement of the exclusive right to use registered trademarks through e-commerce activities is added in the draft revision. The scope of trademark use covers the use of information networks such as the Internet. The draft revision provides that trademark infringement activity includes using signs identical or similar to the registered trademarks of others in e-commerce related to the same or similar goods without the permission of the trademark registrant and causing confusion among consumers.
Complete the trademark dispute resolution mechanisms (Article 74)
Multiple resolution mechanisms are added in the draft revision, including arbitration, administrative adjudication and confirmation on non-infringement litigation.
- For trademark infringement disputes, the parties could apply to an arbitration institution for arbitration according to a written arbitration agreement reached by the parties.
- The parties may apply to the administration in charge of intellectual property management for administrative adjudication or mediation regarding disputes over whether trademark infringement is constituted, or the amount of compensation. If an agreement is reached through mediation by the said administration, the agreement may be confirmed by the people's court. If no agreement is reached, the said administration may issue an administrative adjudication on whether the infringement is constituted. If the party is not satisfied with the administrative adjudication, the party may initiate litigation in a people's court under the Administrative Procedure Law of the PRC.
- The relevant party involved in a dispute with the trademark registrant or the interested party over the exclusive right to use a registered trademark could initiate litigation with the people's court, requesting judgment on whether its act infringes the exclusive right to use a registered trademark.
Law enforcement measures against trademark infringement activities (Articles 74, 75 & 76)
The law enforcement measure against trademark infringement is improved in the draft revision. The receipt, document, records, business correspondence, audio-visual materials, electronic data, and other materials related to suspected trademark infringement activities are specified in the scope of materials that could be consulted and copied by the law enforcement department. The draft revision also provides that the evidence that is likely to be lost or difficult to obtain in the future, may be registered and preserved in advance by the law enforcement department. The bank account of the party suspected of trademark violations could be searched and inquired about.
For the seller who sells goods infringing the right to exclusively use a registered trademark without knowledge of such infringement and can prove that the goods are legally acquired and provide information of the supplier, the law enforcement department could order the seller to cease the distribution, confiscate the infringing goods and report the case to the law enforcement department in charge of the provider of the infringing products.
The draft revision also clarifies the two-way transfer mechanism for investigating and dealing with trademark infringement administrative cases and criminal cases. In current Trademark Law, it regulates that the infringement acts suspected of a crime shall be transferred to the judicial authority. In the draft revision, it adds that for those who do not need to bear criminal liabilities but should bear administrative punishment, the judicial authority shall transfer the case to the trademark law enforcement department in time.
Calculation of compensation in trademark infringement litigation (Article 77)
The calculation method for the amount of compensation for trademark infringement is optimized. The draft revision clarifies that the amount of compensation should include reasonable expenses of the right holder. It also modifies the requirements for the application of punitive damages from “malicious” to “intentional” to keep consistency with the articles in the Civil Code of the PRC.
Public interest litigation concerning trademark infringement (Article 78)
The procuratorial authorities may file litigation against the infringement of the exclusive right to use a registered trademark with the people's court according to the law under the conditions that:
- The infringement of the exclusive right to use a registered trademark causes damages to the interests of the State or the society and public;
- The holder of a right to exclusively use a registered trademark or the interested party does not initiate litigation against the trademark infringement; and
- The Administration responsible for enforcement of the trademark law has not dealt with trademark infringement.
Counterclaim for malicious litigation (Article 84)
For those who filed trademark litigation maliciously, the people's court shall impose punishment according to law. If the said litigation causes losses to the other party, there should be compensation for the losses. The amount of compensation shall include reasonable expenses paid by the other party for stopping the trademark litigation in bad faith.
Admission requirements and obligations of trademark agency & trademark agency illegal acts and legal responsibilities (Articles 68, 69, 70 & 86)
The draft revision intends to stipulate the admission requirements for trademark agencies and further regulates trademark agency behavior. It strengthens the supervision and management of the trademark agency industry, clarifies the access requirements of trademark agencies, and improves the quality of trademark agency services (Article 68); It strengthens the responsibilities and obligations of trademark agencies and practitioners, and standardizes trademark agency behavior (Article 69) ; It improves the duties and obligations of the trademark agency industry organization, and requires the organization better play the role of industry self-discipline (Article 70); It further clarifies the illegal acts of trademark agency, and increases the restrictive requirements for the person in charge of the illegal trademark agency, the person directly responsible, and the shareholder with management responsibility for new positions (Article 86).
Credit supervision (Article 87)
The draft revision provides that, for the parties that are subject to any administrative punishment due to the violation of the Trademark Law, the punishment will be put in their credit record and published by the law enforcement departments.
Non-acceptance for trademark found to have significant negative effects (Article 27)
The draft revision provides that if the intellectual property administrative department of the State Council finds that the trademark applied for registration obviously has significant negative effects, it shall not accept it during the formality examination stage.
Preliminary examination opinion (Article 34)
The draft revision provides that during the examination process, if the intellectual property administrative department of the State Council believes that the content of the trademark registration application needs to be explained or amended, it may issue preliminary examination opinion to require the applicant to make explanation or amendment. If the applicant fails to make explanation or amendment, it will not affect the examination decision made by the intellectual property administrative department of the State Council.
Revocation of publication of preliminary approval (Article 37)
For trademarks that are found to violate the provisions of Article 15 [signs not allowed to be used as trademarks] of this Law after the preliminary approval, the publication of the preliminary approval can be revoked ex officio.
Opposition (Articles 36 & 39)
The draft revision shortens the publication period of a preliminarily approved application to two months for filing opposition (Article 36).
The draft revision cancels the procedure of review of opposition totally. If the intellectual property administrative department of the State Council makes a decision of disapproval of registration, and the opposed party is not satisfied, he may file a lawsuit in a people's court within 30 days from the date of receipt of the decision (Article 39).
Suspension of procedure (Article 42)
The draft revision unifies the provisions on the suspension of the procedure and adds the provisions that the people's courts do not apply the principle of change of circumstances in the trial of administrative cases of trademark authorization and confirmation.
In the processes of trademark examination and trial, the intellectual property administrative department of the State Council may suspend the examination and review if the determination of the prior rights involved must be based on the results of another case that is being tried by the people's court or being handled by the administrative agency. After the reasons for the suspension are eliminated, the examination and review procedures shall be resumed in a timely manner.
When the people's court hears the decision of refusal review, decision of non-registration or ruling of invalidation made by the intellectual property administrative department of the State Council, it shall take the factual status at the time of the sued decision or ruling being made as the basis. If the status of the relevant trademark changes after the sued decision or ruling is made, it will not affect the trial of the sued decision or ruling by the people's court, unless it clearly violates the principle of fairness.
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.