On August 30 this year, China passed a new version of its law on trademarks (to be enforced on May 1, 2014). The aim is to gradually align the Chinese system with international standards.

Among the (many) changes brought by the new version, the one concerning well-known trademarks is of particular interest to us.

It is no secret that non-Chinese well-known trademarks are wrongfully filed every day in this country (most often by Chinese nationals), either in their own field of activity or in closely related areas. The ultimate objective here is to subsequently cash in on the reassignment of the trademarks concerned or to legitimize counterfeiting.

The owners of well-known trademarks which are thus pirated often end up being defenseless if they are not in a position to demonstrate that their marks were well known in China prior to the fraudulent filing.

The new law does not resolve the issue, but it is a significant step toward the official recognition of well-known trademarks as part of a precise and official recognition process in identified situations, i.e. during a trademark registration procedure, during administrative or judicial infringement proceedings (maybe with the aim of avoiding having local courts decide arbitrarily whether the trademarks considered are well-known trademarks or not).

According to the new law, it is prohibited to affix the terms "well-known trademark" on products and to use them for communication purposes (this is probably to prevent abuses and thus to protect consumers).

The new law includes a great number of other items which cannot be detailed in this article, but the following aspects deserve to be mentioned in particular:

  • Sound trademarks have been accepted (first step toward the possibility of protecting trademark "atmospheres") in addition to words, logos, numbers and 3D shapes, which were already included in the previous law
  • Multiple-class filing is now possible (suggesting that we should be able to save money!), and a specific schedule should be established for the examination of files (no more uncertain time delays!)
  • A new, more efficient e-filing system has been created (we'll be able to move faster and save on costs!)
  • Procedural adjustments have been made, i.e.: the Office will first issue a notification prior to a possible refusal, so as to allow the applicant to defend himself.  Also, an opposition process has been created to limit tactical actions (certain parties used to artificially stop the trademark registration process because the infringement proceedings cannot be initiated before the trademark concerned has been registered). Other adjustments include the introduction of impeachment actions, the calculation of damages (to include the claimant's loss and the infringer's benefit), the possibility of renewing a registration up to one year before expiration (which could allow savings to be made here as well), and the principle of the associated trademarks (although this should pose a number of problems). Finally, the burden of proof regarding the evidence of use of the trademark will now be used as a basis in any infringement action, and all trademark license agreements will now have to be registered with the Office.

Overall, what are the key takeaways for all practitioners?

  • Associated trademarks - It will no longer be possible to have "identical" trademarks registered in the name of several owners, which means that the risks of having to make association requests should be anticipated (as well as the respective costs). In which case should this apply? Essentially in situations where groups or several companies are the owners of derivative trademarks and cases where priority is established in favor of a third party, which will be more difficult to overcome.
  • Communication on well-known trademarks - All field players must be asked to make sure that they affix the "well-known trademark" statement on their products.
  • Multiple-class filings - These will certainly become cheaper, and hence should be preferred and planned.
  • Burden of proof to provide evidence of use of the trademark (the allocated time period is of 3 years, starting from registration) - This will now be used more intensively, and it will also be necessary to register all trademark license agreements.
  • Renewals - These can now be made well in advance (up to one year), which is particularly interesting in order to save on costs, should future increases be imposed.