A welcome change for trade mark owners in China

Following more than a decade of discussion for better IP protection, China's Trademark Law, the first IP protection law after the opening policy, has arrived. Approved by the Standing Committee of the National People's Congress, the top legislative body, on August 30 2013, the new Trademark Law will take effect on May 1 2014.

Standing at the threshold of the implementation of this new guideline for trade mark protection in China, the following major changes are highlighted for attention.

With the aim of modernising the trade mark process, the new Trademark Law for the first time allows the registration of sound marks. The wording "visually perceptible" is deleted from article 8. With the inclusion of sound marks, the fast-consuming product and electronic industries in China are likely to be start leading the way.

Moreover, the inclusion of the word "etc" in the Law provides further speculation on new possibilities for non-traditional trade marks.

For the first time, a multi-class application system will be put into place to speed up the registration process, as stipulated in article 22. With the allowance of multi-class applications, the application procedure in China is now a much more streamlined process for applicants.

The new law reintroduces the practice of office action in article 29, which was adopted in the 1993 version of the Chinese Trademark Law. Where necessary, the China Trademark Office (CTMO) will issue examination opinions, within the substantive examining procedure, to request that applicants provide explanations and amendments. Failure to reply shall not affect the CTMO's decision. This practice provides a chance for applicants to make amendments and explanations before the approval or refusal of the registration. This will no doubt mean that the number of refusal notifications will be reduced, the efficiency of trade mark right determinations will be improved and miscarriages in refusal notifications avoided.

To provide an efficient trade mark application procedure, the new law allows e-filing. The trial period for e-filing began in 2009. Due to the technical environment and formality requirements, the number of trade mark applications via e-filing is fairly low compared to paper filing. However, considering the cost and efficiency, the new law provides opportunities to develop the prospects for e-filing.

The calculation of the trade mark examination period is no longer left to guesswork with the new Trademark Law.

The extension is left to be decided upon by the authority, which may not be applicable from case to case.

With the implementation of such a transparent and calculable examination schedule (apart from trade mark applications), applicants are advised to pay attention to the time limits. If the deadline is missed, there are no remedies, and evidence filed at the expiration of the deadline are not likely to be considered.

However, the time limits for filing a review against the CTMO's decision and for filing an appeal at the People's Court against the TRAB's decision are still 15 and 30 days from receipt. No time extension is allowed.

Case	Authority	Time limit (months)	Extension (months)
Trade mark application	CTMO	9	No
Review on refusal of application	TRAB	9	3
Invalidation on absolute grounds filed by any party	TRAB	9	3
Cancellation	CTMO	9	3
Review on cancellation	TRAB	9	3
Opposition	CTMO	12	6
Review on opposition	TRAB	12	6
Invalidation on relative grounds filed by a interested party	TRAB	12	6

With the help of the new Trademark Law, trade mark squatting and counterfeiting are becoming more difficult for perpetrators in the market.

When interviewed by the state press Xinhua News Agency, Xu Ruibiao, director of the Trademark Office of the State Administration for Industry and Commerce, said that the law treated Chinese and foreign enterprises equally and based on the amendments, it will become easier for foreign trade mark holders to protect their rights in cases of infringement.

The principles of honesty and credibility have always been at the core of China's trade mark law and practice. But this is the first time that the principle of honesty and credibility is officially written down, as in article 7 governing the trade mark application and use.

With the new law, the representative of a person who files the application without authorisation from the trade mark owner extends to those with a contractual relationship or who have had business dealings with the trade mark owner, as set forth in article 15(2). This includes not only distributors of the trade mark, but also entities involved by commercial relationship, provided that the parties know of the disputed mark. This provision makes trade mark hijacking more difficult.

The infringement of the exclusive right to use a registered trade mark has been expanded from the previous five clauses to seven clauses as in article 57.

"Using a trade mark similar to a registered trade mark on identical goods or using a trade mark identical with or similar to a registered trade mark on similar goods, without being licensed by the trade mark registrant, which may easily cause confusion" and "intentionally providing facilitation for infringement upon others' right to exclusively use a registered trade mark or aiding others in committing infringement upon the right to exclusively use a registered trade mark" are added as clause 2 and clause 6.

In the light of clause 2, it is now clear that the likelihood of confusion is the only criteria to judge whether two trade marks are similar.

As for clause 6, the main content was previous indicated in the Implementation Regulations. The inclusion of this clause in the new law provides officials of the local Administration of Industry and Commerce with clear guidelines to rely on when identifying and determining infringement, in order to stop such activities.

The statutory maximum damage of Rmb3 million ($500,000) in article 63(3) is the most eye-catching number in the new law.

But this is not the only change for infringement compensation.

