On August 30, 2013, China National People’s Congress enacted the amended the Chinese Trademark Law, and the new Chinese Trademark Law shall come into effect as of May 1, 2014.

The current Chinese Trademark Law was enacted in 1982, and amended in 1993 and 2001 respectively. In December 2012, June 2013 and August 2013 respectively, the National People’s Congress has reviewed the draft amendments of the Chinese Trademark Law three times.

We have sorted out the key amendments of new Chinese Trademark Law. Please see below.

  1. Time limitation is set for major matters of trademark prosecutions before Chinese Trademark Office (CTMO) and Trademark Review and Adjudication Board (TRAB)

For the first time, Chinese Trademark Law has set the time limitation for the following major matters of trademark prosecutions: 1) Preliminary examination for registration; 2) Rejection appeal; 3) Appeal against the CTMO invalidation decision regarding provisions of Article 10 (prohibition of using and registration as trademarks, such as name of country, deceptive signs, and geographical names well known to the public), Article 11 (lack of distinctiveness for two-dimensional marks), Article 12 (lack of distinctiveness for three-dimensional marks), or registration acquired by fraud or any other unfair means; 4) Cancellation based on generic names or three-year non-use; 5) Appeal against the CTMO cancelation decision; 6) Opposition; 7) Opposition appeal; and 8) Invalidation requested by the prior right holder or interested party.

Three types of time limitations are set: 1) Nine Months; 2) Nine Months plus Three Months; and 3) Twelve Months plus Six Months.

1.1 Nine Months

The CTMO shall complete the preliminary examination for registration within 9 months after the receipt of trademark applications. [Article 28]

1.2 Nine Months plus Three Months

The CTMO / TRAB shall render the decisions within 9 months after the receipt of the requests for rejection appeal, invalidation appeal, non-use cancellation and/or generic terms cancellation. Additional 3 months may be extended under special circumstances.

1) Rejection appeal before the TRAB [Article 34]

2) Appeal against the CTMO invalidation decision before the TRAB regarding provisions of Article 10 (prohibition of using and registration as trademarks, such as name of country, deceptive signs, and geographical names well known to the public), Article 11 (lack of distinctiveness for two-dimensional marks), Article 12 (lack of distinctiveness for three-dimensional marks), or registration acquired by fraud or any other unfair means [Paragraph 2, Article 44]

3) Invalidation filed by third parties other than the CTMO regarding the same ground prescribed by Paragraph 2, Article 44 before the TRAB [Paragraph 3, Article 44]

4) Cancellation based on generic names or three-year non-use filed by any one before the CTMO [Article 49]

5) Appeal against the CTMO cancelation decision regarding the same ground prescribed by Article 49 before the TRAB regarding cancellation based on generic names or three-year non-use [Article 54]

1.3 Twelve Months plus Six Months

The CTMO shall render the decisions regarding opposition within 12 months after expiration of gazette of preliminary approval. The TRAB shall render the decisions regarding opposition appeal and invalidation requested by the prior right holder or interested party within 12 months after the receipt of the requests. Additional 3 months may be extended under special circumstances.

1) Opposition before the CTMO [Paragraph 1, Article 35]

2) Opposition appeal before the TRAB [Paragraph 3, Article 35]

3) Invalidation requested by the prior right holder or interested party before the TRAB [Paragraph 2, Article 45]

  1. Opposition and opposition appeal system is further optimized

​2.1 Qualification of the opponent is restricted in accordance to grounds of the opposition.

Different from 2001 Chinese Trademark Law where any entity may file the opposition based on various grounds, the new Chinese Trademark Law distinguishes the qualification of the opponent based on the different grounds of the opposition. [Article 33]

1) One the one hand, as the opponent, the prior right holder or interested party may file the opposition based on their private rights for Paragraph 2 and 3 of Article 13 (well-known mark), Article 15 (fully aware trademarks with prior use of others based on contracts, business relationships or other relationships), Paragraph 1 of Article 16 (geographic indication), Article 30 (identical or similar to prior trademark registrations/ preliminarily approved marks on identical or similar goods/services), and Article 31 (identical or similar to prior marks with prior preliminary approval and gazette).

Please note that the CTMO may invalidate the trademark registrations acquired by fraud or any other unfair means, and any entity other than the CTMO may file invalidation request before the TRAB on the same ground. [Paragraph 1 and 2, Article 44] However, the ground of trademark registrations or applications by fraud or any other unfair means is not expressly listed as a ground for opposition. Thus, further discussions and clarifications (for example, via the amendments of current Implementing Regulations of 2001 Chinese Trademark Law) on this issue may be needed in the future.

