What is the primary law governing trademarks in your jurisdiction?
The Trademark Law of the People’s Republic of China (the Trademark Law) is the primary law governing trademarks in China. The Trademark Law was published in 1982, and revised three times in 1993, 2001 and 2013.
The most recently revision of the Trademark Law was made on 23 April 2019, and entered in force on 1 November 2019. Six articles of the Trademark Law were amended in the new revision for three purposes.
First, there is a new article that the malicious trademark registration without intended use shall be rejected. This provision will apply to the examination of registration, opposition and invalidation.
Second, the increased article is to regulate the trademark agencies' behaviour, that is, the trademark agencies shall not accept the entrustment if they know or should know that the client has exhibited malicious registration behaviour. Once found out, they shall be investigated for responsibility according to law.
Third, there are new rules to punishment applicants and trademark agencies that apply for trademark registration and file litigation maliciously.
Besides the Trademark Law, Anti-Unfair Competition Law of the People’s Republic of China gives certain protection to unregistered trademarks if the logos enjoy a certain influence through long-term use in China.
Which agency is responsible for the grant and registration of pharmaceutical trademarks?
The Trademark Office of National Intellectual Property Administration is responsible for the registration and administration of trademarks throughout the country, including pharmaceutical trademarks.
Where a trademark application complies with the relevant provisions of this Law, the Trademark Office shall complete its examination within nine months of the acceptance of the application, and shall publish its preliminarily examination.
What are the relevant national and international regulatory bodies and requirements that need to be considered when clearing a pharmaceutical trademark?
A pharmaceutical trademark to file an application with the Trademark Office should have distinctive characteristic. The following marks are not permitted to be registered as a trademark: (1) names, devices, or designs that are generic to a class or group of goods; or (2) marks that merely indicate the quality, principal raw materials, function, use, weight, quantity or other features of the goods in respect of which the marks are used.
Besides, according to article 30 of the Trademark Law, ‘Where a trademark application does not complies with the relevant provisions in this Law or is identical with or similar to a registered trademark used in connection with the same or similar goods, its registration shall be refused by the Trademark Office after examination and the mark shall not be published’, so it is important and necessary to conduct a search in the registered trademark database of Trademark Office before clearing a pharmaceutical trademark. If there are identical or similar registered trademarks used in connection with the same or similar goods, the new application will be rejected.
In accordance with the Pharmaceutical Administration Law, the names of pharmaceuticals listed under the state pharmaceutical standards are the generic names of pharmaceuticals shall not be used as pharmaceutical trademarks.
What non-traditional trademarks are available in your jurisdiction and how are they registered?
Beside the traditional trademarks that are including any word, device, letter of the alphabet, number or any combination thereof, the trademarks comprised of three-dimensional symbol, colour combination or sound that identifies and distinguishes the goods of a natural person, legal person, or other organisation from those of others are available to register in China. The applicant applies to the Trademark Office.
There is no regulation on smell or odour trademarks in China.
Does your jurisdiction allow the registration of cannabis-derived products?
There is no explicit provision regarding the registration of cannabis-derived products in the Trademark Law. Medicines that may contain cannabis are allowed to register. But the use of the medicines must comply with the relevant administrative regulations on medicine.
What are the rules governing parallel imports of pharmaceutical goods?
At present, China’s current laws have no clear provisions relating to the trademark on the parallel import of pharmaceutical goods. In practice, the principle of international exhaustion of trademark rights is adopted in the judicial policy of parallel import of trademarks. That is, as long as the trademark owner or the licensed user agrees to put the goods marked with his trademark into the market, then the trademark owner and the licensed user lose their control over it and their rights have been exhausted. The trademark owner has no right to interfere in the resale of the commodities legally obtained by any person.
Strategies against parallel imports
What strategies are available to police and enforce against parallel imports?
Based on China’s economic situation and economic policies implemented, it is suggested that the principle of exhaustion of rights should be adopted in the field of intellectual property rights to allow the parallel import of pharmaceutical goods, which should be adjusted through the corresponding contract law.
