Amendments to the Trademark Law of the People’s Republic of China

By Richard Hoffmann and Michelle Yan, ECOVIS Beijing

On August 30^th, 2013, the Standing Committee of the National People’s Congress revised the Trademark Law of the People’s Republic of China (“amendments” hereafter). The New law will be effective from May 1^st, 2014. However, we are still waiting for further interpretation and implementation rules in order to clearly understand the practical impact of the amendments.

Figure 1: Amended Trademark Law

The key revisions are listed below:

1.     Streamlining the trademark process, further facilitating the trademark registration

Registration of sound mark is allowed under the new law. However, the examination, review standard and procedures are under consideration at the present stage.

Multi-class applications are allowed under the new law. In the past, each application is only allowed to be filed in one class only. The applicant can now designate multiple classes in one application, rather than filing separate applications for each class of goods/services.

Opposition procedures are shortened. In case the CTMO is not in favor of the reasons for opposition, the trademark will be granted immediately other than reexamination.

The time limit for preliminary examination and trademark dispute case are explicitly provided in the new law, which will greatly shorten the time of trademark registration and make the application more predictable.

2.     Maintaining fair competition within the market

The usage of a mark as a business name, which refers to the use of a registered trademark or an unregistered well-known trademark as a business name or part of it, is confirmed that to be prohibited under the PRC Anti-unfair Competition Law.

Well-known mark status can only be conferred by the government in certain situations. For instance, owners can request “well-known” if they believe their rights have been violated in cases before the Trademark Office, the Trademark Review and Adjudication Board, or certain People’s Court.

The new law also stipulates trademark agency’s liability. When a trademark agency violates the principle of good faith and thus infringes the client’s or other people’s legal interests, it will bear the relevant civil liability according to the law and be punished by the guild of trademark agency in accordance with the articles of association.

3.     Enhancing the protection of the exclusive right of trademark use

The principle of Good faith is regulated in the new law for the first time. It will be used as miscellaneous provision in protecting trademark rights.

The new law also recognizes the prior use of trademarks. Trademark squatter is forbidden especially when the applicant and the person/entity who has already used the trademark but has not registered engage in a business relationship.

For seriously malicious infringement of trademark use, punitive damages will be granted.  The amount of compensation may be one time to three times of the right owner’s actual loss or the infringer’s actual interest.

The burden of proof of the infringer is aggravated under the new law. The infringer will be ordered to submit relevant accounting books and information, otherwise, the People’s court will determine the compensation with reference to the right owner’s claim and proof.

If the amount of compensation is hard to determine, the People’s Court will decide by discretion. And the amount can be 3 million RMB at maximum, which is much higher compared to 0.5 million before the amendment.

However, there is also a balance term to urge the right owner performing exclusive right of trademark use. If the trademark owner claims for compensation, trademark use for the past three years must be proved. Otherwise, the infringer challenged will bear no liability for compensation.

Ecovis Beijing is the trusted tax and legal advisor of several embassies and official institutions in China. It specializes in mid-sized international companies and focused on tax & legal advisory, accounting and auditing. Moreover, Ecovis was awarded the No. 1 auditing firm for mid-sized companies in Germany in 2013.If you’re interested in finding out more about tax and legal, don’t hesitate to sign up to our newsletter or give us a call +86 10-65616609 (ext 811/806) or contact us directly via Beijing@ecovis.com