Brief on the Third Revision of Trademark Law

Since May 1, 2014, the third revision of Trademark Law issued by the Standing Committee of the National People's Congress has come into force. Herein, the highlights of this revision are summarized, which we hope you will find useful.

Trademark Registration

The new Trademark Law adds "sound" as one element registerable for trademark. When applying sound for trademark, distinctiveness is required. Hence, consumer can identify such trademark in the process of consumption.

Applicants are allowed to submit application electronically.

The application procedures are simplified. For example, “one application of one class” was replaced with “one application of multiple classes”, and therefore, applicants may file one single application for a multiple of goods in different classes;

Communication procedures are added regarding office actions, during examination. The Trademark Office may request the applicant to present additional arguments or amendments to his/her/its application.

Protection System for Well-Known Trademark

The new Trademark Law follows the principle of determination on particular case and passive protection. It explicitly specifies that the Trademark Office, the Trademark Appeal Board, and the People's Courts should not actively apply provisions relating to the protection for well-known trademark, but only apply relevant provisions upon the request by the party (parties) concerned, and the decision is only in force for the particular case.

The new Trademark Law forbids advertising in the name of “well-known trademark”. The term “well-known trademark” should not be used by the producers and/or traders on goods, packages or containers of goods, or for advertisements, exhibitions and other commercial activities.

Where any party violates the above provisions, by the means of advertising his/her/its own trademark as “well-known trademark”, he/she/it should be ordered to correct by local Administrative Bureau for Industry and Commerce and subject to monetary penalties of RMB100,000.

Setting up Examination Timeframe

The Trademark Office should, within nine (9) months, complete the preliminary examination on a trademark registration application.

The Trademark Appeal Board should, within nine (9) months, complete the appeal procedures for an appeal against the rejection decision on trademark registration issued by the Trademark Office, and under special circumstances a three(3)-month extension may apply.

The Trademark Office should complete the investigation and examination within twelve (12) months after the expiration of the opposition term with respect to a trademark opposition filed by an opponent, and under special circumstances a six(6)-month extension may apply.

The Trademark Appeal Board should, within twelve (12) months, complete the appeal procedures for an appeal filed by the opposed against the non-approval decision on trademark registration issued by the Trademark Office, and under special circumstances a six(6)-month extension may apply.

The Trademark Appeal Board should, within nine (9) months, complete the appeal procedures for an appeal filed by a party concerned against the declaratory decision of invalidation of a registered trademark issued by the Trademark Office, and under special circumstances a three(3)-month extension may apply.

The Trademark Appeal Board should, within nine (9) months, complete the examination on a request, filed by another entity or individual, for declaring invalidation of a registered trademark, and under special circumstances a three(3)-month extension may apply. 

The Trademark Appeal Board should, within twelve (12) months, complete the examination on a request, filed by a prior right-owner or interested party, for declaring invalidation of a registered trademark, and under special circumstances a six(6)-month extension may apply.

The Trademark Office should, within nine (9) months, complete the examination on a request for cancellation of a registered trademark on the ground that the registered trademark has become the generic name of a goods approved to use the registered trademark or that the registered trademark has not been used for three consecutive years without justified reason, and under special circumstances a three(3)-month extension may apply.

The Trademark Appeal Board should, within nine (9) months, complete the appeal procedures for an appeal, filed by a party concerned, against the decision of canceling or not canceling a registered trademark issued by the Trademark Office, and under special circumstances a three(3)-month extension may apply.

Improved System of Opposition

The previous provisions allow anyone to file opposition based on any grounds; then an appeal may be filed against the ruling of opposition issued by the Trademark Office; next, a lawsuit may be initiated against the Trademark Appeal Board’s decision on opposition. The procedures involved are complicated and the duration of examination is very long.

Now, the current provisions are that the Trademark Office, after examining the opposition, decides whether to approve or not approve the registration (of a trademark application). The opponent may file a request for declaring invalidation of the registered trademark against the Office’s approval decision. The opposed, if not satisfied, may appeal against the decision of non-approval of trademark registration issued by the Office. Moreover, with respect to the ground of infringing any prior right(s), only the prior right-owner or interested party can file the opposition.

The new law further adds a suspension procedure. During the process of opposition, the Trademark Appeal Board may suspend the examination, if the determination of the involved prior right(s) must be based on the result of another case being processed by a People's Court or an administrative department. After the cause for suspension is removed, the examination should be resumed.

Where it is decided that the opposition is not justified and the trademark should be approved for registration, the date on which the applicant acquires the trademark’s exclusive rights should be counted from the day on which three months have expired after publication of its preliminary examination for approval. From the date of the publication to the approval of the trademark registration, it is not retroactive for others’ activities of using the same or similar mark on goods of the same or similar class; however, the loss of the trademark registrant caused by the malevolence of the user should be compensated. 

Cancellation of controversial registered trademarks amended to invalidity declaration

Cancellation of controversial registered trademarks in the previous Trademark Law is amended to invalidity declaration.

The revised law adds a suspension procedure into the examination on request for invalidity declaration. The Trademark Appeal Board may suspend the examination process on a request for invalidity declaration if the determination of relevant prior rights is based on the result of another case being processed by a People's Court or an administrative department. After the cause for suspension is removed, the examination shall be resumed. 

If any registered trademark is declared invalid, the Trademark Office shall announce such declaration, and the exclusive rights of such registered trademark shall be deemed non-existent ab initio. 

