According to the 10th Meeting of the Standing Committee on April 23, 2019, the new PRC Trademark Law has been formally implemented since November 1, 2019 (please see the new PRC Trademark Law at http://sbj.cnipa.gov.cn/zcfg/sbflfg/20191122_308740.html )
A. Reinforcing pressure on the rush-registrations in bad faith;
B. Explicitly raising compensation standard; and
C. Refining Article 63 of the PRC Trademark Law and stopping the counterfeits.
Articles Comparison
There are some significant points in the new PRC Trademark Law:
Rush-registrations without intention to use (Article 4)
Previously: Any natural person, legal person, or other organizations that needs to acquire the exclusive right to use a trademark in the production and operation activities shall file an application for trademark registration with the Trademark Office.
Provisions of the Law regarding goods marks apply to service marks.
Amended version: Any natural person, legal person, or other organizations that needs to acquire the exclusive right to use a trademark in the production and operation activities shall file an application for trademark registration with the Trademark Office. Application for registration of a malicious trademark that is not intended for use should be rejected.
Provisions of the Law regarding goods marks apply to service marks.
Registrations filed by IP Agents (Article 19.3)
Previously: The trademark agency shall apply for registered trademarks or handle any other trademark matters authorized by the clients based on the principle of integrity, honesty and credibility and in accordance with laws and administrative rules and regulations; and the trademark agency shall assume confidentiality obligations for trade secrets of the client obtained during the agency.
The trademark that the client applies for registration may not be registered in accordance with the Law, in which case the trademark agency shall explicitly notify the client.
The trademark agency knows or has already known that, where the client applies for a trademark that falls into Article 15 and Article 32 hereof, the trademark agency shall not accept the entrustment.
Except for the registration of trademarks on behalf of client, the trademark agency shall not apply for the registration of any other trademarks.
Amended version: The trademark agency shall apply for registered trademarks or handle any other trademark matters authorized by the clients based on the principle of integrity, honesty and credibility and in accordance with laws and administrative rules and regulations; and the trademark agency shall assume confidentiality obligations for trade secrets of the client obtained during the agency.
The trademark that the client applies for registration may not be registered in accordance with the Law, in which case the trademark agency shall explicitly notify the client.
The trademark agency knows or has already known that, where the client applies for a trademark that falls into Article 4, Article 15 and Article 32 hereof, the trademark agency shall not accept the entrustment.
Except for the registration of trademarks on behalf of client, the trademark agency shall not apply for the registration of any other trademarks.
Registrations from business partners, distributors, etc. (Article 33)
Previously: Where any prior right owner or interested person believes that provisions of Paragraphs 2 and 3 of Article 13, Article 15, Paragraph 1 of Article 16, Article 30, Article 31 or Article 32 of the Law have been breached or any person believes that the provisions of Article 10, Article 11 or Article 12 have been violated, it may raise an objection to the Trade Office against a trademark that has been published after a preliminary examination within three months from the date of announcement. When no objections have been raised upon expiration of such period, the application shall be approved for registration with issuance of a certificate of trademark registration and announcement of the trademark.
Amended version: Where any prior right owner or interested person believes that provisions of Paragraphs 2 and 3 of Article 13, Article 15, Paragraph 1 of Article 16, Article 30, Article 31 or Article 32 of the Law have been breached or any person believes that the provisions of Article 4, Article 10, Article 11 or Article 12 and Paragraph 4 of Article 19 have been violated, it may raise an objection to the Trade Office against a trademark that has been published after a preliminary examination within three months from the date of announcement. When no objections have been raised upon expiration of such period, the application shall be approved for registration with issuance of a certificate of trademark registration and announcement of the trademark.
Fraud registrations (Article 44.1)
Previously: The Trademark Office shall annul the registered trademark if it violates the provisions of Articles 10, 11, and 12 of the Law, or it was acquired by fraud or any other improper means. Other units or individuals may request the Trademark Review and Adjudication Board for a ruling to annul such a registered trademark.
Amended version: The CNIPA shall annul the registered trademark if it violates the provisions of Article 4, Article 10, Article 11, Article 12 and Paragraph 4 of Article 19 of the Law, or it was acquired by fraud or any other improper means. Other units or individuals may request the Trademark Review and Adjudication Board for a ruling to annul such a registered trademark.
