CHINA INTELLECTUAL PROPERTY LAW NEWSLETTER
SPECIAL ISSUE:
Commentary on China's New Trademark Law
On October 27, 2001 the final amendments to the Trademark Law were approved by the Standing Committee of the National People's Congress of the People's Republic of China. The new amended version has become effective as of December 1, 2001. The new version, in the spirit of abiding by WTO rules, borrows much language from the Trade-Related Aspects of Intellectual Property Rights (TRIPs) agreement and makes great strides in improving intellectual property protection in China.
Lehman, Lee & Xu's China Intellectual Property Law Newsletter is devoting three issues to explaining the most significant changes in the Trademark Law. We hope this three-part explanation will provide our colleagues and other interested parties with a greater understanding of the consequences the recent amendments will bring to IP holders.
Part III of III
Registration Modifications
Article 36 allows applicants of trademark applications or registrants of trademark registrations to apply to modify their registration if they discover any obvious mistakes in the trademark application documents or registration documents. The Trademark Office will make corresponding modifications within its limits of functions and powers and inform the applicants or registrants.
The above-mentioned mistakes to be modified do not refer to essential content in such application documents or registration documents. There should be further clarifications or definitions on this in the future measures to be published by the Trademark Office.
Mistakes in the registration documents here can also refer to mistakes made by the Trademark Office. In the past, the Trademark Office encountered the problem of wrongly recording the registrant's name, goods or other information in the registration certificate and lacking formal stipulations on how to modify the mistake.
Trademark Assignment
Article 39 determines that trademark assignors and assignees shall jointly apply for trademark assignment with the Trademark Office and the assignee shall guarantee the quality of the goods in respect of which the registered trademark is used.
Article 39 also makes it necessary that the assignor and assignee enter into a trademark assignment agreement. As in the old Trademark Law, the assignment of a registered trademark shall be published after it has been approved, but now the assignee shall enjoy the exclusive right to the trademark beginning from the date of publication of the approval of the trademark assignment. This is more clear and specific than the previous article concerning trademark assignment agreements.
Cancellations
Article 41 clarifies the procedures of canceling trademarks. It stipulates that where a registered trademark is in violation of the provisions of Article 10, Article 11 and Article 12 of the new Trademark Law, or were acquired by fraud or any other unfair means, the Trademark Office will cancel the registered trademark in question; and any other organization or individual may request that the Trademark Review and Adjudication Board make an adjudication to cancel such a registered trademark.
The new Article 41 also determines that where a registered trademark violates the provisions of Article 13, Article 15, Article 16 and Article 31 of this new Trademark Law, the trademark owner or interested party may, within five years after the registration date, apply to Trademark Review and Adjudication Board to cancel such the trademark. There is no time limitation for well-known trademark owners who apply for canceling a trademark registered in bad faith.
In addition to the cases mentioned in the two preceding paragraphs, any person disputing a registered trademark may, within five years from the date of approval of the trademark registration, apply to the Trademark Review and Adjudication Board for adjudication.
The Trademark Review and Adjudication Board shall, after receipt of the application for adjudication, notify the interested parties and request them to respond with arguments within a specified period of time.
The first main change in this article are that the time limitation for applying to the Trademark Review and Adjudication Board by a person disputing a registered trademark was previously one year, which has now been extended to five years. The second is that whereas previously there were no time limits for applying to cancel or revoke an improperly approved trademark, now anyone can apply to cancel or revoke a registered trademark standing in violation of the provisions of Article 13, Article 15, Article 16 and Article 31 of this new Trademark Law within five years after the registration date.
Article 42 is the previous article 28 of the old Trademark Law. It stipulates that where a trademark, before being approved for registration, has been the object of opposition and decision, no application for adjudication may be filed based on the same facts and grounds.
Article 43 provides that a decision made by TRAB on the maintenance or cancellation of a trademark registration should be subject to judicial review. Any party dissatisfied with the decision made by TRAB may institute a court procedure within 30 days of the receipt of the decision. The people's court should notify the other party to take part in the litigation as the third party.
Before the recent amendments, any decision made by TRAB was final and binding on both parties. As TRAB only examines written disputes, and the defense and evidence submitted by the "defendant" is not available to the petitioner, it was felt that some decisions reached by TRAB may not be fully justified. Now the introduction of Article 43 (and also Articles 32 and 49) and the process of judicial review allows the dissatisfied party the chance to appeal the previously final decisions and also cautions TRAB to be more prudent in making judgments.
The newly added Article 49 also deals with TRAB decisions. It determines that when a trademark registration is cancelled by the Trademark Office, the former registrant, if dissatisfied, may file an appeal with the TRAB against the decision within 15 days of the receipt of the decision. Furthermore, TRAB's appeal decision will be subject to judicial review.
Shift of Burden of Proof of Infringement
Article 52 is an improvement from the previous Article 38. From the sentence of "to sell goods that he knows bear a counterfeited registered trademark" the phrase "he knows" has been deleted. This makes it clear that undertaking the sale of counterfeit products will constitute infringement even the seller is not aware that the goods are fake. This amendment relieves the previous burden of proving that the alleged infringer sold the infringing goods in bad faith.