A decision or adjudication on the declaration of invalidity of a registered trademark shall have no retroactive effect on any judgment, adjudication, and mediation agreement on a trademark infringement case already made and executed by the People’s Court, on the decision on a trademark infringement case already made and executed by the administrative department of the industry and commence, or on the trademark assignment and license contract already performed prior to such declaration of invalidity. However, the loss of other parties caused by the malevolence of the trademark registrant shall be compensated. Where non-refund of trademark infringement damages, trademark assignment fees, or trademark royalties pursuant to this provision is in obvious violation of the principle of fairness, a whole or partial refund shall be made.

Enhanced crackdown on malicious preemptive registration

The revised law adds that as a general principle, the principle of good faith shall be abided by during the registration application or use of a trademark.

The revised law also adds that: 

where a trademark of which registration is applied for is identical or similar to another party's unregistered trademark which has already been in use for identical or similar goods, the applicant knows of the existence of the another party's trademark due to contract (other than agent or representative agreement), business operation or other relationship with the another party, against which the another party raises an opposition, such trademark application should not be approved to be registered. 

This provision aims to curb malicious preemptive registrations. Pursuant to this provision, as long as the unregistered trademark is indeed in prior use and the existence of the unregistered trademark is already known as a fact to the applicant, the right-owner can request to protect its rights through opposition. 

In the previous law, however, protection for an unregistered trademark requires that such trademark shall have certain fame in the market: protection for an unregistered trademark under Article 13 requires that such trademark is a well-known trademark; protection for such trademark under Article 31 requires that such trademark shall be in prior use and have a certain influence and that the preemptive registration is achieved in an unfair means. 

The revised Trademark Law also adds that the use of another’s registered trademark or unregistered well-known trademark as the trade name of an enterprise, causing the public to be misled and which constitutes unfair competition, shall be handled in accordance with the Anti-unfair Competition Law of the People's Republic of China.

Cancellation of registered trademarks

The revised law adjusts the causes for cancellation: abolishing the cancellation of registered trademarks for bad quality of goods and for unilaterally assigning registered trademarks (i.e. without the required approval).

The revised law specifies that the use of a registered trademark has ceased for three consecutive years without justified reason, the Trademark Office will no longer order the registrant to rectify the situation within the prescribed time period but will directly cancel the registered trademark.

The revised law adds that where a registered trademark becomes the generic name of a kind of goods on which the registered trademark is approved to be used, any one may apply for canceling the registered trademark before the Trademark Office.

The cancellation of a registered trademark shall be announced by the Trademark Office, and the exclusive rights of such registered trademark shall be terminated as of the date of such announcement.

Enhanced protection for the exclusive rights of a trademark

The revised Trademark Law adds rules on punitive damages for trademark infringement and raises the statutory amount of infringement damages from RMB500,000 to RMB3,000,000, further strengthening the punishment on trademark infringement.

The revised Trademark Law alleviates the burden of proof borne by a registrant of a trademark and adds provisions with regard to providing evidential documents: in determining the amount of compensation, the People’s Court may, in the event that the right-owner has taken every effort to provide evidence but the account books and materials relating to the infringement are in possession of the infringer, order the infringer to provide such account books and materials; if the infringer refuses or provides false account books or materials, the People’s Court may decide the amount of compensation according to the claim of the right-owner and the evidence provided by the right owner.

The revised law adds that intentionally providing convenience for infringement of other’s exclusive rights of a registered trademark or assisting others in committing infringement upon the exclusive rights of a registered trademark is an infringement of the exclusive rights of the registered trademark.

The amount of compensation for infringement upon the exclusive rights of a trademark shall be determined according to the actual loss that the right-owner has suffered due to the infringement; where it is difficult to determine the actual loss, it may be determined according to the profit obtained by the infringer from the infringement; where it is difficult to determine the loss suffered by the right owner or the profit obtained by the infringer, it shall be reasonably determined in accordance with multiples of the trademark royalty. For malicious infringement upon the exclusive rights of a trademark and where the circumstances are serious, the amount of compensation may be determined as one to three times the amount calculated by the above-mentioned method. The amount of compensation shall include the reasonable expenses paid by the right-owner for stopping the infringing acts.

Where it is hard to determine the actual loss suffered by the right owner due to the infringement, the profit obtained by the infringer from the infringement, and the registered trademark license fee, the People’s Court shall determine an amount of compensation up to RMB3,000,000 depending on the circumstances of the infringing acts. 

Where a trademark registrant makes a claim for compensation and the accused infringer defends on the grounds that the trademark registrant has not used the registered trademark, the People’s Court may require the trademark registrant to provide evidence proving actual use of this registered trademark within the three years prior to the lawsuit. Where the trademark registrant fails to prove actual use of the registered trademark during the three years prior to the lawsuit, and fails to prove that it has suffered other losses due to the infringement, the accused infringer shall not be held liable for compensation.

The revised law specifies that prior use could be used as grounds for defense. Where another has already used a trademark identical with or similar to a registered trademark on the same or similar goods and such trademark has attained a certain influence before the trademark registrant applied for trademark registration, the trademark registrant has no right to prohibit the another from using this trademark within the original specified scope, but can require the another to affix suitable distinguishing signs. 

Where a party unknowingly sells goods that infringe upon the exclusive rights of a registered trademark but is able to prove that it has obtained the goods lawfully and is able to identify the supplier, said party shall not be held liable for compensation

Others

The revised law amends the original six-month time limit to twelve months for going through formalities for renewal prior to the expiration.

The revised law specifies that where a registered trademark is licensed to another party, if the licensor has not recorded its trademark license before the Trademark Office, the trademark license cannot be used against any bona fide third party.  

The above information is for your reference only. Should you have any questions regarding the revised Trademark Law, please feel free to contact us.