2) On the other hand, any entity (including the prior right holder or interested party) may, as the opponent, file the opposition based on the public interests for Article 10 (prohibition of using and registration as trademarks, such as name of country, deceptive signs, and geographical names well known to the public), Article 11 (lack of distinctiveness for two-dimensional marks), and Article 12 (lack of distinctiveness for three-dimensional marks).

2.2 Opposition appeal procedure is partially cancelled in favor of the opposed party.

The new Chinese Trademark Law partially cancelled the opposition appeal procedure in favor of the opposed party. [Paragraph 2 and 3, Article 35]

1) If the opposed party wins the opposition, the losing opponent is not entitled to initiating the opposition appeal procedure before the TRAB, and the opposed mark will obtain registration. Instead, the losing opponent may seek to file invalidation against the registered trademark before the TRAB. [Paragraph 2, Article 35]

2) If the opposed party loses the opposition, it may still appeal to the TRAB via the opposition appeal procedure before the TRAB. [Paragraph 3, Article 35]

  1. Well-known mark protection system is further clarified

​3.1 Well-known mark recognition is based on the request of the trademark right holder and a fact to be ascertained according to the necessity of the cases. 

1) The right holder of the trademark well-known among the relevant public may request the well-known trademark protection according to regulations in Chinese Trademark Law, when he believes his right has been infringed upon. [Paragraph 1, Article 13]

Please note that this provision prescribes “the right holder of the trademark well-known”, while other provisions prescribe “the prior right holder or interested party” for opposition. [Article 33] And other provisions prescribe “the prior right holder or interested party” for invalidation, and it expressly prescribes “the right holder of the trademark well-known”. [Paragraph 1, Article 45] According to the above provisions, it seems the registrant of the well-known mark instead of its licensees may request the well-known mark recognition.

2) The well-known status of a trademark shall be recognized upon the request of the party concerned and shall be deemed as a fact to be ascertained according to the necessity of the trademark cases. [Paragraph 1, Article 14] 

3.2 Specific routes and authorities governing well-known mark recognition 

1) Opposition: the CTMO [Paragraph 2, Article 14] 

2) Complaint before the local Administration for Industry and Commerce (AIC) for trademark infringement disputes: the CTMO (reported by the local AIC) [Paragraph 2, Article 14] 

3) Trademark dispute cases (opposition appeal, invalidation requested by the prior right holder or any interested party): the TRAB [Paragraph 3, Article 14] 

4) Trademark infringement civil lawsuit: Courts designated by China Supreme Court (which means only limited courts will have the jurisdiction on trademark infringement civil lawsuits involving well-known mark protection) [Paragraph 4, Article 14] 

5) Trademark administrative lawsuits: Courts designated by China Supreme Court (Beijing First Intermediate Court as the first instance court, Beijing High Court as the second instance court) [Paragraph 4, Article 14] 

3.3 Prohibition of using the wording “well-known trademark” for commercial activities 

1) Producers and operators shall not use the wording “well-known trademark” on the products, packages or containers, or advertising promotion, exhibitions and other business activities. [Paragraph 5, Article 14] 

2) This provision will crack down on the improper use of the wording “well-known trademark” for commercial activities for the Chinese entities.

  1. Trademark protection is further strengthened

4.1 Forms of trademark infringement are further clarified

1) The new Chinese Trademark Law further clarified the criteria of trademark confusion among the public. For identical marks/signs on identical goods/services, it is assumed as confusion. For similar marks/signs on identical goods/services or identical marks/signs on similar goods/services, confusion shall be established. [Item 1 and Item 2, Article 57]

2) The new Chinese Trademark Law added the provision of contributory infringement that the act of “intentionally providing and facilitating conditions for infringement and assisting others to carry on the infringement” shall be deemed as trademark infringement. [Item 6, Article 57] In fact, this provision comes from existing provision of Item 2, Article 50 of Implementing Regulations of 2001 Chinese Trademark Law promulgated in August 2002 which has prescribes the similar situation of “to intentionally provide any other person with such facilities as of storage, transportation, postal service.”

