IP Newsletter Issue 14 (2012-12-28)
 
The Description of Draft Amendment to the Trademark Law

On December 28, 2012, the Draft Amendments to the Trademark Law of the People’s Republic of China was first deliberated at the 30th session of the Standing Committee of the 11th National People's Congress (the "NPC").
The draft is mainly based on
a) the actual domestic demands in correspondence with the international treaties in which China participated;
b) improving specific systems for practical issues, which include obtaining registrations conveniently by applicants,standardizing the application and use of trademarks, maintaining the market order of fair competition, strengthening the protection for trademark rights and legal benefits of trademark holders;
c) keeping the trademark legal system with the adoption of amendment.
The important revisions are referred as below:
 
1. Improvement of the trademark opposition system
1.1 Restriction of the qualification of opponents and the reason of trademark oppositions
The draft revises the qualification of opponents from anyone to prior right holders or interest parties. In the mean time, the draft restricts the reason to the existence of potential injury to priority right. Other parties or parties with other reasons may apply for invalidation declaration after the approval of the trademark registration. This revision shall reduce the amount of trademark oppositions and impede malicious oppositions.
 
Relevant revised clause(s):
 
Article 30 is amended as Article 33 as:Prior right holders or interest parties may, within three months from the date of the publication, file an opposition to the Trademark Office against the trademark that has, after examination, been preliminarily approved where they consider this trademark stands in violation of the provisions of Article 13,Article 15, Paragraph 1 of Article 16,Article 30, Article 31 and Article 32 of this Law. If no opposition has been filed, the registration shall be approved, a certificate of trademark registration shall be issued and the trademark shall be published.
1.2 Simplification of the opposition procedure
The draft stipulates that the Trademark Office shall make decisions of approval or rejection in the end of opposition examination. For opposition denied, the opponents may apply for invalidation declaration after the trademark approval; if the opposition was sustained and the registration was not approved, the opposed party may apply for a review.
For those not satisfied with the decision of invalidation declaration or review, they may initiate a lawsuit.
 
Relevant revised clause(s):
 
Article 33 is amended as Article 35 as: Where an opposition is filed against the trademark that has, after examination, been preliminarily approved and published, the Trademark Office shall hear both the opponent and opposed party state facts and grounds and shall, after investigation and verification, make a decision of approval or rejection and notify both the opponent and opposed party in writing.
For approval decision of the Trademark Office, a certificate of trademark registration shall be issued and the trademark shall be published. Where the opponent is dissatisfied, he may apply for invalidation declaration with The Trademark Review and Adjudication Board after the trademark approval in accordance with the Article 44 of this Law.
Where the opposed party is not satisfied, it or he may, within thirty days from the date of receipt of the notification, apply for a review with the Trademark Review and Adjudication Board.
Where dissatisfied with the decision made by the Trademark Review and Adjudication Board, the opposed party may institute legal proceedings before a people's court within thirty days from the date of receipt of the decision. The people's court shall notify the opponent to appear as the third party in the legal proceeding.
 
2. Revisions in the procedure of trademark application
2.1 Adding types of registrable trademarks
The draft stipulates that a single color which has acquired distinctive features through use as well as voice can be registered as trademarks.
 
Relevant revised clause(s):
 
Article 8 is amended as: Any visible sign that is capable to distinguish the goods and services of a natural person, legal person and other organization from those of others, in particular, words, devices, letters, numerals, three-dimensional signs, combination of colors and voice, as well as any combination of such signs, shall be eligible for application for registration as trademark.
A single color used on goods or trade dress which has acquired distinctive features through use, shall be eligible for application for registration as trademark.
2.2 Definition of the format of “multi-classes applications for one trademark”
The draft stipulates that the applicant can file one trademark application in multiple classes.
 
Relevant revised clause(s):
 
Article 20 is amended as Article 22; one Paragraph is added as Paragraph 2: The applicant can file one trademark application in multiple classes. The specific measures shall be established by administrative authority for industry and commerce under the State Council.
2.3 Adding an system of written comments
The draft stipulates that the Trademark Office may require explanations or amendments from the applicant by delivering written comments to the applicant in the procedure of examination.
 
