Recent Amendments to the Chinese Trade Mark Law
2015-05-04 14:38:15   Source:   Hit:

Author:Gordon Xu

The Chinese Trade Mark Law (hereinafter CTML) has twice been amended since it came into force on 1st March 1983 – in 1993 and 2001. The proliferation of applications in recent years underscores the complications and delays in existing trade mark registration procedures. Also, the myriad of trade mark infringements, along with the disproportionately high enforcement costs and over-lengthy process of confirmation of trade mark rights demonstrate that the then CTML is failing to accommodate to new circumstances.
To that end, an amendment has been made in 2013 – with effect from 1st May 2014. We may observe a number of significant changes from the previous piece of legislation: setting a time limitation for trade mark prosecutions and simplifying relevant procedures, devising punitive damages to tackle infringements more effectively, clarifying and further strengthening the protection of “well-known trade marks” in an attempt to promote fairness in business competitions. The CTML has been completely revised: it currently contains 73 articles (previously 64) with changes made to 53 of them.
This article aims to provide an introduction to some of the key changes.

 1.The Application of the Principle of Good Faith
In addressing the growing concerns over bad faith trade mark applications, use and enforcement, the new CTML has written in its provisions the civil law principle of “good faith”. This seeks to provide clear guidelines in relation to trade mark holders engaging in trade activities, as well as a comprehensive list of legal basis for judicial bodies involving in the adjudication of trade mark disputes.
For an instance, Articles 7 and 19 made mention of the requirement “abide by principles of good faith”. Further detailed regulations have also been adopted in other relevant articles.
 2.New Forms and Scope of Trade Mark Registration
A.Sound marks are now registrable
Article 8 of the amended CTML expanded the scope of registration to cover sound marks. This would mean that sounds with sufficient distinctiveness are eligible to be registered as trade marks, which could enhance the protection offered to the intangible assets of companies. It is also believed that this would, however, pose new questions about the examination and protection of trade marks.
B. “O ne application,  multiple  cl asses” now possible
Article 22(2) stipulates that an applicant can apply for a trade mark in multiple classes by submitting one application, i.e. one mark may pertain to multiple classes of goods or services in the trade mark certificate, and the applicant needs only to pay for a single application.
 C.E-registrations are now accepted
Article 22(3) further provides that the applicant may file trade mark applications in writing or by “other electronic means of data transmission”, hence effectively allowing applications to be made to the relevant authorities via the Internet.
The regulations in Article 22(2) (3) would be a great extent reduce trade mark application costs and relieve financial burdens of companies.
 3.A Revised Opposition System
The opposition procedures in the 2001 CTML provided that any entity may file an opposition based on any ground against a trade mark application that has been published after a preliminary examination and approval. Oppositions are first examined by the Chinese Trade Mark Office (hereinafter CTMO), and a request for re-examination may be made to the Trade Mark Review and Adjudication Board (hereinafter TRAB) against a CTMO decision; a party unhappy with the TRAB decision can choose to bring the case to the courts. In this sense, the entire opposition proceedings can be extremely lengthy, taking approximately 3-4 years from the initiation stage to the completion of the administrative litigation.
In order to speed up the registration cycle and reduce opposition filings made in bad faith, the revised TML places limits on the parties who may file oppositions whilst simplifying the procedures. Specifically speaking, Article 33 made clear regulations pertaining to who may file oppositions under what grounds, for instance it is only when the absolute grounds for refusal are involved that any entity is eligible to make an opposition filing against the mark. Hence any entity may initiate an opposition proceeding against the registration of a mark identical or similar to the name of a State, national flags, name of capital cities, etc.– in relation to the relative grounds of refusal such right to file oppositions is exclusively vested in the owners of a prior right and “interested parties. Hence, it is only the owners of prior rights and interested parties who may file opposition proceedings against the registration of a mark identical or similar to the registered marks of another.
Article 35 mandates the CTMO to determine within 12 months after the opposition filing on whether registration should be granted nonetheless. The stage of referring to the TRAB for review of opposition has also been deleted, hence a certificate of registration may be issued and the mark may be published once the CTMO decides the mark should be registered and dismisses the opposition. On the other hand, in cases where the opposition is deemed valid by the CTMO and that registration should not be granted, the party against which the opposition has been commenced may request for a review of the opposition from the TRAB.
