China’s new Trademark Law improves brand protection

The new law looks to address what some see as a lack of deterrent effect of the old laws. The most obvious change is the six-fold increase in the statutory damages maximum, from RMB500,000 to RMB3 million (USD$80,000 to USD$480,000). Furthermore, the law now allows for punitive damages of up to three times the damages where the infringement is serious and committed in bad faith.

The new law also increases deterrence in other ways. Jack Chang of the Quality Brands Protection Committee says that the new law makes it easier for authorities to confiscate and destroy equipment used by infringers. “Under the old law, equipment used for making counterfeit goods could be confiscated and destroyed only if it was ‘exclusively used’ for counterfeiting, even though TRIPs used the language ‘predominantly used’,” explains Chang. “The new law, however, adopts the language used in TRIPs, which should help with enforcement efforts.”

The new law also looks to speed up many of the procedures used by brand owners.It has several statutorily mandated timelines for proceedings before the CTMO and the Trademark Review and Adjudication Board (TRAB). For example, an application for cancellation based on non-use must be decided within nine months of the application. Similarly, registration examinations must also be completed in nine months, while an invalidation action based on relative grounds must be decided in 12 months.

Related to this goal is the move to limit bad faith actions. Oppositions based on prior rights, such as claims that a mark is confusingly similar to an existing registration, can now be brought only by interested parties, such as the holder of the prior right.

However, one such change has raised concerns. Under the new law, a mark that successfully survives an opposition is now immediately registered. Hui Huang of Wan Hui Da warns that this can be a big problem for legitimate brand owners, because the mark can now be used even if the opponent initiates invalidation proceedings.

“No civil action can be filed against this trademark, except by the owner of a well-known trademark or other prior rights,” Huang explains. “This means that, during the entire invalidation procedure, which can take several years all together, the trademark is free to build a reputation...which might, eventually, become an argument to resist the invalidation.”

Despite these concerns, many rights holders say that the changes in the law are generally positive. There is hope that it will build on the progress China has made in improving brand protection.