Infringement and Compensation (Article 63)
Previously: The amount of compensation for infringing the exclusive right to use the trademark shall be determined based on the right owner's actual losses due to infringement or the infringer's actual interests obtained due to the same if the actual losses are hard to be determined, or may be determined based on times of the royalties of the registered trademark when both the losses or the infringer's actual interests obtained are hard to be determined. For seriously malicious infringement, the amount of compensation may be one time – three times of the aforesaid amount determined in light of the foregoing regulations. The amount of compensation shall include reasonable expenses of the right owner to prevent the infringement.
For the purpose of determining the amount of compensation, where the account books and information regarding the infringement are held by the infringer while the right owner has put to the proof as practical as possible, the People's Court may order the infringer submit such account books and information; in case the infringer refuses to submit the account books and information or submit a false version thereof, the People's Court may determine the amount of compensation with reference to the right owner's claim and proof.
Where it is hard to determine the right owner's actual losses due to infringement, the infringer's actual interests obtained due to the same or the royalties of the registered trademark, the People's Court shall, based on the actual circumstance of infringement, bring in a verdict of amount up to CNY3 million.
Amdended version:
The amount of compensation for infringing the exclusive right to use the trademark shall be determined based on the right owner's actual losses due to infringement or the infringer's actual interests obtained due to the same if the actual losses are hard to be determined, or may be determined based on times of the royalties of the registered trademark when both the losses or the infringer's actual interests obtained are hard to be determined. For seriously malicious infringement, the amount of compensation may be one time – five times of the aforesaid amount determined in light of the foregoing regulations. The amount of compensation shall include reasonable expenses of the right owner to prevent the infringement.
For the purpose of determining the amount of compensation, where the account books and information regarding the infringement are held by the infringer while the right owner has put to the proof as practical as possible, the People's Court may order the infringer submit such account books and information; in case the infringer refuses to submit the account books and information or submit a false version thereof, the People's Court may determine the amount of compensation with reference to the right owner's claim and proof.
Where it is hard to determine the right owner's actual losses due to infringement, the infringer's actual interests obtained due to the same or the royalties of the registered trademark, the People's Court shall, based on the actual circumstance of infringement, bring in a verdict of amount up to CNY 5 million.
Counterfeits and Compensation (Article 68)
Previously: If a trademark agency has any one of the following conducts, the administrative department for industry and commerce shall order the agency organization to rectify the same within a specified time, give corresponding warning and impose a fine of more than CNY10,000 up to CNY100,000; and give warnings to management in direct charges and the other persons in direct charge and impose a fine of more than CNY5,000 up to CNY50,000; those who have committed crimes shall be held for criminal responsibilities:
Forging/altering legal documents, seals or signatures or using forged/altered legal documents, seals or signatures during the process of handling trademark-related matters;
Soliciting agency business by slandering other trademark agencies or disturbing the trademark agency market order by other unjust means; and
Violating provisions of Paragraphs 3 and 4 of Article 19 of the Law.
Where a trademark agency has had conducts stipulated in the previous paragraph, it will be recorded by the administrative department for industry and commerce in the files of credits; in case of serious circumstances, the Trademark Office and the TRAB may cease accepting its agency business and make relevant announcement.
Where a trademark agency violates the principle of good faith and thus infringes the client's legal interests, such organization shall bear relevant civil liability according to law and be punished by the industry organization of trademark agency in accordance with the articles of association.
Amended version:
If a trademark agency has any one of the following conducts, the administrative department for industry and commerce shall order the agency organization to rectify the same within a specified time, give corresponding warning and impose a fine of more than CNY10,000 up to CNY100,000; and give warnings to management in direct charges and the other persons in direct charge and impose a fine of more than CNY5,000 up to CNY50,000; those who have committed crimes shall be held for criminal responsibilities:
Forging/altering legal documents, seals or signatures or using forged/altered legal documents, seals or signatures during the process of handling trademark-related matters;
Soliciting agency business by slandering other trademark agencies or disturbing the trademark agency market order by other unjust means; and
Violating provisions of Article 4, Paragraphs 3 and 4 of Article 19 of the Law.
Where a trademark agency has had conducts stipulated in the previous paragraph, it will be recorded by the administrative department for industry and commerce in the files of credits; in case of serious circumstances, the Trademark Office and the TRAB may cease accepting its agency business and make relevant announcement.
Where a trademark agency violates the principle of good faith and thus infringes the client's legal interests, such organization shall bear relevant civil liability according to law and be punished by the industry organization of trademark agency in accordance with the articles of association.
Examination Trends and Suggestions
Automatic Rejection
With the explosive growth of new trademark applications in mainland China (please see the statistics from 2000 through 2019), more and more Chinese entities and individuals are now paying more attention to trademark rights, even the profits of the possible transfer fee from the trademark applications.