4.Clear Time limits for Examinations
The revised CTML has, for the first time in history, set a statutory time limit for various procedures such as opposition and invalidation. This will effectively lead to improved efficiency in ensuring that registrations can be obtained in a timely manner. For an instance:
  1. A time limit of 9 months for the CTMO to handle trade mark applications and the TRAB to process a review on a rejection or invalidation on absolute grounds – an extension of 3 months may be granted in exceptional circumstances.
  2. A time limit of 12 months for a decision on an opposition or a review of opposition – an extension of 6 months may be granted in exceptional circumstances
  3. The time frame for the filing of trade mark renewal has been prolonged from 6 months to 1 years before the mark is due to expire, which affords a more generous period for mark holders to renew their registration.
Moreover, the CTML also regulates the communication procedures between the CTMO and the applicant in the examination process in providing a channel for the latter to make statements and amendments in connection to the trade mark application. This would mean both increased examination efficiency and decreased opposition proceedings.
5.A Refined Concept of Well-known Trade Marks
The legal concept of “well-known trade marks” was first brought into the Chinese trade mark law in 2001, and has since been gradually perfected. This legal regime has significantly improved the protection of well-known trade marks, particularly the well-known marks of foreign investors in
China. Nevertheless, in practice quite some problems arise  – a considerable number of companies 3
used “well-known trade mark” as an elegantly gilded sign to make their products sell better, some even included the words “well-known trade mark” prominently on the products’ packaging and they are put into frequent use in advertising and promotional activities.
The revised CTML attempts to set out in clear terms the protection and permitted uses of well-known trade marks. For an instance, Article 13 stipulates that with respect to a mark which is a reproduction, imitation or translation of a well-known mark which has not been registered in China and where the goods are identical or similar, the proprietor of the well-known mark may bring an action to ensure that no registration is to be granted and that the use of the offending mark is to be prohibited. For well-known marks with a Chinese registration, cross-class protection is also afforded and the proprietor of the well-known mark may object to the registration and use of all reproductions, imitations and translations of the mark even where the goods are not identical or dissimilar.
Article 14 provides for the test in determining well-known trade marks. Also, the CTMO, TRAB and the courts may sometimes, in adjudicating trade mark related disputes, determine whether a mark constitutes a well-known trade mark. Further, the display of the words “well-known trade marks”on products, their packaging and containers have been proscribed, together with the use of the term in advertising, exhibitions and other business activities.
6.What Constitutes Unfair Competition
The original CTML makes no provision of dispute resolution clauses in relation to disputes involving trade marks and company names. In China, registration of company names is a regional issue whereby registration of trade marks is on a national level – the distinction in between these two systems of registration offers infringers an opportunity to appropriate the mark of another, usually a mark with a certain level of prominence, as their company names. This undue competitive behaviour is becoming increasingly serious a problem in recent years.
As such, the revised CTML provides in Article 58 that, the use of a registered trade mark or unregistered well-known trade mark as a company name which causes confusion to the public would constitute unfair competition. The implication is that all proprietors of registered marks and unregistered well-known marks can now receive greater protection in the ambit of the Chinese Anti Unfair Competition Law.
 7.Types of Trade Mark Infringements
In relation to the types of activities which constitute an impeachment to the trade mark rights of another, the original CTML listed a number of infringing acts, for instance:
  1. The use of a trade mark that is identical with a registered trade mark in connection with the same goods without the authorization of the owner of the registered mark;
  2. The use of a trade mark that is similar to a registered trade mark in connection with the same goods, or that is identical with or similar to a registered trade mark in connection with the same or similar goods, without the authorization of the owner of the registered mark and which may cause public confusion;
  3. The selling of goods that violate the exclusive right to use a registered trade mark;
  4. The counterfeiting, or making without authorization, representations of another party’s registered trademark, or selling such representations;
  5. The alteration of the registered trade mark of another without authorization and the selling of goods bearing such an altered mark.