Repeated infringement activities will be given harsher punishments as prescribed in article 60. These activities include situations where any person who commits trade mark infringement acts more than two times in five years, or where there are other serious circumstances.

In this new law, infringement compensation can be calculated on the basis of the trade mark contractual licence. Where it is difficult to determine the losses the right holder has suffered or the profits the infringer has earned, the amount may be assessed by referring to the appropriate multiple of the amount of using the registered trade mark under a contractual licence as indicated in article 63(1).

As the materials relating to the infringement act are mainly under the control of the infringer, it is difficult for the trade mark owners to submit evidence and thereby justify a compensation amount. Article 63(2) guarantees that when the right holder has tried his best to provide the evidence, but the infringer does not cooperate, the People's Court may determine the amount of damage by reference to the claim and evidence provided by the right holder.

Finally, when it is difficult to determine losses suffered by the right holder, the profits the infringer has earned and the fees of licensing a registered trade mark, the People's Court will grant compensation up to Rmb3 million, depending on the circumstances.

For the first time, the concept of prior use is explicitly introduced in the Trademark Law in article 59. This provision imposes greater importance on the use of the trade mark, and enhances the protection of unregistered trade marks.

However, the ambiguous italic wording "before a trade mark registrant applies for trade mark registration, another party has used an identical or similar trade mark with a certain reputation on identical or similar goods prior to the trade mark registrant" in article 59.3 is likely to cause uncertain results in trade mark examination. This requires that the date on which another party uses his trade mark should be earlier than the date on which the proprietor uses the trade mark, which is different from the practice in most countries and regions. It is believed that the Commission of Legislative Affairs of the NPC and the People's Court will provide further judicial interpretation.

The number of trade mark agents has rapidly increased in recent years, which has inevitably led uneven standards across the board. Article 19 of the new Trademark Law stipulates certain legal liabilities of trade mark agents. It is believed that this provision will help to some extent in regulating the trade mark agents and clamping down on pre-emptive applications filed in bad faith.

Further, the revised Trademark Law stipulates certain prohibitive behaviours of trade mark agents, and establishes punishment mechanisms to improve the feasibility of the provision.

According to article 14, the recognition and protection of a well-known trade mark should follow the principles of passive protection, necessity check and case-by-case recognition.

For a long time, the well-known trade mark was regarded as an honorary title used in promotional activities. The new law explicitly stipulates that the wording well-known trade mark cannot be used for advertising purposes, which will prevent well-known trade marks from being abused as an advertising tool, and decrease the blind pursuit for the well-known status.

The opposition procedure is dramatically changed in the following two aspects. First of all, the opponent is no longer any third party, but only the owner of prior right or interested party. This aims to prevent oppositions filed in bad faith.

Secondly, if the ruling of the opposition is not in the opponent's favour, the opponent has no right to file a review on the opposition. Instead, they can only take an invalidation action before the TRAB after the opposed mark is registered. However, the opposed party still has the right to file a review on the opposition if the ruling is in the opponent's favour.

This revision aims at raising the efficiency of opposition proceedings. But as such, the burden of proof of on the opponent during the opposition procedure has been increased.

With the implementation of the new Trademark Law, as well as the corresponding coordinative new Implementation Regulations and Rules for Trademark Review and Adjudication, which are expected to be put into force from May 1 2014, there will be more choices when filing applications, more efficiency in examinations, more reliable protection and more fair play to trade mark owners at home and abroad.

Gang Hu
		Gang Hu is a senior attorney at CCPIT Patent and Trademark Office. He has extensive experience in the areas of litigation, counselling on trade marks, domain names, copyright and unfair competition matters, advising on trade mark availability, securing and defending IP rights, filing opposition and cancellation proceedings, requesting recognition of well-known trade marks, negotiating for the acquisition of trade marks and licensing. He represents many internationally well-known brand owners in developing brand strategies and protecting trade mark rights in China. Gang has published many articles in law reviews including Intellectual Property, Chinese Intellectual Property News, China Patents & Trademarks, Chinese Trademark, and World Trademark Review. He is a member of INTA, AIPPI China and the Justice Appraiser Committee of China.

Fang Wu
		Fang Wu graduated from Beijing Normal University in 2001 with a BA in engish language and literature, and from Sheffield University in 2003 with an MA in law. Fang joined CCPIT Patent and Trademark Law Office in 2005 and started practicing in the trade mark division in 2007. Her areas of practice include litigation, counselling on trade marks, advising on trade mark availability, filing oppositions and cancellation proceedings, and trade mark licensing. Fang's clients include an internationally well-known hotel group, luxury goods, technology sectors, food and beverages, retail and financial companies.