Recently a report emerged from the Standing Committee of the National People’s Congress indicating that the draft amendment to the P.R.C. Trademark Law now under consideration would ban producers and operators from applying the term “famous trademark” to goods, packaging, containers or business activities such as advertisements or exhibitions. If the amendment becomes law, trademark owners will no longer be able to use the term “famous trademark” to promote their products or services. The legislative purpose of this amendment is to restrict the use of this term to its function in protecting trademark rights rather as a tool for advertising.

The term ”famous trademark” originates from 【ARTICLE 6bis】of the Paris Convention and is reflected in Article 16 of the TRIPS agreement. In 2001 it became part of Chinese law as an amendment to the P.R.C. Trademark Law (in the 1993 Trademark Law Implementing Rules it is referred to as a “trademark known to the public”). Although the Trademark Law incorporates nearly all international conventions concerning the protection of famous trademarks, in practice the term “famous trademark” became a commonly-used term used by trademark owners and local governments to promote their products and advertise their political achievements, respectively. A large number of bogus “famous trademarks” sprang up in China through phony litigation and administrative recognition.

To resolve this problem the “individual recognition” and “passive protection” methods would be used to recognize and protect famous trademarks: authorities would only recognize famous trademarks when necessary and the recognition thereby granted only valid with respect to a single case. Apart from these conditions the following limitations apply: Jurisdictional limitations: In industrial and commercial cases only the State Administration of Industry and Commerce departments at the municipal (prefectural) level and above would be allowed to rule on a petition for protection of an asserted “famous trademark.” Even these authorities would have to report to the Trademark Bureau at the appropriate administrative level if they determine that the trademark in question is worth recognizing. In civil actions, only Intermediate People’s Courts in cities or municipalities with independent planning status where provincial and autonomous regional governments are located would have jurisdiction over cases in which “famous trademark” recognition is sought.

Subject matter restrictions: In an administrative investigation, trademark owners would have no right to petition for recognition of a famous trademark unless their registered trademark required multi-class protection or if their unregistered trademarks needed protection against identical or similar goods or services. In civil actions, in addition to the foregoing causes of action, trademark owners could petition for recognition in the event that the accused enterprises’ names were identical or similar to their trademarks or where defenses or counterclaims were involved.

Moreover, in civil lawsuits the recognition of a famous trademark could be used to support a final judgment, but such recognition could not be treated as part of the judgment itself, and a settlement agreement could not effectively recognize a famous trademark.

Although trademark owners would be subject to the foregoing limitations, once their trademarks were recognized as famous trademarks they could use this designation in their business activities. It is difficult for the current Anti-Unfair Competition Law and the Advertising Law to restrict the use of officially recognized well-known trademarks. Indeed, once it applies, this designation is unlikely to be restricted to use in trademark protection unless separate legislation prohibits owners of famous trademarks from advertising their products as such. 

Although the draft amendment of the Trademark Law is currently under examination and discussion, we believe that it will be signed into law in the near future. Whether or not the above-mentioned articles can be preserved in the amended Trademark Law is crucial to accomplish the legislative purpose of designating certain trademarks as “famous” to enhance trademark protection.