China's new Trademark Law ("new law") will come into effect on May 1, 2014. For our earlier comments on the new law, click here.
To implement the new law, new regulations have been drafted, the Draft Implementing Regulations ("Draft IR"), which have since been submitted to the Legislative Affairs Office of the State Council of China (LAO) for review. Last month the LAO issued a call for public comments.
The current Draft IR is subject to LAO's review; LAO is further entitled to make additional amendments based on public comments before submitting the amended draft to the State Council for a final review. The profession have been submitting comments, and we will keep you posted on further developments.
The Draft IR details the procedures of trademark applications and reviews, and clarifies the uncertainties or ambiguities under the new law. It introduces some new systems and also further regulates the practices of trademark agents in China.
- Of note, the Draft IR tries to streamline and clarify existing procedures. This is done through detailing e-filing provisions, introducing the "division of trademark applications" for partially refused applications, allowing for settlement negotiations, and specifying circumstances where non-use of a trade mark may be justified, etc.
- The Draft IR also attempts to facilitate enforcement of trademark infringement. Key efforts include providing for calculation of illegal turnover, specifying circumstances where a seller can claim innocent infringement, and stipulating how right holders assist on verification of suspected infringing products in AIC raid cases, etc.
- Finally, the Draft IR states that assignor and assignee are jointly responsible for recording the trademark assignment with the China Trademark Office (CTMO).
We outline in detail several notable points below.
1. Trademark application requirements and procedures amended
- Requirements of filings for sound marks and clarification of e-filing.
Sound mark applications
As the new law allows sound marks to be eligible for registration as a trademark, the Draft IR specifies requirements of the filing documents for sound mark applications. This includes a sound sample, explanation on how the mark is used, and a description.
The Draft IR states that e-filing applications for registration of trademarks under the new law refers to filing trademark registration applications electronically via the internet, and in a format designated by CTMO. It specifies that where the documents are submitted to CTMO/TRAB electronically:
•hedatenhihapartyuisdensto T/TAB hallbeheateonhihhe doetsarereidby/TABseletonc te;
•hedoetsuitedhlbeujet to T/TABsdataberod.
It also states that various kinds of documents issued by CTMO/TRAB can be served on the parties concerned by electronic means, and such documents shall be deemed duly served on the party 15 days after the date on which the document is sent.
b. Explanations/corrections upon Examiner's Advice
The new law reintroduces Examiner's Advice in the trademark application process. The Draft IR further provides for a 15-day time limit for the applicant to provide explanations or corrections upon receiving CTMO's notification.
c. Division of application
The Draft IR allows for the "division of trademark applications" for partially refused applications, allowing the preliminarily approved goods/services to proceed to registration and dealing with the rejected goods/services separately. The applicant may, within 15 days upon receipt of CTMO's partial refusal notification, request the CTMO divide the application so that the goods preliminarily approved are moved to a new application. The application on the goods preliminarily approved shall be allocated a new application number and be published with the filing date of the original application's filing date.
We understand this provision shall apply to both multi-class and single class applications, though this is not expressly stated in the Draft IR.
However, the Draft IR states that the division shall not apply to international applications designating China for territorial extension. This seems to be an additional advantage domestic applications may have over Madrid applications.
2. Time limits
As the new law provides for new time limits for CTMO/TRAB's examination of cases in trademark application/opposition, invalidation and cancellation procedures, corresponding provisions/changes in this regard are included:
a.heraft IR atstht tefooingperidsare eludedfrmhetelit oreainatinofthee:
ii.hetienededor tepatyoerndtoproide eplanatiosororeiosherenaryndor anoter rondf eidneehang;
iii.rediffeentapliansalyontheedayfor thereiratonofientalorilar trdarsn rept f teeor iilargoo, teteor te appintstouiteideeof pror eofthe tradarseforeaplingorregtraion,or to drawlot;
iv.reheartynenedishaged,thetie needdforre-ntifingthepatytout deene;
v.reinneainaionrei, theinoledpior righsaretoedterindbedonterulsf anoter aebengtiedbyaourtor hndedbyn adntraieagn, tepeodof aitngforthe reutsof aothere;
vi.hetieof aitigfor heariesongoiatea etteent ser teir ppiion.