4.2 Conflict between trade name and registered mark or unregistered well-known mark

1) The new Chinese Trademark Law added the provision that “Use of the registered trademark or unregistered well-known marks of others as a trade name contained in the enterprise name, which misleads the public and constitutes as unfair competition, shall be ruled under the Chinese Anti-Unfair Competition Law.” [Article 58]

2) Article 53 of Implementing Regulations of 2001 Chinese Trademark Law promulgated in August 2002 has already prescribed the complaint with local company registration authorities for conflict between registration of the trade name (enterprise name) and the well-known mark, which prescribes as follows: “Where a trademark owner believes that another person has registered his well-known trademark as a trade name, which is likely to deceive, or mislead, the public, he may file an application with the competent authority for the registration of trade names for cancellation of the registration of the trade name. The competent authority for the registration of trade names shall handle the matter pursuant to the Regulations for the Administration of Registration of Trade Names.”

3) Item 1, Article 1 of China Supreme Court’s Interpretations on Issues regarding the Application of Law in Civil Cases Involving Trademark Disputes (which has binding effects on all courts in China) has prescribed the situation where the prominent use of the trade name infringes upon rights of registered trademark, which prescribes as follows: “the use of words identical or similar to another's registered trademark as a trade name in a distinctive manner on identical or similar goods, and thus causing possible confusion among the relative public” constitutes as trademark infringement.

4) Article 58 of new Chinese Trademark Law merely covers the registered mark and unregistered well-known mark which are entitled to protection on identical or similar goods/services, but it does not cover the registered well-known mark which is entitled to cross-Class protection. In addition, it does not emphasize the prominent use of the trade name. Thus, further discussions and clarifications (for example, via the amendments of current Implementing Regulations of 2001 Chinese Trademark Law) on this issue may be needed in the future.

4.3 Fair use defense and prior use defense 

1) Fair use defense for two-dimensional signs. The new Chinese Trademark Law added the provisions of fair use for generic name, descriptive signs, and geographic name contained in two-dimensional trademark registration. The new Chinese Trademark Law prescribes as follows: “Where a registered trademark contains the generic name, shape or model of the goods in respect of which it is used, or directly indicates the quality, main raw material, function, use, weight, quantity and other features of the goods, or contains a place name, the holder of the exclusive right to use the registered trademark has no right to prohibit others from duly using.” [Paragraph 1, Article 59] In fact, Article 49 of Implementing Regulations of 2001 Chinese Chinese Law has already prescribed this situation. 

2) Fair use defense for three-dimensional signs. The new Chinese Trademark Law added the provisions of fair use for technical effects contained in three-dimensional trademark registration. The new Chinese Trademark Law prescribes as follows: “Where a three-dimensional registered trademark contains any shape derived from the goods itself, product shape required to obtain the technical effect, or shape that gives a substantive value to the goods, the holder of the exclusive trademark right has no right to prohibit others from duly using.” [Paragraph 1 and 2, Article 59] The provision of fair use defense for three-dimensional signs is added in the new Chinese Trademark Law based on the same logic as fair use defense for two-dimensional signs.

3) Prior use defense. The new Chinese Trademark Law affirms the right for use of a prior mark with certain fame, by stipulating that “Where prior to an application of trademark registration by a trademark registrant, others have been using identical or similar trademark on identical or similar goods prior to the trademark registrant, and such trademark has acquired certain influence, the trademark registrant shall have no right to prohibit said trademark user from continuing to use that trademark within the original scope of use, but may require it to attach additional appropriate distinctions.” [Paragraph 3, Article 59]     In fact, the protection of prior use has already in practice in China, and this practice has been affirmed by the new Chinese Trademark Law.

4.4 Penalty in the administrative complaint is further strengthened and clarified

1) The new Chinese Trademark Law has extended scope of tools to be seized or destroyed, which are used to manufacture infringing goods, forge registered trademark labels, by changing the wording into “the primary tools” from “specially used tools” prescribed in 2001 Chinese Trademark Law. [Paragraph 2, Article 60]

2) The new Chinese Trademark Law has prescribed the specific amount of the fine, that is, “with unjustified business income over RMB 50,000, can be held liable for a fine up to five times of the unjustified business income; where no unjustified business income or unjustified business income is less than RMB 50,000, a fine up to RMB 250,000 can be enforced.” [Paragraph 2, Article 60] 

3) The new Chinese Trademark Law has prescribed situations where severer penalties shall be imposed, that is, “Where two or more repetitive trademark infringements were found within five years or where other serious circumstances were found, the infringer shall be heavily punished.” [Paragraph 2, Article 60]

4.5 Damages 

1) Ways and sequences of determining the damages are further clarified as follows: A) the actual losses of the rights holder; and then B) the infringer’s profits obtained from infringement; and then C) multiples of royalty fees. [Paragraph 1, Article 63] 