Types of proceedings
What types of legal or administrative proceedings are available to enforce against infringing products?
With respect to the small-sized enterprises that only have a slight influence; the economical approach for a right holder may be to send a warning letter before going into any legal proceedings. An ideal warning letter should clarify the client’s IP rights, the infringer’s activities and request that the infringer stops the infringing activities immediately and provide an undertaking the same effect. It is suggested that this letter be sent after the notarisations are done for the purchase process and the infringing Web pages, since, given the relatively weak legal force of a C&D letter in China, the suspected infringer may choose to ignore the letter and continue their infringement more covertly, which will make evidence collection more difficult in the future. The C&D letter or any undertaking should be prepared carefully to avoid any unnecessary groundless threat issues.
If the infringer refuses to stop the infringement, the right holders could file trademark infringement or unfair competition lawsuit against the infringers before the court. Apart from stopping the infringement immediately, a favourable judgment will grant a certain amount of compensation to the right holder.
And the right holders could also file an Administration for Market Regulation (AMR) action based on the evidence obtained. An AMR action is a unique and effective tool in the Chinese trademark enforcement system. If the AMR accepts the complaint, a raid action will be conducted against infringers, whereby all infringing products will be confiscated and destroyed, and the infringers may be issued with a fine. Compared to other enforcement measures, the AMR action is a time and cost-efficient way to enforce the intellectual property rights against infringing activities.
Where the case is of a nature serious enough to constitute a crime, the case shall be investigated in accordance with Chinese criminal law.
Pursuant to article 213 of the Criminal Law, the penalty for use of an identical trademark on identical goods without the permission of the registered mark owner is a fine or a term of imprisonment up to a maximum of three years. However, in extreme cases, imprisonment of three to seven years (with a fine) is common.
According to an interpretation issued by the Supreme Court, the following circumstances are deemed to be serious enough to be investigated in accordance with criminal law:
the turnover from the illegal conduct is no less than 50,000 yuan, or the amount of illegal profit is no less than 30,000 yuan;
the infringer has counterfeited two or more registered marks, with the turnover from the illegal business operations amounting to no less than 30,000 yuan, or the amount of illegal profit gained is no less than 20,000; and other circumstances the consequences of which are serious.
From the above provisions and interpretations, it is clear that only acts of counterfeiting can constitute a criminal offence. Therefore, only when the infringer uses a trademark identical to the registered mark on the same type of goods will a criminal offence have been committed. An identical trademark used on similar goods or a similar mark used on the same type of goods are not seen as criminal offences.
In a case where a counterfeiter shall bear criminal liability, the Public Security Bureau (PSB) will be involved in the investigation and the counterfeiter will be prosecuted by public prosecutors before a criminal court.
According to the Supreme Court’s judicial interpretations, a trademark owner cannot initiate civil litigation collateral to criminal proceeding concurrently, but it can initiate civil litigation for damages separately after the criminal judicial reform takes place, the trademark owner is allowed to recover damages through reaching a criminal settlement agreement with the defendant during the criminal trial. If the trademark infringement does not constitute a crime, the PSB will return the case to the AIC, and the AIC will decide on a punishment after investigation.
What are the available remedies for infringement?
Compensation will be issued to the right holders by the court if the court considers that the actives constitute trademark infringement. The amount of damages for trademark infringement will be determined according to the actual losses suffered by the right holder from the infringement. Where it is difficult to determine the amount of actual losses, the amount of damages may be determined according to the benefits acquired by the infringer from the infringement. Where it is difficult to determine the right holder’s losses or the benefits acquired by the infringer, the amount of damages may be a reasonable multiple of the royalties. If the infringement is committed in bad faith with serious circumstances, the amount of damages shall be the amount, but not more than five times the amount, determined in the aforesaid method. The amount of damages shall include reasonable expenses of the right holder for stopping the infringement.
Where the right holder has made its best efforts to adduce evidence but the account books and materials related to infringement are mainly in the possession of the infringer, to determine the amount of damages, the court may order the infringer to provide the account books and materials; and if the infringer refuses to provide them or provides false ones, the court may determine the amount of damages by reference to the claims of and the evidence provided by the right holder.
