China plans to beef up trademark laws with latest draft amendment
New and bold expansion means trademark owners must review and prepare, say DLA Piper authors Horace Lam and Allen Xu
The Trademark Law of the People's Republic of China has been amended four times – in 1993, 2001, 2013 and 2019. Just three years after the 2019 amendment, the China National Intellectual Property Administration (CNIPA) decided to amend it again and released another draft amendment for public comment (the ‘Draft’) on January 13 this year.
In the Draft, the trademark law has expanded to 10 chapters and 101 articles. In particular, 23 new articles have been added, six new articles derived from existing articles and 45 articles have been substantially revised. Some of the amendments, such as the mandatory transfer of a hijacked registration and the submission of proof of use evidence every five years from the date of registration, are new and bold. Trademark owners should familiarise themselves and make necessary preparations in advance.
Some of the revisions that we believe are most noteworthy include:
Further efforts against trademark hijackings
As further efforts to tackle trademark hijackings, the Draft provides:
Some very specific circumstances of malicious trademark applications (Article 22), including lack of actual use intent, massive trademark hoarding and filing by unfair means. This is essentially a re-affirmation of the judicial practice combating trademark hijackings in the past three-to-five years.
Malicious trademark hijackings (as set out in Article 22) could be subject to penalties, including fines of up to ¥250,000 (roughly $40,000) and confiscation of illegal gains (Article 67). This provides legal consequences for trademark hijackings and would better deter professional trademark hijackers.
The CNIPA may order the transfer of a hijacking trademark registration in an invalidation action, upon the request of the petitioner (the real trademark owner) of the invalidation action (Articles 45 to 47). This is a new mechanism favourable to trademark owners whose prior-used mark was preempted by a hijacker. The mechanism can better harmonise trademark enforcement actions and prosecution actions as well as efficiently facilitate a trademark owner to tackle a hijacking registration and secure its own registration at the same time. It is a little unfortunate that the mechanism is only applicable in invalidation proceedings but not opposition proceedings.
“Optimise” trademark prosecution procedures
The Draft proposed some fundamental changes to the current trademark prosecution practice, including the following, among others:
An applicant is only allowed to file for or register one trademark on identical goods/services. Repeat filings for the same trademark on the same goods/services are prohibited with only a few exceptions, such as the prior registered mark needs to be slightly modified for commercial reasons; the prior registration has lapsed for non-renewal for reasons that cannot be arbitrated to the registrant, and so forth. Furthermore, an applicant shall not file an identical trademark for identical goods/services within one year after its prior registration is revoked, cancelled or invalidated based on either absolute or relative grounds (Article 21).
Under the current practice, in case of a trademark refusal, many trademark applicants would choose to refile their marks as a backup while clearing the obstacles. Once this new provision comes into effect, such a practice will no longer be possible. As a result, a clearance search and proactive actions would become more necessary than ever in order to clear any obstacles in advance. In addition, since refiling is no longer possible, an applicant would have to focus their efforts on the existing application and keep on appealing to keep the application alive until the obstacles are removed, which means the number of court appeals may sharply increase.
The opposition window will be reduced from three months to two months (Article 36). This means a trademark owner will need to monitor their marks more closely and make decisions on whether to oppose more quickly.
The review on opposition procedure is abolished, which means a dissatisfied applicant would no longer be able to file a review of an opposition with the CNIPA, but to directly file an appeal with the Beijing IP Court (Article 39). This will further shorten the time of the proceedings that a trademark can exhaust.
If a prior registration is revoked or cancelled (for being misleading, having a negative impact, misuse or failure to submit use status report) or not timely renewed (Article 50), then any identical or similar application filed within one year from the publication of the revocation or cancellation, would not be approved. These provisions are aimed at further reducing the number of trademark filings in China, especially those filed with no use intent or bad faith.
Attach higher importance to use requirements
For many years, China has been known as a first-to-file country which does not require any use evidence to be submitted, except for defending a non-use cancellation. Notably, the Draft attaches a higher importance to the actual use or committed use of a trademark, shifting towards a compromised position between ‘first to file’ and ‘first to use’. See the following provisions in the Draft:
- Use or commitment to use are required at the application stage (Article 5). This has fundamentally changed the current first-to-file system and, to some extent, mirrored the US trademark system.
- Trademark registrants are required to file statements of use every five years after the trademark is registered. The CNIPA would randomly inspect the authenticity of the use evidence and ask the registrant to supplement additional use evidence when necessary. Failure to submit use evidence will result in a revocation of the registration (Article 61). Given the large number of trademark filings in China, this seems like a good mechanism to clear out some zombie registrations. However, with the limited number of examiners vis-à-vis the large number of trademark filings every year, it would be interesting to see how the CNIPA will conduct such random inspections and the standard they will adopt with respect to the use evidence.
In addition, the Draft also provides much stricter requirements on trademark agencies and more serious penalties against infringers. Overall, the changes in the Draft are fundamental and reflect China’s continued efforts to strengthen the protection of intellectual property rights and crack down on IP infringements. On the other hand, some of the proposed changes are so significant that it remains to be seen how they will be implemented properly.
The full text is available here (Chinese only).
DLA Piper Partner Horace Lam is co-head of IPT Asia and co-country managing partner for China. He has more than 25 years of experience helping multinational and Chinese companies with all types of IP issues in China and overseas. He can be reached at email@example.com. Senior consultant Allen Xu is an associate in the firm's IP practice, based in Beijing. He can be reached at firstname.lastname@example.org .
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