Such provisions are aimed to protect the legitimate rights/and interests of the party concerned, as well as avoid inaction during the statutory examination time limit.
b.heurrent30daytieit or theapliant oae upleensoranensasrquirdby T/TAB hasbenhornedto15 days, andthe urret 3onhteliit fr heaplanttoile upleenaluionsinppoitinor ABs reiewproedueshasbenhorteedo30 days.
c.lear rlesforauatinofteitdealiesare addedintherft I, hihatesthat,ulesoherie pifedntenewlaw–
•for dedlnslulaednersoronh,thededlie falsontheoreondngdaeof teatothf the deadin, or heatdaeof at ltonhinehereis noorreponingdaeinthatonh;
•inaethededlieflsonatattoryhoida, t ill autatalybeetenddtohenet oringdte thereater.
Currently the calculation relies on General Principles of Civil Law and the Civil Procedure Law in China. The provisions in the Draft IR will make the parties' calculation of the deadlines more convenient.
3. Certification requirement concerning the identity/locus standi of the applicant
The Draft IR expressly confirms that when filing an application for registration of a trademark, or filing other applications (for change, assignment, renewal, opposition and cancellation etc.) of a trademark with CTMO, the applicant shall submit a copy of certification document (i.e. Certificate of Incorporation or identify certification etc.) confirming their identity/locus standi.
4. Failure of the applicant to pay required fees for filing trademark applications will result in CTMO's non- acceptance of the filings
The Draft IR clarifies that if the applicant does not pay the official fees upon filing any application, the CTMO shall not accept the application and shall notify the applicant in writing. Current regulations do not prescribe how to deal with a case where fees are not paid.
5. Formalities for trademark assignment
Current Regulations provides that the assignee files a recordal of any assignment. Since there are often falsified assignments, the Draft IR states that the formalities for the assignment shall be handled jointly by the assignor and assignee or by an agent entrusted by both parties. For assignment of pending applications, the provision in the Draft IR remains the same, i.e. the applicant of the trademark application shall go through the formalities of assignment with CTMO (as is currently the case).
6. Transfer for registered trademarks
The Draft IR lists succession and others as statutory reasons other than assignment for transfer of registered trademarks.
7. Recordal of trademark license contract
The new law states that an unrecorded trademark license cannot be used against third parties acting in good faith. The Draft IR therefore expressly clarifies that the recordal shall have the effect against third parties acting in good faith as of the date of the publication of the recordal by CTMO.
8. Recordal of pledge of registered trademarks
The Draft IR adds an article on the recordal of pledge of registered trademarks. It states that where a party pledges the exclusive right to his/its registered trademark, the pledgor and the pledgee shall enter into a written pledge contract and jointly record such pledge with CTMO which shall publish the same.
9. Opposition procedures
To implement the new law's new provisions on opposition procedures, the Draft IR includes the following notable additions/ changes:
a.heraft IR eprelyonirstht theoponnt hal proideertfiatonoesnernigteir denity andostadi(.e. etifaeof Ioporaionor idenifyerifaionet.of heoppoent) henilngn oppiton. hssnt epliiyrequiredintheurrnt egulaio.
b.pponet saoequiedoroiderleant eidene/ertiitinproigt isapror rghtshlderor anitertedpartyforopoitonsildonreltie groun.
c.heraft IR eifisuhiutnsnder hih TOhallnot ept hepotionaplaton,as follo:
i.heoppoentisnot liibefr filnghe oppiton,e.g.,itheoesnothaelusandi eitherbybengaprir rihtsolderor bingan intertdpatyinrptief oppngteark onthebsof elaiegrun;
iii.heoppitonoesnotfaluder theopeof relatieaboltegounssroidedntenew la;
v.heaeoponnt flsaoher opoiton agait heaearkonhebasf thee groun, asndeglb;
vi.heuiindesnotettheanuage requient (ie.haleininee);
vii.ther ianesof eingnot ligblefor aeptn.
