Interpreting China's New Trademark Law

Since May 1, 2014, an applicant has been able to submit one application to register a mark in multiple classes. Because multiclass applications are permitted, divisional applications are also allowed if the initial applications encounter problems. Division can be requested within 15 days of the receipt of the notification of partial rejection issued by China Trademark Office (CTMO) regarding partial goods or services. The application for unblocked goods or services generates a new application to be preliminarily published with a new filing number but reserved original filing date. However, the CTMO does not lower official fees for a multiclass application, namely, the CTMO still charges RMB 800 (US $131) per class. Because a multiclass application might mean higher chances of division, it seems wiser to still use the former single-class filing approach in most cases.

During examination, if the CTMO thinks it necessary for the applicant to explain or make an amendment to the content of the application, the trademark office can ask the applicant to make such an explanation or amendment within 15 days of the receipt of the notification, although the applicant's failure to do so does not result in the abandonment of its application.

The new amendment significantly sets up examination and review times for all trademark proceedings. (See Table 1 below.) The stipulation of timeframes is intended to further promote efficiency. As an example, the CTMO shall complete an examination of an application for registration within nine months of the receipt of the application documents. Where there is an opposition, the CTMO shall make a decision within 12 months of the date of expiration of the publication of the preliminarily approved mark. In special situations, an extension of six months can be approved. However, it is possible that the actual process in some cases could be a little longer.

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Appeals to the Trademark Review and Adjudication Board (TRAB) are available, but a strict 15-day non-extendable appeal deadline remains unchanged. Therefore, it is crucial to know the CTMO's decisions as early as possible and then lodge an appeal with the TRAB before the deadline if the appeal is confirmed. Detailed arguments and evidence may still be supplemented within three months of the date of filing the appeal.

An application for the renewal of the registration can be made within 12 months of the date of expiration; the old law stipulates six months. (The six-month grace period for renewal post-expiration has been retained.) The extension helps registrants to have renewal certificates timely issued to facilitate enforcement actions or renewals of related customs recordal registrations.

If a licensor licenses another party to use its registered trademark, the licensor shall arrange for recordal of the license to the CTMO. Chinese local administrative bodies more recognize or more easily believe the recordal certificate issued by the CTMO than the license contract. In addition, recordal is necessary in order to remit licensing fees outside China.

The new amendment stipulates in Civil Law Article 7 that 'when applying to register and using a mark, an applicant must abide by the principle of honesty and good faith.' This is looked at as a general principle.

Besides prohibiting an unauthorized registration and use of a trademark in the name of an agent or a representative of trademark holder, in Article 15 the new amendment adds: 'Where the application is for the registration of a trademark identical or similar to another party's unregistered trademark which was used earlier for the same or similar goods, and the applicant clearly knows another party's trademark due to non-agent/representative contract, business or other relations between the applicant and another party, the applicant's application for registration shall not be allowed if another party opposes it.' However, it is still unclear if the earlier use is restricted to within China's territory.

Under the old law, anyone could file an opposition with the CTMO to a preliminarily approved mark within three months of the date of publication. Under the new amendment, within the same time limit, anyone can still file an opposition based on absolute grounds, but only a prior right holder or a party with an interest can file the opposition. (See Table 2 below.) If the CTMO rejects an opposition, the opposing party cannot appeal against the CTMO's decision to the TRAB, but it can apply to the TRAB to invalidate the mark after it is registered, allowably on the basis of the same facts and grounds as the previous opposition. By contrast, if the CTMO allows an opposition, the applicant of the opposed mark can appeal against the CTMO's decision to the TRAB.

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Dispute Procedure

The dispute procedure under the old law is conceptually broad and vague. Under the new amendment, cancellation and invalidation are clearly separated. The grounds under which invalidation actions against registered marks can be initiated are similar to the opposition grounds mentioned above. The differences in invalidation procedures are: 1) based on absolute grounds, the CTMO can announce invalidation at anytime or anyone can file to the TRAB at anytime for its announcement of invalidation; and 2) based on other available grounds, a prior right holder or party with an interest can file to the TRAB for its announcement of invalidation within five years after registration. (Exception: There is no time limit for invalidation based on a bad-faith registration of another's well-known trademark.) But the invalidation of a registered mark does not have retroactive force on a court's rulings or mediation paper, on already made and implemented decisions of the Administration of Industry and Commerce, or on assignment or license contracts that have already been executed before the invalidation. However, a third party is entitled to compensation for loss incurred as a result of the registrant's bad faith.

Any entity or individual may apply to the CTMO to cancel a registered mark if the mark has become generic in respect to the designated goods, or if the mark has not been used for three consecutive years without proper excuses. Also, the CTMO can cancel a registered mark on its own initiative if the registrant, in the course of use of the registered mark, alters the registered mark or other registration matters and fails to make rectification with a prescribed limit of time.