The revised CTML has added a new category of infringing activity to the list, i.e. facilitating or assisting others to infringe the exclusive right to use a registered trade mark is now also an infringement in itself. Previously, infringing behaviour of this sort could only be dealt with the principle of joint-tortfeasor in civil law, which has been proved difficult in some occasions to ascertain the tortious liability of the respective tortfeasors. Therefore, clear categorization of such behaviour as a trade mark infringement is certainly to be viewed as an enhanced protection to trade mark rights.
 8.Prior User Rights Illustrated
In pursuant to the frequent debate on whether third parties may have prior user rights in connection to a registered trade mark, Article 59 in the revised TML now offers an answer which its predecessor failed to provide. Article 59 adds to the CTML specific conditions where prior users may “properly use” registered trade marks of another:   where an identical or similar trade
mark has been used in connection with the same goods or similar goods by prior users before the registrant’s application, the prior users are entitled to continue the use of the mark within the original scope – the proprietor of the registered trade mark may, however, request the prior users to add proper signs for distinguishing purposes. In this sense, the legitimate rights of prior users are now under clearly defined protection.
 9.The Responsibility of Trade Mark Agencies
Since year 2003 which marks the removal of the requirement to obtain approval for the qualification of trade mark agency and trade mark agent, a boom in the trade mark agency business is clearly evident. Nevertheless, this largely unregulated area of rapid growth poses a numerous problems, for instance the compromised professionalism and expertise of personnel in trade mark agencies. Also, it has become a phenomenon for trade mark agencies to rush the registration of trade marks in bad faith.
The revised CTML raises the level of regulation on trade mark agencies. Article 19 mandates trade mark agencies to keep secret any confidential information and trade or business secrets, along with a duty explicitly inform the principal in accordance to the principles of good faith. Article 68 on the other hand, listed a variety of proscribed conducts, for instance the forging, altering or using forged or altered legal documents, seals or signatures during trade mark applications. Liability is also affixed to the soliciting of trade mark agency business by defaming another trade mark agencies or using of other unfair means to disturb the order of the trade mark agency market.
The  commission  of  the  aforesaid  offending  conducts  shall  entail  not  only administrative  sanctions                                                                                                                                                                                                     
such as warnings and fines, but the relevant SAIC authorities would also record the offending conduct in the credit files. In extreme circumstances, the CTMO and TRAB may even stop the agency from continuing to take part in the trade mark agency business and make publication of the decision.
 10.The Penalties and Damages in Trade Mark Infringements
In order to regulate the infringement of registered trade marks more effectively, the revised CTML increased both the scope and amount of administrative sanctions and civil compensation.
  1. Administrative Sanctions
Article 60 of the revised CTML has increased the maximum fine limit by stipulating that the administrative authority for SAIC may now impose a fine up to 5 times the amount of illegal earnings – it was only up to 3 times in its predecessor. Instead of RMB 100,000, a fine of RMB 250,000 may now be imposed on infringing activities generating no or less than RMB 50,000 of illicit earnings. Also, severe punishments may be accorded in relation to infringing activities where the circumstances are serious. For instance, a repeated infringement of more than two times within 5 years.
       B. Civil Compensation
Article 63 of the revised TML is seen to have imported the system of compensation, whichswitched the approach in determining the quantum of damages from “the amount of damages shall be the profit that the infringer has earned from the infringement…or the loss that the right owner has suffered from the infringement” to “if there is malicious infringement and the circumstances are serious enough, the amount may be more than one up to three times the aforesaid determined amount”. In addition, the cap of statutory damages has been lifted from RMB 500,000 to RMB 3,000,000 - to be awarded only in instances where the claimant could not adduce evidence to prove his loss suffered or the illegal profit gained by the infringer, the exact sum of which to be determined by the judges on a case to case basis. Article 63 also alleviates the burden of proof on part of right owners – where the right owner has adduced as much evidence as practically possible and where the accounts and information pertaining to the infringement are largely under the control of the infringing party, the courts may order the infringers to surrender such accounts and information. Should the infringer fails to produce, or produces falsified accounts and information, the courts may determine the amount of damages with reference to the claims and evidence of the right owner.