d.heurrent3-onthteiitfor theoponnt tofie upleenaluionstoanopoitinshortned to30 days. hisisnef teotuneaonale aedntsasparies(epialyforignparte) ill needoretetoprperlyoletperinet eidneto uport teopiton. ned, theaft IRofirstat TOmay onder teewfataleienefledoutof tiedurngroseaiatin,hihilllelyae igifantinluneonheaeproiddteoher ide hasariht torepl.
10. TRAB's Review procedures
- Review scope of TRAB's review procedures
The Draft IR has tried to clarify TRAB's review scope. It amended the current provisions under Rules for the Review and Hearing of Trademarks issued in 2005, as specified in the table below (the underlined parts are additions/ changes):
reasons and claims as described in the party's application for review.
Review on Cancellation
TRAB shall review the facts, reasons and legal basis for the CTMO to make the decision on cancelling or sustaining the registered trademark, unless the Petitioner claims the mark has now become generic or is no longer in use and needs to supplement evidence.
On a case by case basis
b. Oral hearing
The Draft IR clarifies that TRAB may, at the request of the party concerned or on the basis of the practical needs, decide to hear the application for review orally. The "oral hearing" is similar to the oral hearing procedure in patent invalidation cases. Current similar provisions are present but oral hearings rarely take place. It will be interesting to see how this will be implemented
c. Negotiations between the parties
The Draft IR states that during the review procedures, parties may negotiate a settlement on their own, and that where a settlement agreement is reached between the parties and if it is not in violation of provisions of the law, TRAB may close the case or make a decision or ruling.
11. "Proper reasons" for non-use of a registered trademark
The Draft IR adds an article specifying circumstances which constitute "proper reasons" for non-use of a registered trademark for an uninterrupted period of three years in non- use cancellation cases, including
- Force majeure;
- Governments' policy-based restrictions;
- Insolvency liquidation;
- Other proper reasons not attributable to the registrant.
12. Definitions of “similar trademarks”, “similar goods” and "similar services"
The Draft IR gives general definitions of “similar trademarks”, “similar goods” and "similar services". Specifically, it states -
- The term “similar trademarks” under the new law refers to marks similar in the font style, pronunciation, meaning of the words, or in the composition and colour of the devices, or in the overall structure of all the elements combined.
- The term “similar goods” under the new law refers to those goods that are identical or essentially the same in respect of functions, purposes of use, producers, marketing channels, target consumers, etc.
- "Similar services” are those that are identical or essentially the same in respect of the purposes, contents, manners, objects, etc. of the services.
Current understanding/interpretations on “similar trademarks”, “similar goods” and "similar services" are provided in the Supreme People's Court on Several Issues Concerning the Application of Law to the Trial of Cases of Civil Disputes over Trademarks (2002). The Draft IR simplifies the definitions based on current interpretations, i.e. it deleted "cause confusion among relevant general public" as a circumstance of constituting similar goods/services or as a condition for constituting similar trademarks under current interpretations. We consider this not a substantive change on determining similar trademarks and goods/services as the new law explicitly states that likelihood of confusion is necessary when assessing the use of a similar mark in respect of same or similar goods.
13. Facilitating trademark infringement
The new law expands the definition of trademark infringement to intentionally facilitating trademark infringements and helping others to conduct infringing activities. The Draft IR adds an article specifying what can be deemed to qualify as “providing facilitating conditions (secondary or contributory liability)”, including providing -
- Business premise; or
- Internet service, etc.
The above is a non-exhaustive list. This widens the scope of facilitating trademark infringements, as under current provisions only mailing or concealing, or providing storage or transport are considered as facilitating infringement.