The new amendment keeps the standard for evidence as high as before. What are newly added are:

• Recognition of well-known status of a trademark shall be based on the trademark holder's request when it thinks its right is infringed.
• The new amendment provides clarification on the venues for asserting well-known mark rights, including the CTMO, the TRAB and the relevant courts.
• The new amendment adds that manufacturers and dealers shall not use the wordings 'well-known mark' on goods, packages of goods or containers of goods, or in advertising, promotions exhibitions or other commercial activities. Violations are punishable with fines of RMB 100,000 (US $16,100). This is to prevent anyone from using a 'well-known mark' to mislead consumers into believing the quality of goods or services using the mark are well regarded in the country.

In the case of trademark infringement, the amount of damages is determined by the loss suffered by the rights holder, the profits earned by the infringer or the referred multiple of the license fee. The new amendment imposes punitive damages against willful infringement and stipulates that the amount of the punitive damages could triple the amount of damages determined in accordance with the methods mentioned above.

Under the old law, the cap of statutory compensation was RMB 500,000 (US $80,600). The new amendment raises the compensation ceiling for trademark infringement to RMB 3 million (US $484,000) ' six times the previous limit.

Where a rights holder has tried to provide evidence and the infringement-related accounts or other materials are held by the infringer, a court, in order to determine the amount of compensation, can order the infringer to provide those materials. If the infringer does not provide them or provides false information, the court can refer to the right holder's petition and evidence to determine the amount of compensation.

Where a holder of a registered trademark asks for compensation and the accused party argues non-use of the registered trademark, the court may ask the holder to provide evidence of actual use of the registered trademark during the preceding three years. If the holder cannot prove use in the preceding three years or cannot prove any other loss suffered, the accused party does not bear responsibility for compensation.

Xiang Gao is a partner and head of trademark department of Peksung Intellectual Property (www.peksung.com) in Beijing, China. He obtained a Bachelor of Law from Peking University in 1991 and a Master of Intellectual Property from Franklin Pierce Law Center in 1997. He began practicing trademark law in 1991. He can be reached at [email protected].

The Trademark Law of the People's Republic of China was adopted in 1982 and amendments made in 1993 and 2001. The third amendment to the Trademark Law was promulgated on Aug. 30, 2013, and became effective on May 1, 2014. New Regulations for the Implementation of the Trademark Law of the People's Republic of China were promulgated on April 29, 2014, and also became effective on May 1, 2014.

According to the new amendment, the registerable subject matter of trademarks are any signs, including words, devices, letters, numbers, 3-D signs, color combinations and sounds, etc., as well as combinations of the aforesaid elements. Sounds are newly added. According to the new regulations, it is necessary to provide a musical sample, explain how the sound mark is used, and describe the sound mark by using a staff or numbered musical notation with literal explanation, or by using literal representations if it cannot be described by using a staff or numbered musical notation.

China is a first-to-file country, so whoever registers a trademark first will have exclusive right to use it. Therefore, it is always recommended that trademark applications be filed as early as possible. It is more urgent for newly allowed types of marks because of the vacancy of prior right.

Since May 1, 2014, an applicant has been able to submit one application to register a mark in multiple classes. Because multiclass applications are permitted, divisional applications are also allowed if the initial applications encounter problems. Division can be requested within 15 days of the receipt of the notification of partial rejection issued by China Trademark Office (CTMO) regarding partial goods or services. The application for unblocked goods or services generates a new application to be preliminarily published with a new filing number but reserved original filing date. However, the CTMO does not lower official fees for a multiclass application, namely, the CTMO still charges RMB 800 (US $131) per class. Because a multiclass application might mean higher chances of division, it seems wiser to still use the former single-class filing approach in most cases.

During examination, if the CTMO thinks it necessary for the applicant to explain or make an amendment to the content of the application, the trademark office can ask the applicant to make such an explanation or amendment within 15 days of the receipt of the notification, although the applicant's failure to do so does not result in the abandonment of its application.

The new amendment significantly sets up examination and review times for all trademark proceedings. (See Table 1 below.) The stipulation of timeframes is intended to further promote efficiency. As an example, the CTMO shall complete an examination of an application for registration within nine months of the receipt of the application documents. Where there is an opposition, the CTMO shall make a decision within 12 months of the date of expiration of the publication of the preliminarily approved mark. In special situations, an extension of six months can be approved. However, it is possible that the actual process in some cases could be a little longer.

[IMGCAP(1)]

Appeals to the Trademark Review and Adjudication Board (TRAB) are available, but a strict 15-day non-extendable appeal deadline remains unchanged. Therefore, it is crucial to know the CTMO's decisions as early as possible and then lodge an appeal with the TRAB before the deadline if the appeal is confirmed. Detailed arguments and evidence may still be supplemented within three months of the date of filing the appeal.

An application for the renewal of the registration can be made within 12 months of the date of expiration; the old law stipulates six months. (The six-month grace period for renewal post-expiration has been retained.) The extension helps registrants to have renewal certificates timely issued to facilitate enforcement actions or renewals of related customs recordal registrations.