- Amount of new trademark applications (2000-2019) Unit: per ten thousand
As a consequence, the squatters’ rush-registrations and the counterfeits have become the biggest trouble in the trade internationalization. Since 2017, the Chinese government had announced to attack the infringers and increase the amount of punishment. After that, SAIC and CNIPA set up the blacklist and link the malicious infringers and their individual credit consulting system. Even, the CNIPA and Court tend to strictly attack the malicious trademarks in actual examination by automatically citing some relative Articles of the PRC Trademark Law, such as Article 7 (principle of good faith) and Article 44.1 (improper means), etc. In the passing 2019, the trade war between China and America has been one of the most noticeable events in the worldwide. In the “trade war”, the counterfeits and infringements in the field of Intellectual Property are the sensitive and intensive part. Under this circumstance, the president, Mr. Xi Jinping had stressed the importance and firm determination in attacking infringements and counterfeits in many international or domestic conferences. Under this circumstance, the amendment of Article 4 has come out. And the legal spirit is advancing the action against infringement in the examination and authorizing the public rights to the CNIPA to automatically reject some malicious trademarks, in order to significantly decrease the real owners’ time and money in safeguard legal right, warn the infringers not to file marks in bad faith and create positive marketing circumstance.
Given that we have attended the discussion of the amendment of the PRC Trademark Law in around June last year, after that, we had filed some written requests with the CNIPA for their automatic rejections to give it a try. Currently, although the CNIPA did not make formal comments or issue any official notifications, we have seen the positive results that the CNIPA indeed automatically reject some later filed marks.
For your easy reference, the CNIPA tends to support one of the following situations in such automatic rejection in practice:
A. The squatters rush-register others’ prior used and influential marks in bad faith;
For example, Weihai Disu Trade Company has filed more than 300 marks; but most of their marks are copying or imitating others’ prior registered, prior used or reputable marks.
B. The squatters rush-register others’ prior rights, monopolize social resources or habitually rush-register others’ marks in obvious bad faith;
For example, Jinjiang Maikege Leidi Shoes and Clothing Co., Ltd. has filed the marks which are similar to the famous basketball star’s names, “Ekpe Udoh”, “Tracy McGrady”, etc.(rush-register others’ prior rights);
For example, Shanghai Juanchang Information and Technology Co., Ltd. and their affiliated company have filed around 5,000 marks. But most of their marks are just the names of the administrative division areas or cities; (monopolize social resources);
A Chinese individual, Mr. Wang has filed the marks, “美的公主” (similar to domestic electric appliance brand, “Midea”), “容声家宝” (similar to domestic electric appliance brand, “Ronshen”). After rejection, he filed the similar marks again (habitually rush-registration)
C. The squatters file plenty of marks, and their application behavior is in exceed of the normal requirements of actual use;
For example, Guangzhou Sisan Jiujiu Information and Technology Co., Ltd. has field 9,000 marks. There are 210 marks were opposed by various companies, and the CNIPA has rejected their remaining 39 marks in a lump.
Punishment for Trademark Infringement
The amendment of Chinese Trademark Law also strengthens the punishment for trademark infringement, and once again, strengthens the punishment for trademark agency who acts in bad faith.
We believe this amendment of Chinese Trademark Law will further protect the client’s trademark right and is helpful to protect the client from trademark infringement.
Ø Case: Punitive Damages
DEERE & COMPANY (“Plaintiff”) has prior registered the mark, “
” and “
” in various classes. However, John Deere (Beijing) Agriculture Machine Co., Ltd. (“Defendant”) produces and sells the industrial oil branded with the same or confusingly similar marks, and further rush-registers the marks, “
” in Class 4. Apart from this, the Defendant even uses the Plaintiff’s marks as their trade name in actual use. In 2016, the Plaintiff appealed with Beijing IP Court for trademark infringement and unfair competition litigation.
Beijing IP Court held, the marks, “”, “” and “” can be recognized as “well-known trademarks”, thus, the defendant’s behavior constitute infringement and unfair competition. Keeping the defendant’s behavior in mind, the Beijing IP Court required them to pay for CNY 500 million (punitive damages) and CNY 36,000 (reasonable expenses) to the plaintiff. Furthermore, the Beijing High Court has also sustained such judgment issued by Beijing IP Court, and the judgment has come into effect at this moment.
With the amendment of new PRC Trademark Law together with the attention from the president, it is hoped that the examination practice and the protection of legitimate rights and interests of the relevant rights holders will be better and better.
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