Over the past few years, the Chinese market has shown great potential for the distribution of wines mainly from France (about 40% of China’s wine imports come from France) yet sales still appear to be marginal given the changing habits of the Chinese whose wine-drinking population, to the present day, remains quite small.

However, the growth in wine consumption has been shadowed by the proliferation of wine trademark counterfeits for both the great growths as well as the less prestigious wines.

Almost all of the wine companies that exported their wines over the past few years in China were hindered by problems either in obtaining trademark registrations that were already applied for by unscrupulous Chinese entities, or in opposing counterfeits despite holding prior legal rights.

Although legal provisions in China undoubtedly existed on paper to counter this type of action, they were either not precise enough or were poorly applied.

The Chinese government therefore adopted a new law on trademarks on 31 October 2012 which will be a deciding factor for rights holders.

This law should bring about the following changes:

  • Enable multi-Class applications which will be accepted from now on by the trademark office; up until now, multi-Class applications in China were only accepted by way of the international trademark, excluding national trademarks: hence, an applicant who wanted to apply for several goods and services falling under different classes had to make a number of applications.    
  • Simplify the trademark registration procedure: the 15-day timeframe for appealing decisions taken by the trademark office was extended to 30 days, leaving the applicants more time to reflect on whether to proceed with an appeal or not.
  • Define the notion of bad faith more precisely: this notion had been cruelly lacking in our various files since it was almost never recognized, even in cases where the fraudulent applicant had registered dozens of pirated trademarks.

In other words:

Currently, when it comes to lodging opposition or annulment of squatter trademarks made by fraudulent applicants, getting the trademark office to recognize the applicant’s bad faith appears to be a difficult task, notwithstanding supporting documents (prior market rights, prior business connections with the legitimate owner, applications of many well-known French wine trademarks etc.).

This law should lead the trademark office to adopt new criteria in favor of legitimate trademark owners especially when they provide evidence of an applicant’s bad faith. All future action as well as those coinciding with the enactment of this law should be able to benefit from this development.

  • Prohibit legal action initiated on the basis on unexploited trademarks, launched with the sole purpose of burdening the courts.

In other words: these practices, in fact, allowed Chinese companies and private individuals to put pressure on companies/natural persons  coming mostly from the West whose trademarks could not be registered but were being exploited in China for the purpose of claiming damages.

  • Increase the sum of damages to be obtained at a hearing: an increase in the amount in the case of infringer recurrence is now henceforth foreseen.

These new provisions undoubtedly constitute an important development in the Chinese trademark law and, we hope that they will be implemented by the trademark office.

An adapted version should be presented in the coming weeks, and the final text is set to be adopted within a few months.