FAQ for New Chinese Trademark Law
Q1: Why the Standing Committee of the National People’s Congress revised the Trademark Law?
A1: To improve the efficiency of applying for or contesting trademark registrations, to provide greater protection for trademark owners, and to crack down on infringers and bad faith applications.
Q2: When will the New Trademark Law take into effect?
A2: The law goes into effect on May 1, 2014, but the practical import of the amendments will not become clear until they have been interpreted and implemented.
Q3: What are the significant revisions in the new law?
A3: 1) Strengthened protection against piracy; 2) Shortened trademark prosecution times; 3) Sound marks and multiple class trademark applications made available; 4) Strengthened well-known mark protection; 5) Narrowed legal standing for oppositions and invalidation; 6) A mark proceeding to registration if the opposition fails at the first level of adjudication at the Trademark Office; 7) Increased fines, compensation, and statutory damage against infringement.
Q4: What’s the time frame for trademark matters in the new law?
A4: Currently, the timeline for most trademark cases, notably oppositions, cancellations, and reviews and appeals before the Chinese Trademark Office and the Chinese Trademark Review and Adjudication Board, can be a lengthy one. The new Trademark Law sets out specific time limits for the completion of cases. After filing the new trademark application, the trademark office must then provide its preliminary determination on registrability within nine months. Similarly, in most cases, opposition and invalidation proceedings must be complete within 12 and nine months, respectively.
Q5: What’s the penalty for infringement in the new law?
A5: Chinese courts may now award significantly greater statutory damages in infringement cases ranging from RMB 500,000 to RMB3 million (roughly from US$80,000 to US$500,000). Statutory damages are awarded in the event the mark owner’s actual damages, the benefit to the infringer and the royalties for the mark are difficult to calculate. If the infringement is in bad faith and damages are determined according to actual damages, profits or royalties, then damages may be multiplied up to three times. Mark owners are also entitled to the expenses incurred to halt the infringing activity.
Q6: What’s the new practice on the well-known trademark in the new law?
A6: The owners of “well-known” trademarks may now prevent others from using the mark on dissimilar goods if the use would likely cause confusion and potentially prejudice the owners of the well-known mark. The government can only confer “well-known status” in certain situations. For instance, owners can request “well-known status” if they believe their rights have been violated in cases before the Trademark Office, the Trademark Review and Adjudication Board, or certain People’s Courts. Recognition as a well-known trademark depends on several factors, including the continuous use of the mark, breadth of publicity for the mark, protection of the mark and how well the relevant public knows the mark. However, owners of well-known marks cannot advertise that their marks are legally well-known, such as in a laudatory sense for marketing purposes
Q7: What’s the new procedure for opposition in the new law?
A7: Aside from registrability issues, the new Trademark Law no longer allows parties that are not prior right holders or interested parties to file oppositions or invalidations.
Oftentimes there is a need for third parties to file oppositions or invalidations. For example, to prevent retaliation, a party may wish to have oppositions or invalidations filed in the name of an unrelated third party in order to keep its identity confidential. Once the new Trademark Law comes into effect, that option will no longer be available.
An important change to the Trademark Law is that if an opposition fails at the Trademark Office level, which is the first level of review for an opposition, the mark would immediately proceed to registration. This is a drastic change from the current Trademark Law, where the opponent in such a situation may appeal to the Trademark Review and Adjudication Board and apply for judicial review at two levels of court.
Unless the Chinese Trademark Office examiners are willing to take up the fight against pirates, this change will fuel piracy as the registration of a pirated mark would embolden the pirates to hold legitimate right holders for ransom.
A key strategic point for foreign companies and their counsel to note is that this change elevates the importance of the evidence for supporting oppositions. It is very important that sufficient use, fame, and other evidence for supporting oppositions is produced for oppositions.
Q8: What’s the new practice on bad faith in the new law?
A8: The registration and use of a trademark must now be in good faith, otherwise the government may impose fines or, in some cases, refuse to consider future applications from the violator. The amendments specifically target certain practices of trademark agencies, companies that are retained to register marks on behalf of clients but are the subject of significant concerns regarding bad faith registrations. Namely, the amendments prohibit agents from registering a mark if they know, or should know, that their client is seeking to register the mark in bad faith. Agents also cannot register marks on their own behalf without their principal’s authorization and cannot register marks that are the same as, or similar to, unregistered marks owned by a third person with whom the agency has a relationship sufficient to make the agency aware of the third person’s mark.
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