On August 30, 2013, China amended its trademark law during the fourth meeting of the Twelfth National People’s Congress’s Standing Committee by adopting the Decision on Amending the People's Republic of China’s Trademark Law (the “New Trademark Law”). In anticipation of the New Trademark Law taking effect on May 1, 2014, on April 29, 2014, the PRC State Council promulgated the revised PRC Trademark Law Implementing Regulations (the “Implementation Regulations”) (No. 651 Decree of the State Council). The Implementation Regulations are designed to effectively implement the New Trademark Law and became effective on May 1, 2014. Below please find an overview of the major changes and additions in the New Trademark Law and the Implementation Regulations.

I.        Specific Terms of the New Trademark Law

As supporting regulations of the New Trademark Law, the Implementation Regulations specifically interpret the terms of the New Trademark Law to facilitate its implementation on the day it becomes effective (May 1, 2014). The Implementation Regulations can be subdivided into five aspects, as follows:

(1)     Adding provisions with respect to opposition procedures

Articles 24 through 28 of the New Trademark Law and the accompanying provisions in the Implementation Regulations significantly revised the procedure of oppositions.

With respect to the acceptance of an opposition, Article 24 of the Implementation Regulations sets forth the required materials that need to be submitted to raise an opposition. Under the New Trademark Law, it is no longer the case that anyone can raise an opposition for any reason. Rather, the Implementation Regulations provides that for an opposition to be considered, applicant raising the opposition should submit evidence to prove he/she is either a holder of prior rights or an interested party. Article 26 of Implementation Regulations further lists four situations where oppositions are not accepted, one of which is that opposing party failed to meet the eligibility.

With respect to the evidentiary rules during the adjudication of the opposition, Article 27 of Implementation Regulations provides that evidence submitted beyond the prescribed deadline may nevertheless be admitted by the Trademark Office upon delivery to the counterparty for cross-examination if i) such evidence is formed after the prescribed deadline or ii) if the party submitting the evidence has other justifications for failing to submit such evidence prior to the expiration of the prescribed deadline. Article 27 codifies certain current practice and is of paramount significance for the changed opposition procedure. Moreover, New Trademark Law states that once an opposition fails,the trademark in question will be approved for registration without any additional follow-up review. Accordingly, the review and adjudication of oppositions is crucial for both the opposing and the opposed party. These new requirements are meant to encourage fact collection and enhance the substantial justice.

Following revisions to the opposition procedure, the treatment of a trademark that was approved by the Trademark Review and Adjudication Board through a decision to overturn the rejection of a trademark application by the Trademark Office has changed. Article 62 of Implementation Regulations provides that res judicata does not apply to a trademark approved by the above procedure, which means that the opposing party may still file an application after the trademark is registered to invalidate such trademark.

(2)     Revising time deadlines for administrative reviews

The New Trademark Law sets new timing deadlines for trademark registration applications, oppositions, reviews and other procedures. Article 11 of Implementation Regulations further clarifies these timing deadlines by setting forth five (5) circumstances that result in tolling (time period during which the circumstance occurs does not count for the purposes of calculating these timing deadlines). These circumstances are as follows: i) the time period during which the Trademark Office or the Trademark Review and Adjudication Board serves relevant documents by announcement; ii) the time period during which a party concerned needs to furnish supplementary evidence or documents or correct documents, and the time period during which new defense shall be submitted as a result of the change of the party concerned; iii) the time period required for furnishing evidence of trademark use, and for consultation or balloting, where multiple applications are submitted on the same day; iv) the period during which priority rights are determined; v) at the request of a party, the time period during a trademark review or hearing where the hearing is suspended pending the outcome of another hearing pertaining to the party’s prior rights.

(3)     Increased protection for the exclusive right to use trademarks

The New Trademark Law provides that the provision of aid and the facilitation of infringement also constitute an infringement of a registered trademark. In order to clarify the above provisions, Article 75 of Implementation Regulations defines aid and facilitation as anyone who provides warehousing, transportation, mailing or printing services, concealed venues, business premises, online trading platforms, etc. for the purpose of infringing on other’s exclusive right to use its trademarks.

