On August 30, 2013, the Standing Committee of the National People's Congress passed the Decisions of the Standing Committee of the National People's Congress on Amendment to the Trademark Law of the People's Republic of China, marking the third amendment to the Trademark Law. Reading the amended Trademark Law carefully, we can find that the provision that a “well-known trademark” shall not be used for advertisement purposes in the draft version was retained as Article 14.5 of the Trademark Law, which provides as follows:
Manufacturers and business operators shall neither use wording such as "well-known trademark" on the goods or on the packaging or containers of the goods, nor apply the same for advertising, exhibition or other commercial activities.
As the third amendment to the Trademark Law (hereinafter the “new Trademark Law”) entered into force on May 1st, 2014, it is very important for us to figure out how to regulate trademark owners’ advertising activities in accordance with the provision of Article 14.5 (hereinafter referred to as the “Prohibition Provision”) of the new Trademark Law.
A Complete Prohibition on Use of the Wording “Well-Known Trademark”
Since the Prohibition Provision includes “other commercial activities” as a transparent clause, we believe that it has completely ruled out the possibility of advertising by the wording “well-known trademark” in the use of trademark.
It’s noteworthy that before the new Trademark Law took effect, the wording “well-known trademark” could be used in advertising as long as the trademark has been recognized by the relevant administrative or judicial authorities as a well-known trademark. The Prohibition Provision, however, provides that the use of the wording “well-known trademark” is by nature an illegal act that permits no exception.
For this reason, the Prohibition Provision in fact eliminates the possibility of the wording “well-known trademark” appearing in any kind of commercial activities.
Violation of the Prohibition Provision may incur stiff administrative penalties and civil litigation proceedings.
On the one hand, Article 53 of the new Trademark Law provides that “In the event of a violation of provision of Article 14.5 hereof (i.e. the Prohibition Provision), the local administrative department for industry and commerce shall order rectification of such violation and impose a fine of CNY100,000.” It is obvious that the new Trademark Law provides stiffer administrative penalties on activities in violation of the Prohibition Provision instead of imposing a flexible amount of fine depending on the circumstance of the breach.
On the other hand, we believe that the Prohibition Provision may also serves as a legal basis for unfair competition accusations in anti-unfair competition actions. Business operators’ use of the wording “well-known trademark” in promotional activities inevitably gives the relevant public, especially the average consumers, a positive impression. After the new Trademark Law took effect, such promotional activities may constitute unfair competition because the illegal advertising activities will invest unfair competitive advantages in the business operators, run counter to the principle of good faith, impair other business operators’ legal rights and interests and disturb social and economic order. The other business operators suffering from the above-described illegal acts may file civil actions, demanding the offender to bear civil liability.
The Prohibition Provision does not prohibit trademark advertising.
Although the Prohibition Provision completely bans the advertising of “well-known trademark”; we still believe that right owners of trademarks that enjoy an extremely high reputation among the relevant public can continue to advertise the reputation and public awareness of their trademarks.
First, the Prohibition Provision only prohibits the use of the wording “well-known trademark” rather than the wording “well-known”. Accordingly the advertisement of “well-known XX trademark” or “XX trademark is well-known” remains unaffected as long as it is not suspected of fraudulent advertising.
Second, Chinese language has provided more than abundant words for us to choose. Trademark owners are not necessarily restricted to the wording “well-known”; instead, they can use synonyms such as “famous” or “reputable” as an alternative.
In any case, for trademarks that deserve the “well-known” title, the Prohibition Provision will not materially harm the use and advertising thereof.
It is advisable to check one’s own goods and promotional materials to ensure compliance with the new Trademark Law
According to the general principle of non-retroactivity of law, goods, advertisement or promotional activities sold, published or carried out prior to the implementation of the new Trademark Law shall not be affected by the Prohibition Provision; accordingly, the use of the wording “well-known trademark” before the new Trademark Law entered into force shall not result in any legal consequences.
However, what about the products that were manufactured before but sold after the new Trademark Law took effect? We believe that before the Regulations for the Implementation of the Trademark Law or other applicable laws provide a specific provision in this respect, trademark owners should cautiously deal with this issue, check products which were manufactured before the effective date of the new Trademark Law but may be sold thereafter, and take precautions to remove (or cover) the wording “well-known trademark” on the products to avoid unprepared risks.
In addition, trademark owners should pay more attention to the wording “well-known trademark” in their promotional materials and delete such wording from all promotional materials to be distributed in the future.
In summary, the Prohibition Provision puts an end to the use of the wording “well-known trademark” in trademark advertising. Any violation of such a provision may be subject to severe legal consequences. Nevertheless, the Prohibition Provision will not cause any material impact on the advertising of truly “well-known” trademarks. Trademark owners are advised to check and remove the wording “well-known trademark” on their products and in their promotional activities to ensure compliance with the law.