Introduction
Trademark warehousing
Trademark squatting
Trademark agency discipline
Increased penalties for IP infringement
Comment
The China subcommittee of the International Trademark Association's (INTA's) trademark office practices committee has issued a report on the implementation of China's amended Trademark Law. It provides critical insights into the pace and shape of IP rights protection in China since the fourth amendment of the law came into force in 2019.
The four-section report involved two years of work by subcommittee members and is based on an analysis of feedback provided by 100 INTA members – brand owners and practitioners – in China and globally, who responded to a survey sent out by the subcommittee. The report focuses on the main policy changes contained in the fourth amendment – namely:
- trademark warehousing;
- trademark squatting;
- trademark agency discipline; and
- increased penalties for IP infringement.
The most significant finding revealed by the report is that the amended law and relevant corresponding provisions have offered powerful tools to curb trademark warehousing. This is illustrated by evidence that the top trademark filers have expressed genuine interest in using their marks in commerce.
Although trademark warehousing and skyrocketing trademark filings in China – up from 7.5 million in 2019 to 9.3 million in 2020 – are not innately or causally linked, it remains to be seen whether efforts to curb trademark warehousing will continue to act as a strong deterrent to the proliferation of trademark filings in the future.
Regarding trademark squatting, survey respondents were generally optimistic that the amended law would result in a decrease in bad-faith filings.
Although squatters are becoming increasingly cunning in how they cover their tracks, which makes investigation and evidence collection more difficult for brand owners, the survey reveals that the success rates in opposition and invalidation cases have significantly improved in recent years. Notably, since early 2021, there has been an increase in cases where penalties are equivalent or almost close to those allowed by law.
The report notes that the amended law and other administrative regulations and rules more closely regulate trademark agencies, which are important players in the trademark ecosystem. On the one hand, respondents agree that the stricter regulation of agencies implemented in the fourth amendment is necessary and helpful. On the other hand, they expressed concern about over-demanding restrictions, such as:
- the circumstances in which agencies are held contributorily negligent and therefore liable for alleged bad-faith filings; and
- to what extent supervisory authorities, including local administrations for market regulations, can regulate trademark agencies.
Increased penalties for IP infringement
Furthermore, while the amended law raises the statutory damages to 5 million yuan (approximately $780,000) from 3 million yuan (approximately $470,000), respondents believe there is more to be done. More than half (52.6 %) believe the effect on the court's post-amended law rulings on compensation amounts are "average". Nonetheless, since then, there has been a clear increase in court cases upholding punitive damages, and the Supreme People's Court and the Beijing High Court have issued judicial guidance on calculation methods for punitive damages.
The report:
- provides an overview of the legislative changes;
- provides analysis and comments on the survey results; and
- draws conclusions based on court judgments and local enforcement punishment records.
It also offers practice tips to help brand owners and practitioners globally navigate the IP system in China. The report, which represents a milestone of successful committee advocacy work, will help guide INTA in its policy work on future revisions of China's Trademark Law.
For further information on this topic please contact Yongjian Lei at Wanhuida Intellectual Property by telephone (+86 10 6892 1000) or email ([email protected]). The Wanhuida Intellectual Property website can be accessed at www.wanhuida.com.
An earlier version of this article was first published by INTA.