This content is from: Features

Assessing the new trade mark law

Fabio Giacopello of HFG takes us through the revised law

In this article I will review China's new Trade Mark Law. Coming into effect in 2015, it represents the third amendment of the Trade Mark Law since its inception in 1982.

Multi-class trade mark applications

One of the biggest innovations of this law was that it allowed trade marks to be filed under more than one class.

However, we have not seen the abandonment of the traditional single class application system in favour of the multi-class system or even a significant shift to the latter. From what I've seen, multi-class applications are less than 10% of the total.

Why? One reason is that filing a multi-class application is no cheaper than filing multiple single-class applications. The official fee charged by the Chinese Trade Mark Office (CTMO) is calculated by class and there is no discount if the filings under different classes come under one application, unlike in most countries. In addition the attorney fee is charged by class and there isn't much of a discount if the filings under different classes come under one application.

Finally, multi-class applications have limitations that single class applications do not. For example, it is not possible to transfer only one class of a multi-class mark.

The CTMO and the Trademark Review and Adjudication Board (TRAB) have issued decisions applying all the articles discussed above, but the decisions are still tentative and the outcomes unpredictable.

Divisional application in case of partial refusal

A good provision of the New Trade Mark law was that it allowed divisional applications for trade mark applications that are partially rejected, for example, only in relation to certain goods and services in one class. The trade mark applicant can now file a divisional application to which a new number is assigned and file the appeal in relation to the refused part of his trademark, while the rest of the trademark is published for opposition.

Bad faith

One of the key reforms that the new Trade Mark Law was expected to adopt was to put in place a system to curb the numerous cases of bad faith applications. Early commenters were unimpressed, however, by the new formulation of Article 15 (which was the most relevant article to bad faith), and we were one of them.

Nevertheless, we notice – at the distance of 3 years – that the new Trade Mark Law has put in place a complex and comprehensive system to combat squatting applications.

In the practice we have seen in several decisions that the CTMO and TRAB are using different legal grounds to reject such bad faith application. Here are all the articles that have been used against trade marks filed in bad faith:

Article 7: the principle of good faith when in applying and using a trade mark.

Article 9: the trade mark for which an application for registration is filed shall have distinctive characteristics easy to identify, and may not conflict with the legal rights acquired by others in priority.

Article 10.1(7): the following words or devices shall not be used as trade marks: (7) those which mislead the public about the quality or the place of origin.

Article 10.1(8): the following words or devices shall not be used as trade marks: (8) those detrimental to socialist morals or customs, or having other unhealthy influences.

Article 13.1: protection within the same class for unregistered well-known trade marks;

Article 13.2: cross-class protection for registered well-known trade marks;

Article 15.1: trade marks filed by agents or representatives of the owner abroad shall not be registered;

Article 15.2: any identical or similar trade mark shall not be registered if the trade mark applicant is fully aware of the existence of the trade mark owned by the other party through any relationship;

Article 32: a trade mark which is used by another person and enjoys a certain reputation shall not be registered;

Article 32: a trade mark which infringes the prior rights of other persons shall not be registered.

Article 44.1: a trade mark applied by fraudulent means shall not be registered.

Among all the provisions listed above, the most surprising one is probably Article 44. To explain how this article has been used in practice by the CTMO and TRAB we use the words of the recent Standards for Trademark Examination and Trial issued in December 2016 by the State Administration for Industry and Commerce of the People's Republic of China:

The following circumstances belong to "obtaining registration by other improper means" stipulated in this Article: (1) A disputed trademark applicant applies for registration of multiple trademarks, which are identical or similar to another's trademark with relatively strong distinctiveness; (2) A disputed trademark applicant applies for the registration of multiple trademarks, which are identical or similar to another's trade name, enterprise name, social organization and other institution name, specific name, packing and decoration of famous goods, etc.; (3) A disputed trademark applicant applies for the registration of plenty of trademarks, and obviously has no true intention to use them; (4) Other circumstances which may be determined as obtaining registration through improper means.

Surprisingly, what looked like a weak reform actually resulted in an amazing piece of legislation on trademark squatting.

Oppositions to trade mark registration

In the field of the opposition there are two important points to note: (1) rejection at the formality examination phase where the opposition is based on unregistered trade marks; and (2) the lack of an opportunity for the opposing party to appeal against the opposition.

In relation to the first point, we are often unhappy about this provision: the CTMO does not even examine the substance of the case and rejects the opposition on the ground that it is grounded on an unregistered prior trade mark.

As far as the lack of an appeal for the opponent, we have developed the tactic of filing invalidation actions instead. The fact that it is possible to file invalidation gives you a choice between these two options. A non-qualified opponent can file an invalidation once the trade mark is already granted for protection, valid and enforceable.

Amount of damages

The new Trademark Law increased the amount of statutory damages to Rmb3 million.

In Moncler v Nuoyakate (2014) the Beijing IP Court awarded Rmb3 million in damages to Moncler. In Meri Chao Group v Beijing Xiu Xin Jie Emerging Building Materials Court (2016), the Beijing IP Court awarded the plaintiff Rmb10 million in damages.

Well-known trade marks

The new Trade Mark Law introduced amendments regarding well-known marks that surprised foreign readers and practitioners. In particular, it said that well-known trade mark status cannot be claimed and used in promotion activity. The provision aimed to stop companies from declaring that their trade mark was well-known as a means of guaranteeing and certifying the quality of their goods.

The implementation has been successful since cases of declaration of the well-known trade marks in promotion activities have dramatically decreased, if not totally stopped. However a downside of this change is that the CTMO and TRAB have stopped publishing the list of trade marks that are recognised as well-known in the past six months.

Time limits for procedures

The new Trade Mark Law has fixed terms for the CTMO and TRAB to complete certain procedures (for example: 9 months for trademark examination and appeal against refusal and non-use cancellation; 12 months for opposition, opposition review and invalidation). These time limits have been respected. Moreover, the cases in which the CTMO and TRAB have applied to the State Administration for Industry and Commerce to extend the term by an additional 3 or 6 months have been really rare.

However, the pressure caused by these fixed terms have had a negative impact on other procedures. Though the CTMO and TRAB hired more examiners, they were still forced to move staff from one office to another in order to process these applications within the stipulated timeframe. Many have noticed that several procedures (which have no fixed timeframe) have suffered a tremendous slowdown, for example, the issuance of notices of receipt for trade mark filings, the issuance of trade mark certificates for both national and international trademarks, the approval and recording of trademark transfers, the recording of change of agent or name or address.

Fabio Giacopello
Fabio Giacopello is a managing director at HFG. He was the winner of the 2013 Client Choice Award by the International Law Office, and was named a notable practitioner (trademarks and patents) by Chambers and Partners, Lawyer of the Year in the China IP category by Global 100, an expert in trademarks in 2014 by Asia IP Expert, and a recommended lawyer by Legal500. He is a member of the Anti-Counterfeiting Committee at the International Trademark Association and Arbitrator at the Shanghai International Arbitration Center.

The material on this site is for law firms, companies and other IP specialists. It is for information only. Please read our Terms and Conditions and Privacy Notice before using the site. All material subject to strictly enforced copyright laws.

© 2021 Euromoney Institutional Investor PLC. For help please see our FAQs.

Instant access to all of our content. Membership Options | 30 Day Trial