2) The maximum statutory damages are raised from RMB 500,000 (around US$ 81,000) to RMB 3 million (around US$ 490,000), in the event it is difficult to prove the actual losses of the rights holder, the infringer’s profits obtained from infringement, and royalty fees are indeterminable. [Paragraph 3, Article 63] 

3) Punitive damages are adopted by the new Chinese Trademark Law, which prescribes as follows: “Where serious circumstances of infringement of exclusive trademark rights in bad faith arise, the amount of damages may be determined with no less than double but no more than triple the abovementioned amount.” [Paragraph 1, Article 63]

4) The court may order the infringer to disclose his account books, and in case of refusal, to determine the amount of compensation based on the plaintiff’s claim. [Paragraph 2, Article 63] 

5) In case the rights holder fails to provide the evidence showing that the trademark had been used in the three years prior to the action brought, and fails to prove any other losses suffered from the infringement, the infringer shall not bear any liability for damages. [Paragraph 1, Article 64]

  1. Bad faith filing is to be further cracked down 

5.1 ​Catch-all provision of the good faith principle is added by the new Chinese Trademark Law, which prescribes as follows: “The application for registration and use of the mark shall comply with the principle of good faith.” [Paragraph 1, Article 7] This newly added provision may be powerful weapon to further crack down the bad faith filing as well as trademark use in bad faith for purpose of free riding. 

5.2 The new Chinese Trademark Law adopted the provision prohibiting the hijacking of another party’s unregistered mark with prior use based on the ground that the applicant is aware of such prior mark because the applicant has contractual, business or other relationships with the other party. The provision is as follows: “Where a trademark application is identical or similar to the other party’s unregistered trademark with prior use on the identical or similar goods, and where the applicant is aware of the existence of such other party’s trademark because the applicant has contractual, business or other relationships with the other party beyond that provided in the preceding paragraph, if such other party raises an opposition, the trademark shall be rejected for registration.” [Paragraph 2, Article 15] 

5.3 The new Chinese Trademark Law prescribes that the trademark registrant will not be awarded with damages if such registered mark is not in actual use. This may prevent those copycats or trademark trolls from obtaining illegal profits by hi-jacking the marks of others. Eventually, this will discourage those copycats or trademark trolls. The provision is as follows: “Where the trademark registrant fails to provide evidence showing actual use of the registered trademark in the three years prior to its case, and fails to prove any other losses it suffered from the infringement, the infringer shall not be held liable for any damages.” [Paragraph 1, Article 64]

  1. Regulations on trademark application and registration are enhanced

6.1 ​Sound mark is accepted for registration. [Article 8] 

6.2 Signs identical or similar to the national flag, national anthem, etc. are prohibited from using and registration as trademarks. [Paragraph 1, Article 10]

6.3 Deceptive signs which tends to mislead the public are prohibited from using and registration as trademarks. [Paragraph 1, Article 10]

6.4 Multi-classes registrations in one application are adopted. [Article 22]

6.5 E-filings are adopted. [Article 22]

6.6 Examination opinion may be issued if the CTMO believes the trademark application needs to be further explained or amended. [Article 29]

6.7 Application for renewal of the registration shall be made within TWELVE months before the expiration date, extended from SIX months prescribed by 2001 Chinese Trademark Law. [Article 40] 

6.8 Requirements for trademark assignment are added and clarified. The new Chinese Trademark Law added the provisions as follows: “The trademark registrant shall assign all identical or similar trademarks registered in identical or similar goods.” and “Any application of an assignment of a registered trademark that tends to mislead the public or cause confusion or have adverse affects shall not be approved by the CTMO”. In fact, Article 25 of Implementing Regulations of 2001 Chinese Chinese Law has already prescribed these situations. [Paragraph 2 and 3, Article 42] 

6.9 The entity and nature of license recordation is further clarified. The new Chinese Trademark Law added the provision as follows: “when licensing others to use its registered trademark, the licensor shall record its trademark license with the CTMO, announced by thereof. Trademark license that are not recorded with the CTMO cannot be used against the good faith use of the registered trademark by a third party.” [Paragraph 3, Article 43] 

  1. Suspension of action is added

According to the new Chinese Trademark Law, suspension of action is available for review case and invalidation cases handled by the TRAB as well as the trademark infringement cases handled by the AICs.

