The Third Amendments to Trademark Law of China

After being in the pipeline for almost 10 years, the third amendments to Trademark Law in China were finalized on 31 August 2013 and are scheduled to take effect on 1 May 2014. We mention the most significant amendments as follows:

Q1: Will office action be issued more based on the updated law?

A1: Yes. At face value, this might sound terrible. When filing a trademark application, we want to avoid compliance issues being raised by the China Trademark Office (CTMO). The issue to date has been the process. Use of office action will be increased by the CTMO. This will facilitate further interaction and communication with the applicants. Applicants will have the opportunity to present submissions to the CTMO to address any compliance issues. The new process should therefore be quicker and more cost-effective than the present process. Anyway, the office action will only be issued in paper but not in other ways.

Q2: How long shall trademark examination cost according to the updated law? Will it be quicker?

A2: The updated law provides statutory time limits for the CTMO and the TRAB to make decisions on procedures such as trademark registrations, reviews, oppositions, invalidations and cancelations. Here is a chart for statutory time-limit for examinations:

So the examinations will be quicker than before.

Q3: Is there any updates regarding trademark renewal in the updated law?

A3: Yes. Currently, a trademark registration can be renewed within 6 months before the expiration. According to the updated law, a trademark registration can be renewed within 12 months before the expiration.

Q4: Is there any article regarding trademark agents in the updated law?

A4: Yes. Probably the most significant amendment is the introduction of provisions which prevent trademark agents in China from acting in bad faith. Articles 19, 20 and 68 provide provisions on trademark agents, such as “if an agent knew or should have known that the application was in bad faith, it may be liable for penalties” as well as other obligations that trademark agents shall observe. Failure to observe the obligations will lead to legal liabilities.

Q5: What’s the new forbiddance on the use of term “well-known trademark” for well-known trademark owners in the updated law?

A5: According to article 15(4) of the updated law, the term “well-known mark” should not be used on goods, packages or containers of goods, or in advertising, exhibition or any other business activities. Violation of the stipulation is subject to injunction and monetary penalty. This is in response to the proliferation of abuse of this term which has led to many cases of misrepresentation, changing the nature of the term into an advertising nature instead of an explanatory nature.

Q6: Will prior use of a trademark be recognized in the updated law?

A6: The right of prior use will be introduced in the updated law. Presently, a trademark registration trumps what could be long-standing use in China. Under the proposed changes, a trademark owner that has been using its mark for some time in China, and has an established reputation in the mark, can continue to use that trademark. However, the prior use will be confined to its original scope, and the owner of the registered trademark can ask the owner of the prior use trademark to attach an additional sign to the mark to help distinguish the trademarks.

Q7: Is there new changes regarding fines and damages in the updated law?

A7: Yes, the updated law increased fines and damages that might resulting in better deterrent effect

• Fines assessment

- Fines for trademark infringement have been explicitly provided. The numerical values are as follows:

• An illegal business turnover amount of over RMB50,000 may result in a fine of up to five times of the turnover amount; and

• An illegal business turnover amount of less than RMB50,000 may result in a fine of up to RMB250,000.

- Committal of trademark infringement twice within a five-year period or any other grave breaches may and would probably result in a more serious penalty/ heavier fine.

• Damages assessment

- In the event of a successful claim for copyright infringement, compensatory damages payable to the applicant will be determinable upon the actual amount lost. Where the actual amount lost is impossible to determine, the damages payable will be determinable upon the actual amount gained by the trademark infringer. If that is still impossible to determine, the damages will be determined by a reasonable estimation of multiplication of license fee of the use of the trademark.

- Punitive damages may also be awarded. The actual amount awarded may range from one to three times of the compensatory value obtained above.

- The maximum amount of damages awarded is increased from RMB500, 000 to RMB3, 000,000.

- However, in defending the trademark owner’s claim for damages by the infringer, the court may request trademark owners to prove the actual use of that trademark throughout the past three years. If the owner is not able to show proof of use and that no lost is incurred as a result of the infringement, the owner will not be entitled to any damages.

LEHMAN, LEE & XU provides a comprehensive service in the field of IP Law, for professional assistant in China please contact us at mail@lehmanlaw.com.

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