The New Trademark Law set forth the rule for situation that if a seller sells a good that infringes on another person’s trademark but without knowledge of such infringement. In order to clarify the implementation of these provisions, Article 79 of Implementation Regulations provides four (4) instances that proves a seller legally obtained merchandise, as follows: i) the seller has supply lists and payment receipts bearing the legitimate signatures and seals of such suppliers, and such supply lists and payment receipts are confirmed as true either upon verification or upon acknowledgement by the supplier; ii) the seller has the purchase contracts signed by both the supplier and the seller, and it is confirmed that such contracts have performed in accordance with its terms; iii) the seller has legal purchase invoices, and the items recorded in such purchase invoices correspond to the products in question; or iv) other circumstances exist under which the seller can prove that it has legitimately obtained the products.

Implementation Regulations further clarifies the relevant factors that shall be taken into account in administrative enforcement when calculating "illegal business profits" defined in the New Trademark Law.

(4)     Amendments to the trademark application

The New Trademark Law introduced the "multi-class application." In order to make the new system practicable and simple, Article 22 of Implementation Regulations further introduces the divisional application system in cases of where part of the trademark application is rejected. Specifically, where the Trademark Office rejected a trademark application on certain classes, the applicant may apply for a divisional application with the Trademark Office, and the portion of the application that has already been preliminarily approved will be allocated a new application number and be announced. The portion of the application that has not been approved will then proceed to be reviewed by the Trademark Review and Adjudication Board However, the Implementation Regulations did not adopt this division system with respect to opposition procedures, other review procedures or the transfer of a trademark, which may have adverse effect in practice.

The New Trademark Law provides that sounds can be registered as trademarks. Paragraph 5 of Article 13 of Implementation Regulations clarifies the implementation of this new rule by setting forth the required instruments for such trademark application. These include sound samples that meet relevant requirements, a description of the sound trademark and an explanation of the ways the trademark will be used.

(5)     Regulating the operation of trademark agencies

The Implementation Regulations contains further regulations that complement the New Trademark Law’s strengthening of supervision of trademark agencies. For example, Article 84 of Implementation Regulations confers jurisdiction and authority to the administration for industry and commerce for credit supervision of trademark agencies. Article 88 of Implementation Regulations further lists circumstances which can be treated as "other improper means that disturbs market order for trademark agencies." Article 90 of Implementation Regulations further provides a specific operational procedure in connection with the government’s decision to stop accepting applications from trademark agencies as punishment for their malicious activities.

II.        New Terms Based on Current Practice

In an attempt to correct the defects in the current trademark regulations and resolve associated practical issues, the Implementation Regulations added new terms, the content of which is as follows:

(1)     Establish a new chapter to regulate the Madrid international registration of marks

This special chapter is based on the Measures for Implementation of the Madrid International Registration of Trademarks (“Madrid Implementation”) passed by the State Administration for Industry and Commerce, which is effective as of June 1, 2003, and gives the Madrid Implementation a higher legal effectiveness as an administrative regulation, rather than a department rules.

The chapter on the Madrid international registration primarily provides the general conditions and procedures for applying for international trademark, and procedures for review of international trademark application.

(2)     Other provisions

With respect to the transfer of a registered trademark, current regulations provide that the transferee shall be responsible to complete the procedures for the transfer. However, due to the prevalence of false transfers in practice, Article 31 of Implementation Regulations now requires both the transferor and the transferee to jointly complete application procedures for transfer of a registered trademark to protect the legitimate interests of trademark owners. However, the Implementation Regulations do not specifically detail the procedures associated with such joint application. Accordingly, the Trademark Office should be responsible for further specifying such relevant joint application procedures.

While existing regulations and the New Trademark Law do not specifically regulate the registration of a trademark pledge, Article 70 of the Implementation Regulations  addresses  this practical ambiguity. Article 70 requires the pledgor and the pledgee to jointly apply with the Trademark Office to register such exclusive right. After the registration, the Trademark Office will make an announcement of such registration.

Article 5 of the Implementation Regulations provides that where a trademark registration applicant or trademark transferee is a foreigner or a foreign enterprise, it shall designate in its written application a party within the territory of the PRC who will be responsible for receiving legal instruments issued by the Trademark Office or the Trademark Review and Adjudication Board in connection with trademark related items, so as to mitigate the difficulty associated with delivering documents to foreign applicants or transferees.

Article 9 of the Implementation Regulations confirms the legal effectiveness of documents delivered by express companies who are not the postal office to the Trademark Office or the Trademark Review and Adjudication Committee. Article 9 also adds a way of determining the filing date for electronic applications.