Where it is difficult to determine the actual losses suffered by the right holder from the infringement, the profits acquired by the infringer from the infringement, or the royalties of the registered trademark, the court may award damages of not more than 5 million yuan according to the circumstances of the infringement.
If the infringing act causes certain harm to the reputation of the right holders, the court will also consider demanding the infringer publish a statement to eliminate the impact.
What border enforcement measures are available to halt the import and export of infringing goods?
According to the Customs Protection Regulations of Intellectual Property Right of PRC, an owner of Intellectual Property Rights can file recordals for his or her registered trademark rights in the Customs IP Recordal System, and then Customs will monitor the goods in transit and investigate whether they infringe the owner’s intellectual property rights.
If a proprietor records his or her IP right in the Customs system, there are generally four steps after any suspected infringing goods are discovered:
First, Customs will notify the proprietor if they discover any suspected goods that may infringe a recorded IP right.
Second, the proprietor then can submit a response to Customs within three working days to inform Customs if they wish to detain these goods or not. If the proprietor decides to detain the goods, it must pay the necessary bond at the same time.
Third, Customs will detain these suspected goods after they receive the request and bond.
Fourth, Customs will investigate whether these goods infringe the proprietor’s IP rights within 60 days, and then make a final decision. When Customs determines the suspected infringing goods in detention to be infringing goods, the goods shall be confiscated. Meanwhile, if an investigation by Customs has eliminated any suspicion of infringement, the proprietor can file trademark infringement litigation before the Court, otherwise, the goods will be released.
Online pharmacy regulation
What rules are in place to govern online pharmacies?
According to the Pharmaceutical Administration Law, pharmacies distributors shall abide by the relevant provisions of this Law on drug marketing when they sell drugs through the internet. Specific administrative measures shall be formulated by the pharmaceutical supervisory and administrative department under the State Council in conjunction with the competent health department under the State Council and other departments. Vaccines, blood products, narcotic drugs, psychotropic drugs, toxic drugs for medical use, radioactive drugs, precursor chemicals in the pharmaceutical category and other drugs under special administration of the state may not be sold online.
The third-party platform providers of drug online trading shall put on record in accordance with relevant provisions. The third-party platform providers shall, in accordance with the law, examine and verify the qualifications of the drug marketing licence holders and drug distributors that apply to enter the platform to ensure that they meet the statutory requirements, and manage the drug marketing activities occurring on the platform. If a third-party platform provider finds that they have committed any act in violation of the provisions of this law, it shall stop such act without delay and report it to the drug regulatory department of the local people’s government at county level; where a serious illegal act is found, the online trading platform shall be stopped immediately.
Furthermore, Regulations for the Supervision and Administration of Drug Trade (exposure draft) issued by AMR, Regulations for Supervision and Administration of Online Drug Sales issued by the National Medical Products Administration (exposure draft), are open to public comment. These regulations will be officially promulgated and executed in the future.
What are the most notable recent cases regarding the enforcement of pharmaceutical marks?
There was a trademark infringement case involving the sale of counterfeit drugs, and the defendants began selling fake Angong Niuhuang pills from Beijing Tong Ren Tang in early 2013, purchasing them at 35 yuan per pill and selling them at 70 to 80 yuan per pill. In 2014, the defendants were arrested by Guangzhou police during the transaction, and the value of the seized bezoar pills totalled more than 2.07 million yuan. Beijing Tongrentang filed a trademark infringement and claimed compensation of 3 million yuan.
The Guangzhou Intellectual Property Court concluded the case recently, saying that counterfeiting the Tongrentang trademark not only concerns the economic interests of the company, but also concerns the vital interests of the public and drug safety. Finally, the judge ordered the infringer to compensate Tongrentang company 1 million yuan.
Which bodies are responsible for oversight of pharmaceutical advertising in your jurisdiction (and what are their powers)?
