In recent years, the speedy growth in number of trademark applications filed with the Trademark Office of China National Intellectual Property Administration (“CNIPA”) has unveiled some problems, including abuses of bad faith applications and the tampering of trademark system, such as trademark squatting, trademark hoarding and cornering, and concurrent bulk filing for trademark blocking. At the tenth Session of the 13th Standing Committee of the National People’s Congress held on April 23, 2019, it approved the amendment to PRC Trademark Law, a year after the draft amendments were released for public discussion in April 2018 and scheduled for amendment. The move made by the Standing Committee is deemed as swift, and the amendment is planned to cut down on unnecessary waste of resources with CNIPA and at courts for abused trademark filings and litigations. Most of all, the move is desired to effectively punish willful infringement, fake trademark applications, and litigations conspired with trademark agents.
Prohibition Against Any Trademark Without Intent to Use From Registration
Registration is the primary principle of PRC Trademark Law. In the amendment, “intent-to-use a trademark in the business operation” is required for any trademarks filed for registration. Such a requirement is stipulated for the first time in the Trademark Law. Hence, any trademark application in lack of intent to use will be rejected. Besides, any person may file an opposition against an approved trademark application within three months from the date of its publication after approval, or institute invalidation proceeding after the lapse of the three-month opposition period if any person finds the application or registration in violation of the “intent-to-use” clause.
In practice it has become more and more difficult to locate a decent word mark within four Chinese characters from the database at the Trademark Office of CNIPA. Given with the legislative intent, many trademarks not in use are likely to be rejected or invalidated as the “intent to use” requirement is stipulated into the Trademark Law and it authorizes any person, instead of only the interested party to institute an opposition or even invalidation for removal of a trademark. However, it is very costly to ascertain if a trademark is used anywhere by any person in this jurisdiction as China is a vast country, and it will be a new challenge for CNIPA to ascertain whether a registered trademark is actually in use.
Raise Punitive Damages and Statutory Damages
The amendment significantly raises the punitive damages up to five times, yet three times under that of current law from actual damages. Furthermore, the maximum amount of statutory damages is also lifted up to RMB$5,000,000 (an equivalent to approximately US$ 733,700).
In pursuant to PRC Trademark Law, the amount of damages for trademark infringement is to be assessed on the basis of (1) actual loss of the right holder, (2) profits of the infringer and (3) appropriate multiple of royalties under a trademark license. The assessment methods are sequential and not optional. If none of the three methods is applicable, the court shall grant compensation by statutory damages. However, some local studies analyzed from 2015 to 2017 find that only 0.2% of the trademark infringement cases are awarded with punitive damages by courts. According to the study, the exceptional use of punitive damages can be attributed to the lack of evidence for gains by infringer, no any proof to indicate royalty fees received because the trademark has never been licensed. In terms of the ceiling with statutory damages, it is not absolutely unbreakable for the Supreme People’s Court has issued opinions that for IPR cases courts should take the situation in general into consideration under current economic status for its adjudication. As have been indicated by the court, if the plaintiff can provide sufficient evidence to prove its damages or show the gains by infringer have obviously exceeded the maximum amount of the statutory damages, the court may, at its discretion, grant a compensation amount above the statutory ceiling.
Destroy Commodities and Manufacturing Tools of infringement
At the request of rights holders, courts shall order the destruction of commodities bearing the infringing trademarks as well as materials and tools used to manufacture them. Besides, the commodities of infringement cannot be launched onto the market merely by removing the infringing trademark they bear.
The above-mentioned stipulations are what have been changed in the amendment to PRC Trademark Law, which is scheduled to be implemented on November 1st, 2019.