14. Administrative penalties for trademark infringement (AIC raid)
- Calculation of illegal turnover
Under the new law, "illegal turnover" is the basis of calculating administrative fines for AIC raids. The Draft IR provides how to calculate illegal turnover in different circumstances. Specifically, the Draft IR states -
i."Illgalturoer"haleantealueof teifriging prodtsthattheinfingerhsanfaure, ored, tranportdorod. healeof theldnfrigig prodtsallbeauatedatthetalalspie. healueoftheauftur, toed, tanportdor unldnfrngigpodtshlbeauatedat he aeragetalaespie. Ifhetulalspreis unabetobeaertine, tealuehalbellatd at theprearednteifrngingprdusorat he aeragearet pieof henringedprdus(.e. genunerod) ifthereisoaedpre.
ii.healueofi-inhdinfngingprdus lablle/aedithinfingngtradashlle inuddinthelueof llealurnoer adalulted at theaualtsaiaediththei-ined prodt.
iii.For fiihedinfrngngpodstohihthelaesof infrigigtrdearshaenotbeenatthd(nudng tie), healehalaoeiluedintelleal turnoer,if teresuffent idenetht h prodtsillinfing.
The Supreme Court and Procuratorate and the Ministry of Public Security provided their interpretations/ opinions on calculation of illegal turnover in handling IPR infringement criminal cases (concerning goods trademarks) in the Interpretation of the Supreme People's Court and the Supreme People's Procuratorate Concerning Some Issues on the Specific Application of Law for Handling Criminal Cases of Infringement upon Intellectual Property Rights (Fa Shi  No.19) issued in 2004 and Opinions on Several Issues concerning the Application of Law in Handling Intellectual Property Right Infringement Criminal Cases (Fa Fa  No.3) issued in 2011. The Draft IR makes slight amendments based on the said 2004 Interpretation and 2011 Opinions and further clarifies whether to include and how to calculate the value of semi-finished infringing products labelled/ marked with infringing trademarks.
iv.Illealurnoer f biesoeratinsinfrngngthe' erietraeakeashenfrinersperaing reenuehrouhteifrineent. hisisanaddtinin theraftI.
b. Repeated infringement
The new law provides for punitive punishment for repeated infringement, i.e. where an operator has engaged in infringing activities more than two times within five years, or if other serious circumstances exist, he shall be given a heavier punishment. The Draft IR elaborates on what circumstances can be considered "engaged in infringing activities more than two times within five years" and "other serious circumstances" under the said provisions. Specifically, it states that -
i.It allottute"egaednnfriningaiitisore thantotesithinfiee",if –
- the same operator was penalised by an AIC or a Court to have infringed others' trademark rights, or
- there is verified evidence that the same operator has committed trademark infringing acts.
ii.Anyof thefoloingirtnshallbeodered "othereiosiruta":
- large-scale infringement; or
- long-time infringement; or
- the infringement caused severe social influence.
c. Seller obtaining the goods lawfully
The new law states that if infringing goods are sold, and the seller is able to prove that the goods are lawfully obtained, the AIC shall order cessation of sale. This means that the new law allows AIC not to impose a fine on the seller. The Draft IR specifies that the following can be considered "proof that he has obtained the goods lawfully":
i.Verifiduplierlt adpaent rept ithauplier ea; or
ii.Verifidpuangontatgnedbytheuplierand theeler; or
iii.Legal puheinoieaneproided andreorson uhinoeoreondotegoosnoled; or
iv.ther ianesthatisaletoproetat tegos inoledereobaindafull.
In practice, the verification of the authenticity of this evidence will become problematic.
15. Right holder's obligation to assist on identification/ verification of suspected infringing products in AIC raid cases
The Draft IR confirms the trademark right holder's obligation to assist in identifying/ verifying the infringing products in AIC raid cases. It states that during a raid action against trademark infringement, the AIC may ask the trademark right holder to identify/ verify the products. The right holder shall provide assistance on identification/verification of the products and issue written opinions. It also states that where the party concerned is not able to provide the related authorization letter on the suspected infringing products seized on scene, the AIC can recognize the products as infringing products directly.
