China’s new Trade Mark Law took effect on 1 May 2014. This is the third amendment of the law after previous amendments in 1993 and 2001 respectively since its adoption in 1982. Overall, the new Trade Mark Law is welcome as it introduces principles of honesty and good faith, tightens up protection against bad faith applications, enables multi-class applications and e-filing, and permits the registration of sound marks. Examination timeframes are also being fixed to reduce pendency, increasing certainty for applicants and opponents alike. A positive development for applicants is that the CTMO also has the power to request clarification or amendment of an application rather than having to issue a refusal. An increase in statutory damages from CNY500,000 to CNY3,000,000 for trade mark infringement and the possibility of triple damages for serious or bad faith infringement are also welcome changes. However, the new Law removes the right of appeal for an opponent whose opposition is rejected by the CTMO. The opposed mark will proceed to registration and the only option for the opponent will then be to file an invalidation action. The changes around oppositions therefore leave legitimate traders more exposed to potential bad faith infringement proceedings. We set out below a summary of these and other key changes to the new Law here…
1. Application procedures: The new law provides more convenience by allowing full e-filing and multi-class filings. The new law also “reintroduces” Examiner’s Advice. Where necessary, the CTMO will issue Examiner’s Advice to ask applicants to provide explanations or corrections. This is an entirely new provision which will hopefully avoid unnecessary refusals.
The time that it took to complete a trademark application or other proceedings such as opposition proceedings has hitherto been notoriously long in China. The new Trademark Law sets out specific time limits for the Chinese Trademark Office (CTMO) and the Trademark Review and Adjudication Board (TRAB) to examine cases. The examination of a trademark application must be completed within nine months and no extension is allowed. For reviews of refusals, invalidation on absolute grounds, cancellation and reviews on cancellation, the time limit is nine months, with a possible extension of a further three months. For oppositions, reviews on opposition and invalidation on relative grounds, the time limit is 12 months, with a possible extension of a further six months.
However, as sub-licensing of single classes out of a multiple class registration appears not allowable, it might be wise to continue filing multiple applications for each class intended for a separate license.
2. Sound Marks: Sound marks are added to the scope of registrable marks. Until now, registrable marks were limited to visually perceptible signs, including words, devices, letters, numerals, three-dimensional signs, and combinations of colours. The new Trademark Law also allows sound marks to be eligible for registration as a trademark. Single colours, scents and moving images are not registerable.
3. Trade names: The new Law clarifies that conflicts between registered trade marks or unregistered well-known trade marks and trade names, i.e. company and business names, should be handled under the Unfair Competition Law, not the Trade Mark Law.
4. Damages: Maximum statutory damages for trade mark infringement have been increased considerably from CNY500,000 to CNY3,000,000 (approx. 300.000€). However, a court will only grant statutory damages where it is not possible to determine damages based on actual losses, profits made by the infringer or a reasonable royalty basis. Also, damages can be multiplied up to three times where the infringer acted in bad faith or the circumstances are serious.
5. Oppositions: Only the owner of a prior right or an interested party can bring an opposition on relative grounds or for misleading use of a geographical indication, but anyone can bring an opposition on absolute grounds.
Once an opposition has been decided, only an applicant can appeal the CTMO’s decision to the Trademark Review and Adjudication Board (TRAB). If the CTMO rejects the opposition, the mark will proceed to registration and the opponent is left with the possibility of filing an invalidation action with the TRAB.
As Opponents can no longer file reviews at the TRAB on unsuccessful oppositions, this will be one of the most frustrating provisions for IP owners as they will need to instead go through invalidation and risk trademark infringement until the mark is invalidated or revoked. Opponents are also required to have locus standi either by being the owner of a prior mark or an interested party in respect of opposing the mark on the basis of relative grounds. Otherwise, they will need to rely on the invalidation procedure. For absolute grounds, there will of course be no locus standi requirement.
6. Bad faith applications: New provisions have been added to prevent registrations of trade marks applied for in bad faith. The amended law adds thus a tool for brand owners in terms of dealing with trademark hi-jacking by business partners such as distributors and manufacturers. An application for trademark registration will be rejected when the trademark applied for is identical or similar in respect of the same or similar goods of another person’s trademark that has been used earlier though not yet registered, if the applicant has a contractual or business relationship or any other relationship with the said person and thereby knows of (constructively or otherwise) the existence of the said person’s prior mark.
7. Well-known trade marks (WKTMs): Protection for WKTMs will only be provided on a case-by-case basis, and only when necessary to determine the case, e.g. when there is a claim of infringement involving dissimilar goods or services.
In summary, the newly-amended law significantly strengthens the standards of trademark registration and enforcement in China. It is an important step by China towards providing better and more complete protection of the legitimate interests of IP owners in China.
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