After several drafts and more than a decade of waiting, the revisions to the China Trade Mark Law took effect on 1 May 2014.
Overall, the new Trade Mark Law is welcome as it introduces principles of honesty and good faith, tightens up protection against bad faith applications, enables multi-class applications and e-filing, and permits the registration of sound marks. Examination timeframes have also been fixed to reduce pendency, increasing certainty for applicants and opponents alike. A positive development for applicants is that the CTMO also has the power to request clarification or amendment of an application rather than having to issue a refusal. An increase in statutory damages from CNY500,000 to CNY3,000,000 for trade mark infringement and the possibility of triple damages for serious or bad faith infringement are also welcome changes.
However, the new Law removes the right of appeal for an opponent whose opposition is rejected by the CTMO. The opposed mark will proceed to registration and the only option for the opponent will then be to file an invalidation action with the TRAB. The provision was intended to and does deal a blow to bad faith opponents, but the more significant impact is that it shifts the balance in favour of bad faith applicants, given the CTMO’s limited review of any bad faith evidence. The removal of the right of appeal for an opponent may be contrary to China’s obligations under TRIPS Article 41(4).
The changes around oppositions therefore leave legitimate traders more exposed to potential bad faith infringement proceedings. New provisions that limit liability for damages where an infringed mark has not been used during the three years preceding the claim or where the owner can show no loss go some way to mitigate that exposure, but the threat of an injunction remains.
The introduction of the principle of honesty and good faith appears positive, but as with many changes in the law, this is only a general provision and its true impact as yet remains uncertain. More on this and other issues will become clear as the first cases are decided by the CTMO in the coming months.
We set out below a summary of these and other key changes to the new Law.
- Sound marks:
registrations of sound marks are now permitted.
- Application procedures:
multi-class applications and applications in electronic form are permitted. Division of an application is allowed where part of the goods/services description is refused, but there are no rules on division resulting from oppositions, assignments, renewals, cancellations, invalidations etc.
The CTMO may also request an applicant to clarify or amend the content of an application rather than issuing a refusal. This is an entirely new provision which will hopefully avoid unnecessary refusals.
- Trade names:
The new Law clarifies that conflicts between registered trade marks or unregistered well-known trade marks and trade names, i.e. company and business names, should be handled under the Unfair Competition Law, not the Trade Mark Law.
Maximum statutory damages for trade mark infringement have been increased from CNY500,000 to CNY3,000,000. However, a court will only grant statutory damages where it is not possible to determine damages based on actual losses, profits made by the infringer or a reasonable royalty basis.
Assessed damages can be multiplied up to three times where the infringer acted in bad faith or the circumstances are serious. No further details are given as to what “bad faith” or “serious” means in this context.
A court may order the infringer to provide evidence of their accounts for assessing profits from the infringing activity, and if the infringer refuses to do so or provides false accounts, the court may rely on the claims and evidence of the trade mark owner.
A new limitation on damages has been included. An infringer can challenge the trade mark right owner to provide evidence to prove that the owner has used the registered trade mark during the preceding three years or that the owner has suffered loss as a result of the infringement, failing which the infringer shall not be held liable for any damages.
Only the owner of a prior right or an interested party can bring an opposition on relative grounds or for misleading use of a geographical indication, but anyone can bring an opposition on absolute grounds.
Once an opposition has been decided, only an applicant can appeal the CTMO’s decision to the TRAB. If the CTMO rejects the opposition, the mark will proceed to registration and the opponent is left with the possibility of filing an invalidation action with the TRAB.
- Bad faith applications:
New provisions have been added to prevent registrations of trade marks applied for in bad faith. Relevant provisions include:
- Use of or an application for registration of a trade mark must comply with the principles of honesty and good faith
- If an applicant for trade mark that is identical or similar to another trade mark for identical or similar goods, where the applicant is aware of the existence of the prior used trade mark because of contractual, business interaction or other relations, the application shall be rejected
- Trade mark agents must advise their clients when the trade marks they want to apply for cannot be registered according to the law
- Trade mark agents are not allowed to act if they know or should know that their clients are applying in bad faith or infringing others’ rights
- Trade mark agents cannot file trade mark applications in their own name designating goods/services other than “agency services” – this is intended to prevent abuse by trade mark agents acting by themselves or on behalf of others
- If a trade mark agent is found to be engaging in such acts, the CTMO and TRAB can stop accepting applications from that agent
- Well-known trade marks (WKTMs):
Protection for WKTMs will only be provided on a case-by-case basis, and only when necessary to determine the case, e.g. when there is a claim of infringement involving dissimilar goods or services.
The claim “well-known trade mark” cannot be used on products, packaging or containers or in exhibitions, promotions or advertising and other business activities.
WKTM recognition can only be granted by the CTMO (in the context of oppositions or infringement cases transferred from the AIC), the TRAB (in opposition appeals and invalidation actions) and the People’s Court.
- Examination timings:
Click here to view table.