Article 52 also determines that "reverse passing off" is an infringement of the exclusive right of use of a registered trademark. "Reverse passing off" refers to the act of removing the registered trademark from goods and reselling them with some other sign without the approval from the holder of the registered trademark.
Enforcement
Article 53, while using some wording from Rules 43 and 44 of the Implementing Rules of the Trademark Law of the People's Republic of China, also supplements the previous stipulations regarding infringement. It determines that any disputes with regard to the acts listed in Article 52 may be settled through negotiation by the parties. If the parties are unwilling to negotiate, or cannot reach a settlement through negotiation, the registrant or the interested party may institute a court procedure or file a petition for administrative mediation. The administrative authority for industry and commerce (AIC) may, after determining that the alleged acts do constitute infringement, order the infringer to immediately stop the infringing acts, seize and destroy the infringing goods and tools used in the infringement and impose a fine.
Article 53 also allows that where the interested party is dissatisfied with the decision made by the administrative authority for industry and commerce, it may, within 15 days from receipt of the notification of the decision, institute legal proceedings with the people's court. If legal proceedings have not been instituted or the AIC's decision has not been performed by the end of the specified period, the administrative authority shall request the people's court for compulsory execution thereof. At the request of the concerned party, the administrative authority is also able to mediate the amount of remedies. If no agreement is reached through mediation, the concerned party may institute court proceedings in accordance with the Civil Procedure Law of the PRC.
Article 53 allows the local Administrations of Industry and Commerce more power in dealing with infringements. Whereas, the former Law only authorized the local AICs to stop the infringing acts, it failed to provide any concrete measures needed to halt them. The Implementing Rules, however, did give the AICs the right to "seize and destroy the representations of the trademark in question, to order to remove the infringing trademark from the remaining goods." Although these measures did enable the administrative authority to react, there was no basis in the Trademark Law. Now the amended Article 53 includes the rights the local AICs are able to exercise.
Article 54 provides that the administrative authority for industry and commerce has the right to handle matters dealing with trademark infringement.
Article 55 is a repetition of Rule 42 of the Implementing Rules of the Trademark Law, which determines that local AICs may exercise the following functions and powers in order to obtain evidence of infringement:
(1)Inquiry of the interested parties about the case;
(2)Examine and reproduce such contracts, account books and any other commercial data connected with the infringing act;
(3)Conduct an on-the-spot investigation involved in the infringement; and
(4)Check up such products or articles relevant to the infringing act, and order to seal up the same where there is evidence showing that the articles are used for infringement.
Whereas these provisions were only included in Rule 42 of the Implementing Rules of the Trademark Laws, they are now added in Article 55 of the new Trademark Law.
Damages
Article 56 provides that the remedies for the trademark owner shall amount to the profit that the infringer has earned through the infringement or the damages that the infringee has suffered during the period of the infringement, including reasonable expenses incurred by the infringee in stopping the infringement. When the amount of profit or damages is difficult to calculate, the people's court shall order an amount for compensation below RMB 500,000 (US$ 60, 240).
Article 56 also determines that if the seller of infringing goods can prove that he obtained the goods through a legitimate source, he will not bear any liability for damages.
Property Preservation, Preliminary Injunction & Evidence Preservation
Article 57 determines that if the trademark owner or trademark-related rights holder can prove that the suspected infringer is engaging in or will engage in infringing activities, and without timely prohibition, will cause the rights owner to suffer irreparable loss, he may seek an order of injunction from the court and take measures to preserve the infringing property.
The option of preliminary injunction is added to comply with the TRIPs agreement. Similar provisions may also be found in the amended Patent Laws and Copyright Laws.
Article 58 provides that for the purpose of preventing the infringing act and under the circumstances where evidence could be lost or become difficult to obtain afterwards, the trademark owner or trademark-related rights owner may apply to the court for evidence preservation before initiating a court action.
Though the Civil Procedure Law of the People's Republic of China provided that parties could request evidence preservation, it failed to determine whether it could be applied before the initiation of a court action. Now the amended Trademark Law explicitly determines that evidence preservation before litigation is available, and thus makes it much easier for victims of trademark infringement to win their cases.
Trademark Officials Regulations
Articles 60 -62 regulates the acts of the administrative authorities in charge of trademark registration, appeal and administration. These are completely new added items compared with the old law. These articles provide that the officials should act lawfully and diligently when handling trademark matters. They also determine that no person working at the Trademark Office or the Trademark Review and Adjudication Board is permitted to act as a trademark agent.
The complete three-part series on the new Trademark Law can be accessed on www.chinalaw.cc by clicking HERE.
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The China Intellectual Property Law Newsletter is intended to be used for news purposes only. It should not be taken as comprehensive legal advice, and Lehman, Lee & Xu will not be held responsible for any such reliance on its contents.
