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Does Likelihood of Confusion need to be taken into account in determining trademark infringement?

Q1: Does Likelihood of Confusion need to be taken into account in determining trademark infringement?


A1: The revised Trademark Law introduces a confusion claim, for the first time in its history of legislation. Article 57.2 prohibits any party "without the consent of the owner of the registered trademark, to use a trademark that is similar to a registered trademark in relation to identical goods, or uses a trademark that is identical with or similar to a registered trademark in relation to similar goods, which can easily cause confusion."

Although the principle of confusion has been used in local practice for a long time, it is the first time to be formally written by law.  It will help the AIC or the court to fairly determine trademark infringement when the marks are similar and/or the goods are similar. This revision will make the infringement standards more analogous to other nation’s rules.

Q2: How much may be awarded as damages against the infringer by the Chinese court in a trademark infringement case?


A2: Punitive Damage: The revised Trademark Law proposes punitive damages and this is the first time for punitive damages to be introduced in the Chinese IP laws. This intends to punish severe trademark infringement on bad faith, and the damages will be 1 to 3 times of above normal damages. Furthermore, the heavier penalties from AIC will be posted on those who implement trademark infringement activities more than twice within five years.

Statutory Damage: Furthermore, the revised Trademark Law proposes to increase the cap of statutory damage from RMB 0.5 million to RMB 3 million (roughly US$500,000). It is a significant increase which may effectively restrain trademark infringement.

Q3: Multi-class trademark application is available in China?


A3: Yes. The Revised Trademark Law simplifies the registration procedure by allowing an applicant to submit one trademark application in multiple classes. The current practice only allows the filing of one trademark in one class and additional trademark applications are required for additional classes.


Q4: Can the term “Well-known Trademark” be used in advertising and other business activities?


A4: No. There has been controversy in the past years regarding the use of well-known trademarks in large advertising campaigns and publications in China, which encouraged local companies to compete for recognition of well-known trademarks instead of seek broader protection. In order to stop this departure from legal nature, the Supreme People’s Court, CTMO and TRAB have enacted strict rules and practices for granting well-known status in recent years. It is a significant move for the legislator to rule that the term “well-known mark” should not be used on goods, packages or containers of goods, or in advertising, exhibition or any other business activities, and the violation of the stipulation of the non-publicity clause is subject to monetary penalties.


Q5: Does the trademark owner bear heavy burden of proof in a trademark infringement case?


A5: The revised Trademark Law reasonably lightens the trademark owner’s burden of proof. If requested by the court, infringing parties must now provide documents to assist in the determination of damages. If the infringer refuses to provide relevant documents, the court can calculate damages based on the trademark owner’s evidence and claim. This newly permitted request could take some pressure off trademark owners by placing a burden of producing these documents on the infringer and forcing them to disclose documents or risk allowing the trademark owner’s evidence and claim to form the basis of the damages calculation.


Q6: What efforts have been made in the revised Trademark Law to restrain trademark squatting?


A6: The revised Trademark Law clearly prohibits the dealers, distributors, agents, and those who have business contacts with the brand owners to register the same/similar trademark on same/similar goods. The new law also introduces in first time the responsibilities of trademark agencies. Besides the confidential duties and other obligations, the new version also prohibits the registration of trademark in the name of trademark agency beyond its business scope. It is a positive improvement to owners of famous brands because some trademark agencies in the past years registered many famous trademarks on behalf of their anonymous clients with bad faith.


Q7: Can prior use defend against a later trademark registration by the third party? And its continued use is allowed?


A7: Yes. The right of prior use is introduced in the revised Trademark Law. A person/entity may continue to use its trademark even after an identical or similar trademark is registered in identical or similar goods/services, if it has used the trademark before the application date of the trademark and obtained certain influence. However, the continued use is limited to the original scope, and the trademark registrant may ask the prior user to attach alterations/designations to its trademark to differentiate the goods/services provided by the two parties.


Q8: Can sounds be registered as trademarks in China now?


A8: Yes. The sounds may now be registered as trademarks as long as they distinguish the mark owner’s goods/services. The revision could spur owners of sound marks in other jurisdictions to seek registrations in China.


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