According to the Advertisement Law, the Administration for Market Regulation is responsible for the oversight of pharmaceutical advertising and may exercise the following functions and powers when performing its duties of supervision and administration to:
conduct on-site inspections of places suspected of engaging in illegal advertising activities;
question the parties concerned or their legal representatives, main person-in-charge and other relevant personnel suspected of violating the law, and to make investigations into the units or individuals concerned;
require the parties suspected of violating the law to provide relevant supporting documents within a time limit;
consult and duplicate contracts, bills, account books, advertising works and other relevant materials related to suspected illegal advertisements;
seal up and detain the advertising articles, business tools, equipment and other property directly related to the suspected illegal advertisements; and
order suspension of the publication of suspected illegal advertisements that may cause serious consequences. The Administration for Market Regulation shall establish and improve the advertising monitoring system, improve the monitoring measures and promptly discover and punish illegal advertising acts in accordance with the law.
What specific rules are in place regarding the advertising of pharmaceutical products?
According to the Advertisement Law, an advertisement for medicine should not in any way contain the following: (1) any unscientific assertions or assurances in terms of efficiency or safety; (2) treatment efficiency or curative rate; (3) comparisons with other medicines in efficiency or safety; (4) use advertising spokespersons for recommendation and certification; and (5) other contents prohibited by laws and administrative regulations.
The contents of drug advertisements shall not be inconsistent with the specifications approved by the drug regulatory department under the State Council, and shall clearly indicate contraindications and adverse reactions. Advertisements for prescription drugs should clearly indicate that ‘this advertisement is for medical and pharmaceutical professionals only’ and advertisements for non-prescription drugs should clearly state ‘Please purchase and use the drugs according to the drug instructions or under the guidance of a pharmacist’. Advertisements for medical devices recommended for personal use should clearly state that ‘please read the product instructions carefully or purchase and use them under the guidance of medical personnel’. If the registration certificate of medical devices contains taboo contents and matters needing attention, the advertisement shall clearly indicate ‘see the specification for the taboo contents or matters needing attention.’
No advertising is allowed for special-purpose drugs such as anaesthetics, psychotropic drugs, toxic drugs and radioactive drugs.
According to Pharmaceutical Administration Law, an advertisement for a drug shall be approved by an advertisement examination organ appointed by the people’s government of the province, autonomous region or municipality directly under the central government where the advertiser is located. It shall not be published without approval. Drug advertisements shall not be recommended or certified in the names or images of state organs, scientific research units, academic institutions, trade associations or experts, scholars, doctors, pharmacists or patients. Non-drug advertisements must not involve the publicity of drugs.
Is generic substitution permitted in your jurisdiction?
The Office of the State Council of the People’s Republic of China issued the Opinions on Reforming and Improving the Supply Guarantee and Use Policy of Generic Drugs in 2018, which clearly stated that it would promote the alternative use of generic drugs. Promoting the substitution of generic drugs is of great significance in reducing the cost of medicines and ensuring their supply.
Which regulations govern generic substitution by pharmacists of brand-name drugs?
Health and other departments are responsible to strengthen drug administration, formulate policies and incentives to encourage the use of generic drugs and strengthen supervision of clinical drug use. The requirements for prescribing drugs according to the common name shall be strictly implemented. Except in special cases, the name of the product shall not appear on the prescription, which shall be specifically stipulated by the health department.
Key developments and future prospects
What were the key judicial, legislative, regulatory and policy developments of the past year in relation to the protection and enforcement of pharmaceutical trademarks? What are the prospects for future developments?
Pharmaceutical trademarks are governed by the Trademark Law. Though the Trademark Law were amended last year, the articles regarding pharmaceutical trademarks have not been changed. As drugs are in the vital interest of the public, as is drug safety, both legislation and the judiciary related to pharmaceutical trademarks are cautious and strict. And the trend is not set to change in the future.
Give the date on which the above information is accurate.
The New Trademark Law came into force on 1 November 2019.
The New Advertisement Law came into force as of 26 October 2018.
The New Pharmaceutical Administration Law came into force on 1 December
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