16. Madrid International Registration of Marks
The Draft IR adds a Chapter on Madrid International Registration of Marks. The added provisions are in accordance with the Madrid Agreement and Protocol Concerning territorial extension, and are based on current Chinese Measures for the Implementation of Madrid International Registration of Marks issued by SAIC in 2003 (2003 Implementation).
a. Applications for international registration of marks with China as the country of origin
i.ualifaiosoftheapliant- heraft IR onfis that tepplnt halhaeagenunendefftie indtrilndoeilbnespaeinin, or haeisoileinhna,r haethenaioality of hia.
ii.For aplatosinaoraneiththeadrid Protool, herat IR lariishat, fr auaifid appint, f h/tstadakaseenegterd ithT, or anaplatonor regtrtionof he tradarkhsbeniledandhasbeenaetedby TO(thissaded),heit yapplyfor TOtoiue eiionon ppotion
iii.hn18ntsasof heepiryof thetelit or eeion,thedate of theigitooreof he adntraiediionor out judent
international registration of the trademark in accordance with the Madrid Protocol.
iv.heraft IR nfisthatthedegnaed goo/erisofaplatonor inernaionl regitratonf arkhllot ebeondthe goo/erisoerageof ebicnaionl appiaionor rgitratonf tetrada.
v.heurrent15daytie-litor theapliant o aeuppeentsor eensherenary isetendedto30 days.
b. Examination and oppositions procedures of applications designating China for territorial extension
i.heraft IR atstht TOhlleaiethe appiaiosegnainghiafor teritoral etenionndaeadeiininaordneith hineradarkLawithintheielitfor ejeionprrbedinheadridAgeeentor adridProtoladnfomteIntenatonlBurau ofP. Itensthatthe9onhteiit for eainatinofnatonltrdarkaplatonsuner thenewlawdoesnotaplytointeratinal appiaiosegnainghiafor teritoral etenion.
ii.Timing of opposition procedures specified in the Draft IR are provided in the table below –
c. Follow-up Assignment/Abridgement of trademark registrations designating China for territorial extension
The Draft IR confirms that the assignor shall at the same time assign all of his/its registered trademarks identical with or similar to the trademark to be assigned in respect of the same or similar goods/services. Where the assignor fails to apply for assigning his/its related trademarks simultaneously, the current 30-day time limit for the assignor to make a correction upon receipt of CTMO's notification is extended to 3 months. The Draft IR also states that if the assignor fails to make the correction before the expiry of the time limit, or if the assignment may cause confusion or other adverse effects, the CTMO shall make a decision that the assignment is invalid in China and shall declare that to the International Bureau.
The Draft IR states that where the limitation of goods/services contents does not conform to the requirements of China on classification of goods and services, or is beyond the scope of original designated goods/ services, the CTMO shall make a decision that the limitation is ineffective in China and shall declare that to the International Bureau.
17. Trademark agency's obligation to receive and sign for documents issued by CTMO/TRAB
The Draft IR adds the trademark agency's obligation to receive and sign for the legal documents issued by CTMO/TRAB to the party concerned. It states that after the documents have been served to the related trademark agency, the service to the party concerned shall be deemed completed; where the trademark agency is not able to serve the documents to the party due to objective reasons, it shall explain in writing the situation and return the documents to the CTMO/TRAB within 15 days upon receipt, and then CTMO/TRAB will serve the documents to the party by public announcement.
18. Trademark agents' practices
To further regulate the practice of the trademark agencies based on the new law, the Draft IR expressly sets out a number of provisions which include the qualifications of a Trademark Agency and a Trademark Attorney, and requirements for trademark agencies' activities and how cases are handled etc.
The above is a snapshot of the provided regulations.