Changes may be coming to China’s trademark law. On January 13, the China National Intellectual Property Association (“CNIPA”) published a draft amendment to the country’s trademark law and while it is the latest in a handful of revisions since the law went into effect in March 1983 (and still in the process of being examined by the government), it is, nonetheless, being touted as capable of having a considerable effect on trademark law in China, namely, in terms of curbing bad faith filings (which have previously been addressed), emphasizing the use requirement, and reducing “trademark hoarding” by banning repeat filings, if it is, in fact, adopted in its current form.
With the period for public comment closing on February 27, we take a look at some of the key points of the proposed draft of amendments to China’s Trademark Law …
New Types of Trademarks – The draft that was released for public comment stipulates that parties can file applications for registration for marks that identify and distinguish the origin of goods or services, including words, graphics, letters, numbers, three-dimensional signs, color combinations, sounds or other elements, as well as combinations of these elements. This provision expands the traditional types of trademarks in China and lays the legal foundation for the future registration of new types of trademarks, such as sound and smell trademarks.
Review Procedure & Opposition Timeline – Article 36 of the draft reduces the opposition period from three months to two. Meanwhile, Article 39 removes the review procedure entirely. In other words, “the only remedy for a trademark applicant whose application is rejected by the CNIPA in an opposition procedure would be to file an administrative appeal with the courts,” Hogan Lovells’ Helen Xia stated in a note. “This change aims to streamline the trademark procedure and improve efficiency.”
Statement of Use – Article 61 requires that a trademark registrant shall file a statement of use every five years after registration. In lieu of such a filing with the CNIPA or a response to a subsequent inquiry from the CNIPA, the registration will be deemed abandoned and the trademark office will cancel the registration. Xia states that the CNIPA may also “arrange random inspections of the authenticity of the declaration and may require the trademark owner to supplement the use evidence filed,” with the penalty for filing forged declarations being the cancellation of the registration.
Heightened Anti-Dilution Protections – “In the original provision on cross-category protection of well-known trademarks, the scope of protection is limited to well-known trademarks registered in China, and the person whose interests are damaged must be the ‘trademark registrant,’” according to Lee Tsai & Partners’ Joyce Wen and Teresa Huang. However, the new draft “extends the scope of protection to well-known trademark holders at home and abroad, which means that well-known trademarks can be protected on an across-category basis, regardless of whether the registration is granted or not, and whether the trademark rights are registered in China or not.” In this regard, it should be noted that the condition that the trademark concerned is known to the “relevant public” shall be satisfied for being protected as a well-known trademark.
Banning Repeat Filings – In an attempt to crack down on trademark “hoarding,” the draft puts in place a new Article that prohibits repeated registrations (Article 21), which states that “a trademark application shall not be the same as prior application filed or registration owned by the same applicant.” That same article also states that a party may not file an application for a mark that is the same as one that has been revoked, cancelled or invalidated within one year.
Additionally, “re-filing may no longer be that straightforward under the draft,” according to Bird & Bird LLP’s Dorie Wong, as it states that “a trademark applicant shall, in respect of the same goods or services, own only one registration when it comes to the same mark (Article 14).”
Fighting Bad-Faith Filings – The draft includes a list of circumstances in which the CNIPA and the courts will presume that an application is made in bad faith. These include: “(1) a large number of applications for trademark registration not for the purpose of use, which disturbs the order of trademark registration; (2) applying for trademark registration by deception or other improper means; (3) an application for registration of a trademark that is detrimental to the interests of the State, the social and public interests or has other major adverse effects.”
When this is read together with the Examination Opinions issued by CNIPA at the end of 2022 against some entities (including large domestic and international companies) with comparatively large filing volumes in one go, Xia states that “it seems that CNIPA is now sending the message that large filing volumes without use intentions (even if in good faith) would no longer be welcomed or accepted in the future.” Not without side effects, she says that “this provision, if it become[s] effective, risks impacting seriously on the good faith defensive filing strategies and refiling strategies (for the marks which are not put in use for three years) which are currently widely implemented by genuine brand owners in China.”
At the same time, Wen and Huang note that the draft states that marks “that are contrary to the core socialist values” or “harmful to the excellent traditional Chinese culture” and “the domestic geographical names known to the public” are prohibited from registration.
Mandatory Transfer – Article 45 provides for what Xia calls “a comparatively bold change” that would enable a “genuine trademark owner to request the transfer of the squatted [or bad-faith] trademark registration(s) under some circumstances (such as squatted marks that hijack well-known marks”), as opposed to the registrations at issue being invalidate, the latter of which is currently the procedure for dealing with squatted/bad-faith registrations.
“This would offer various benefits to the genuine trademark owner, including obtaining the earlier filing date of the squatted mark,” per Xia, who states that the draft adds that such as transfer will not be granted “if it could lead to market confusion or other adverse effects, and in such cases the mark would simply be invalidated.”
In addition, the draft (in Article 67) provides that in the event that the bad-faith registration circumstances are “serious,” a fine of not less than RMB50,000 but not more than RMB250,000 may be imposed, and any illegal gains shall be confiscated. In situation that are not deemed to be “serious, the trademark body “shall give a warning or impose a fine of not more than RMB50,000.”
Social Credit System Entry – Finally, the newly-created Article 87 states that “where an administrative penalty is imposed due to violation of the provisions of this Law, the department that imposed the penalty shall record it in the credit record and publicize it in accordance with the provisions of relevant laws and administrative regulations.” For instance, Shanghai Patent & Trademark Law Office, LLC stated in a note that “those who constitute bad-faith trademark applications will also be punished with warnings, fines and other penalties, and the punishment information will be incorporated into the national enterprise credit information publicity system and publicized to the public according to law.”
A notable inclusion, this appears to be a nod to China’s social credit system, stands to significant impact both native and non-native entities doing business in China.