If a licensor licenses another party to use its registered trademark, the licensor shall arrange for recordal of the license to the CTMO. Chinese local administrative bodies more recognize or more easily believe the recordal certificate issued by the CTMO than the license contract. In addition, recordal is necessary in order to remit licensing fees outside China.

The new amendment stipulates in Civil Law Article 7 that 'when applying to register and using a mark, an applicant must abide by the principle of honesty and good faith.' This is looked at as a general principle.

Besides prohibiting an unauthorized registration and use of a trademark in the name of an agent or a representative of trademark holder, in Article 15 the new amendment adds: 'Where the application is for the registration of a trademark identical or similar to another party's unregistered trademark which was used earlier for the same or similar goods, and the applicant clearly knows another party's trademark due to non-agent/representative contract, business or other relations between the applicant and another party, the applicant's application for registration shall not be allowed if another party opposes it.' However, it is still unclear if the earlier use is restricted to within China's territory.

Under the old law, anyone could file an opposition with the CTMO to a preliminarily approved mark within three months of the date of publication. Under the new amendment, within the same time limit, anyone can still file an opposition based on absolute grounds, but only a prior right holder or a party with an interest can file the opposition. (See Table 2 below.) If the CTMO rejects an opposition, the opposing party cannot appeal against the CTMO's decision to the TRAB, but it can apply to the TRAB to invalidate the mark after it is registered, allowably on the basis of the same facts and grounds as the previous opposition. By contrast, if the CTMO allows an opposition, the applicant of the opposed mark can appeal against the CTMO's decision to the TRAB.

[IMGCAP(2)]

Dispute Procedure

The dispute procedure under the old law is conceptually broad and vague. Under the new amendment, cancellation and invalidation are clearly separated. The grounds under which invalidation actions against registered marks can be initiated are similar to the opposition grounds mentioned above. The differences in invalidation procedures are: 1) based on absolute grounds, the CTMO can announce invalidation at anytime or anyone can file to the TRAB at anytime for its announcement of invalidation; and 2) based on other available grounds, a prior right holder or party with an interest can file to the TRAB for its announcement of invalidation within five years after registration. (Exception: There is no time limit for invalidation based on a bad-faith registration of another's well-known trademark.) But the invalidation of a registered mark does not have retroactive force on a court's rulings or mediation paper, on already made and implemented decisions of the Administration of Industry and Commerce, or on assignment or license contracts that have already been executed before the invalidation. However, a third party is entitled to compensation for loss incurred as a result of the registrant's bad faith.

Any entity or individual may apply to the CTMO to cancel a registered mark if the mark has become generic in respect to the designated goods, or if the mark has not been used for three consecutive years without proper excuses. Also, the CTMO can cancel a registered mark on its own initiative if the registrant, in the course of use of the registered mark, alters the registered mark or other registration matters and fails to make rectification with a prescribed limit of time.

The new amendment keeps the standard for evidence as high as before. What are newly added are:

• Recognition of well-known status of a trademark shall be based on the trademark holder's request when it thinks its right is infringed.
• The new amendment provides clarification on the venues for asserting well-known mark rights, including the CTMO, the TRAB and the relevant courts.
• The new amendment adds that manufacturers and dealers shall not use the wordings 'well-known mark' on goods, packages of goods or containers of goods, or in advertising, promotions exhibitions or other commercial activities. Violations are punishable with fines of RMB 100,000 (US $16,100). This is to prevent anyone from using a 'well-known mark' to mislead consumers into believing the quality of goods or services using the mark are well regarded in the country.

In the case of trademark infringement, the amount of damages is determined by the loss suffered by the rights holder, the profits earned by the infringer or the referred multiple of the license fee. The new amendment imposes punitive damages against willful infringement and stipulates that the amount of the punitive damages could triple the amount of damages determined in accordance with the methods mentioned above.

Under the old law, the cap of statutory compensation was RMB 500,000 (US $80,600). The new amendment raises the compensation ceiling for trademark infringement to RMB 3 million (US $484,000) ' six times the previous limit.

Where a rights holder has tried to provide evidence and the infringement-related accounts or other materials are held by the infringer, a court, in order to determine the amount of compensation, can order the infringer to provide those materials. If the infringer does not provide them or provides false information, the court can refer to the right holder's petition and evidence to determine the amount of compensation.

Where a holder of a registered trademark asks for compensation and the accused party argues non-use of the registered trademark, the court may ask the holder to provide evidence of actual use of the registered trademark during the preceding three years. If the holder cannot prove use in the preceding three years or cannot prove any other loss suffered, the accused party does not bear responsibility for compensation.

Xiang Gao is a partner and head of trademark department of Peksung Intellectual Property (www.peksung.com) in Beijing, China. He obtained a Bachelor of Law from Peking University in 1991 and a Master of Intellectual Property from Franklin Pierce Law Center in 1997. He began practicing trademark law in 1991. He can be reached at [email protected].