On May 1st, 2014 the newly amended Trademark Law of China entered into force. Many questions arise about how it will apply: immediately? retroactively? on pending cases? only on future cases? etc. In its Interpretation of February 10, 2014, the Supreme People’s Court answers these questions.
The first four articles, basically repeat what is already in practice concerning the jurisdiction of People’s Courts over trademark related disputes.
The real Transitional Provisions, concerning which part of the Law before May 1st 2014 (the Former Law) or of the New Law after May 1st 2014 (the New Law) shall apply to pending cases, are stipulated in Articles 5 to 9 of the Interpretation.
Article 5 refers to the situation where the CTMO refuses, at the preliminary stage and for formal reasons, to accept an application (a trademark application, a renewal application or an opposition), without examining its merits.
If the application was filed before May 1st, 2014, but the rejection decision is made after that date, the following rule applies:
- For a trademark application (for example, the application was for a sound mark, which is not acceptable under the Former Law, or the trademark renewal application was filed earlier than the 6 months previously provided in the Former Law), the decision should be based on the provisions of the New Law.
- For an opposition filed before the New Law, however, the decision as to whether the opposition is acceptable should be made on the basis of the Former Law which provides that any person may file an opposition, (whereas, under the New Law, only a prior right owner may file an opposition).
Article 6 is about decisions to be made by the TRAB concerning trademarks that are not registered yet. Two circumstances may occur: the CTMO refused to preliminarily approve the trademark and the applicant filed an application for review to the TRAB, or the CTMO ruled in favour of an opposition and the trademark applicant filed an application for review to the TRAB. In the first case, the decision of the TRAB is called a “re-examination decision” and, if he fails again, the trademark Applicant may appeal to the People’s Court). In the second case, it is called an “adjudication”, and depending on who is dissatisfied with such adjudication, the possibility to appeal to the People’s Court differs in the Former Law and in the New Law. In the Former Law, both parties may appeal to the Court, whereas in the New Law, only the Applicant whose trademark is still refused may appeal to the Court; the Opponent who had won in the first instance before the CTMO, but loses in the review before the TRAB, cannot appeal. The trademark becomes immediately registered and the Opponent may only file an invalidation application to the TRAB.
Therefore, when an application for review is made and accepted (put on file) by the TRAB before the New Law, but the TRAB makes its decision or adjudication after the New Law, it is important to know under which law the decision of the TRAB should be based.
Article 6 stipulates the following rule:
- If the TRAB decides to approve the registration, the question is whether the Opponent, who has won before the CTMO but loses before the TRAB, may appeal to the Court of not. The answer is no : ‘the court should dismiss the case”). This means that the New Law applies immediately (i.e., no appeal against a decision rejecting an opposition).
- If the TRAB decides not to approve the registration, the trademark Applicant may file an appeal to the People’s Court, and the question is in accordance to which provisions of which Law shall the Court examine the case. The answer is : the Court shall examine the right to sue and the qualification of the litigant on the basis of the Former Law (under the Former Law, anybody may oppose, whereas under the New Law, only a prior right owner may oppose). This means that an Opponent who does not have a prior right will not be rejected for this reason even after the New Law has entered into force.
It may be deduced a contrario from this rule that, for other “substantive” matters, the case will be examined under the New Law, for example by taking into account the new provisions of the Law about good and bad faith, which should apply immediately to oppositions even if they are filed before the New Law.
Article 7 relates to the situation where a registered trademark is the object of case filed before the TRAB (invalidation based on absolute grounds, or invalidation based on relative grounds) and the TRAB has “accepted” the case before the New Law. However, the “re-examination decision” (on absolute grounds) or the “adjudication” (on relative grounds) is to be made after the New law.
The question arises concerning which part of the Former Law or of the New law should apply. The answer is: the TRAB is to examine the procedural matters, in accordance with the New Law, and the substantive matters, in accordance with the Former Law.
Article 8 concerns the time limits imposed by the New Law on the CTMO and the TRAB for examining and deciding on cases (from 6 months to a maximum of 12 months, depending on the nature of the case). If one of these decisions is appealed to the People’s Court, the Interpretation provides that the Court “shall calculate the statutes of limitation “ from the date of entry into force of the New Law. Apparently, this means that, when a case is still pending on the 1st of May 2014, date of entry into force of the New law, the CTMO or the TRAB shall have another 6 to 12 months (depending on the type of case) to finish the examination and make a decision. What is not explained in the Interpretation (nor in the New Law, for that matter) is what will be the consequence if the CTMO and/or the TRAB take more time to decide…This is, actually, a fundamental question. If the Law imposes a deadline on the litigant, the sanction is easy to imagine: the evidence, or argument etc. will be ignored. But… if the deadline is imposed on the authority in charge of making the decision, what is the sanction?
Article 9 refers to civil litigation cases “accepted” by a People’s Court after the New Law, but concerning acts (of trademark infringement) that took place before the New Law. This article provides that, if the acts continued after the New Law, the provision of the New Law will apply, whereas if the acts stopped before the New Law, the provisions of the Former Law will apply. This is quite important because, in the New Law, the plaintiff may benefit from the increase in the level of statutory damages (3 million Rmb), the triple amount in case of bad faith, the special powers of the Court to order the defendant to disclose evidence etc.
As for the defendant, if he can prove that he had started using the trademark before the plaintiff used or filed his own trademark, he will also be allowed to claim the protection of the New Law (article 59.3). in favour of the first user .