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Maximum damages up again under China’s new trade mark law

Peter Leung, Hong Kong

Many of the changes to China’s trade mark law, effective May 1 2014, were expected by those familiar with previous drafts of the revision, but the provisions will also bring new challenges

A number of the changes should be welcome to brand owners in China. Maximum statutory damages have been raised to Rmb 3 million ($490,000) from the current Rmb 500,000 maximum ($82,000). This increase is even larger than proposals from earlier drafts; as late as July, there was a version circulating with maximum statutory damages of Rmb 2 million. This increase reflects concerns that the law did not do enough to deter infringement.

Another new provision will require infringers to provide damages evidence, such as sales records. If the infringing company fails to do so, the court may elect to award damages based on the claims and the evidence provided by the trade mark owner. This change is also intended to address the concern that it is difficult to get sufficient damages and that even those found liable can avoid serious penalty by simply refusing to cooperate with the court.

Despite these and a number of other positive developments for brand owners, some sections of the new law are causing concern. One particularly controversial change is that marks that survive an opposition are now immediately registered. Under the current law, the opposing party still has the option to appeal the registration.

Though this provision is intended to curb bad faith oppositions, many rights holders opposed this change with the worry that bad faith registrants that survived an opposition would be able to immediately use the registered mark and proceed to build a reputation with it.

Joseph Simone of Simone IP Services said that he believes one result of this change is that brand owners will now have to dedicate more resources to oppositions. While some companies are already very diligent when preparing to oppose bad faith registrants of their brands, Simone notes that others, due to budget constraints and the volume of cases they have, are not as thorough. Given the higher stakes under the new law, this may no longer be an option. For these companies, Simone suggests that the cost to oppose a registration may increase significantly, perhaps even double.

For Managing IP’s previous coverage of the changes, see here and here.


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