1) The TRAB may stay the review case and invalidation case where a determination of prior rights involved is based on the decision of a case pending before the People’s Court or before the administrative authority. [Paragraph 4, Article 35; and Paragraph 4, Article 45]

2) The AIC may suspend the investigation and handling of a trademark infringement, where disputes arise regarding trademark ownership or the rights holders bring trademark infringement lawsuits before the People’s Court at the same time. [Paragraph 3, Article 62]

3) However, the new Chinese Trademark Law does not provide the option for suspension of trademark cases such as the opposition cases handled by the CTMO.

  1. Effectiveness and retroactive effect of opposition, invalidation and cancellation of the trademark

1) ​Effectiveness of opposition. The trademark approved for registration upon the adjudication on the opposition shall not have the retroactive effect on another person’s act to use a sign identical with or similarly to the trademark on the same or similar goods from the date on which the period for trademark opposition expires and before the adjudication on the opposition takes effect; however, the losses inflicted to the trademark registrant due to the bad faith in which the sign is used shall be compensated. [Paragraph 2, Article 36] In fact, Article 23 of Implementing Regulations of 2001 Chinese Chinese Law has already prescribed this situation. 

2) Effectiveness of invalidation. In respect of a trademark registration that is invalidated in accordance with Article 44 and Article 45 of this Law, it shall be gazetted by the Trademark Office, and the exclusive right to use the trademark shall be deemed to be non-existent from the beginning. The decision or adjudication on the invalidation of the registered trademark has no retroactive effect on a judgment or decision made and executed by the People’s Court or the Administrative Authority for Industry and Commerce on a case of trademark infringement, or on a trademark assignment or licensing contract executed. However, in respect of damage done to any other person in bad faith by the trademark registrant, he shall compensate for the said damages. If, pursuant to the preceding paragraph, no repayment of the trademark infringement compensation, trademark assignment fee, or the trademark royalty fee, is obviously contrary to the principle of equity, the whole or part of the fee shall be repaid. [Article 47] In fact, Article 36 of Implementing Regulations of 2001 Chinese Chinese Law has already prescribed the similar situation. 

3) Effectiveness of cancellation. The registered mark cancelled will be published by the CTMO, and the exclusive rights thereof will be terminated on the date of publication. [Paragraph 2, Article 55] 

  1. Administration on trademark use is further strengthened

9.1 ​Definition of trademark use is clarified 

The new Chinese Trademark Law clarified the definition of trademark use, and emphasized the trademark use in the sense of Chinese Trademark Law with the purpose of identifying the sources of goods/services. [Article 48] In fact, Article 3 of Implementing Regulations of 2001 Chinese Trademark Law has already prescribes the similar provision.

9.2 Legal consequence of improper use of the registered marks is clarified 

The new Chinese Trademark Law clarified that the local AIC (instead of the CTMO prescribed by 2001 Chinese Trademark Law) has the power to order the rectification of unilaterally altering a registered trademark, name, address, or other registered matters, while the power to cancel the registered trademark remains at the CTMO. [Paragraph 1, Article 49] 

9.3 Cancellation against the trademark registration of generic terms is adopted 

The new Chinese Trademark Law adopted the practice of cancellation against the trademark registration of generic terms. Like the cancellation against the three-year non-use cancellation, any entity is entitled to filing the cancellation against those registered marks where they have becomes generic terms. [Paragraph 2, Article 49] 

9.4 Amount of the fine imposed by the local AIC is further clarified 

1) For any violation of compulsory requirements of registered marks on certain goods/services prescribed by laws and administrative regulations like drugs, the new Chinese Trademark Law prescribes the specific amount of the fine as follows: “where unjustified business income exceeds RMB 50,000, a fine of 20% thereof may be imposed; where no unjustified business income or unjustified business income is less than RMB 50,000, a fine up to RMB 10,000 may be imposed.” [Article 51] 

2) For falsely representing an unregistered trademark as registered, or using an unregistered trademark violates Article 10 of the new Chinese Trademark Law, the new Chinese Trademark Law prescribes the specific amount of the fine as follows: “where unjustified business income exceeds RMB 50,000, a fine of 20% thereof may be imposed; where no unjustified business income or unjustified business income is less than RMB 50,000, a fine up to RMB 10,000 may be imposed.” [Article 52] 

3) For using the wording “well-known trademark” on commercial activities in violation of Paragraph 5, Article 14 of the new Chinese Trademark Law will be ordered by local AIC to rectify the violation and impose a fine of RMB 100,000. [Article 53] 

  1. Regulations and requirements on trademark agents are enhanced 

The new Chinese Trademark Law adds several provisions to regulate the practice of the trademark agents and to be helpful to crack down bad faith trademark registration. [Articles 19, 20, 68]