Relevant revised clause(s):
 
One Article is added as Article 29: If the Trademark Office considers the trademark application needs further explanations or amendments in the procedure, it may deliver a written comment and require explanations or amendments from the applicant within thirty days from the date of receipt of the written comment. If the applicant fails to meet the time limit for explanations or amendments or not does not affect the decision of examination of the Trademark Office.
3. Specification of the pattern of well-known trademark protection
The recognization of a well-known trademark is a confirmation of facts which is only effective in a disputed case. However, a number of well-known trademark holders advertise the recognization of a well-known trademark as the recognization of quality of their goods/services by the government, which will mislead consumers. Therefore, the case by case recognization of a well-known mark is specified in the draft.
 
Relevant revised clause(s):
 
One Paragraph is added in Article 14 as Paragraph 1: The recognization of a well-known trademark shall recognize as facts in trademark cases in accordance with request of the interested party.
 
4. Adding an Article to forbid rush-registrations of prior used trademarks
To avoid rush-registrations of others’ prior used trademarks, the draft forbids ones who had business contact with prior user before and knew perfectly well the trademark to rush-register this trademark.
 
Relevant revised clause(s):
 
One Paragraph is added in Article 15 as Paragraph 2: Where the applied trademark is identical with or similar to others’ prior used trademarks in respect of the same or similar goods, the applicant had contract or business contact with the other except from the proceeding paragraph and know perfectly well the trademark, the other files an opposition, the application for registration shall be refused.
 
5. Forbiddance of use of other’s trademark as trade name
In practices, there are ones taking free ride over others’ well-known brands by counterfeiting other’s famous trademark as a trade name. Their behavior constitutes unfair competition. The draft specifies this part by reference to the Anti-Unfair Competition Law.
 
Relevant revised clause(s):
 
One Article is added as Article 57: Where any person use others’ registered trademark or well-known trademark as a trade name, mislead the public and constitutes unfair competition shall be disposed accordance with Anti-Unfair Competition Law of the People's Republic of China.
 
6. Adding punitive compensation provisions and raising the compensation standards for trademark right protection
Facing the high expenses in safeguarding in the rights and interests, the draft brings in the punitive compensation provisions. These provisions stipulate that for an offender
who maliciously infringes a trademark right, resulting in severe consequences, the amount of infringement fines may be determined within one to three times of the losses caused to the right holder thereby, the benefits obtained by the offender therefrom or the loyalties of the registered trademark. Furthermore, if none of the amount of aforesaid three expenses may be determined after investigation, the upper limit of statutory compensation to be decided by courts is raised from CNY500,000 to CNY1,000,000.
 
Relevant revised clause(s):
 
Article 56 is amended as Article 62; Paragraph 1 is amended as: The amount of compensation for the damage caused by the infringement of the exclusive right to use a trademark shall be assessed on the basis of the losses which the infringee has suffered, the profits which the infringer has earned through the infringement, or reference to the loyalties of the registered trademark. Where the trademark is registered in bad faith or the infringement acts are serious, the amount of compensation may be assessed within one time to three times of above mentioned amount. The amount of compensation shall include the reasonable expenses for stopping such infringement paid by the infringee.
Where the trademark holder has tried to collect evidences while the book of accounts or data related to the infringement acts are mastered by the infringer, the people’s court may order the infringer to provide the book of accounts or data related to the infringement acts in assessing the amount of compensation. If he fails to do so or the book of accounts or data provided is false, the people’s court may assess the amount of compensation by reference to the trademark holder’s claim and the evidence he provided.
Paragraph 2 is amended as: If it is difficult to determine the losses which the infringee has suffered as referred in the proceeding paragraph, the profits which the  infringer has earned through infringement or the loyalties of the registered trademark, the people's court shall make a sentence of compensation under the amount of 1,000,000 in accordance with the seriousness of infringing acts.
One Paragraph is added as Paragraph 4: Where the accused infringer raise a defense under the pretext that the registered trademark holder did not use this registered trademark before the registered trademark holder assess the compensation, the people’s court may order the registered trademark holder to provide the evidence of actual use of the registered trademark in previous three years. If the registered trademark holder cannot prove the actual use of the registered trademark in previous three years or other losses suffered from the infringement acts, the accused infringer shall not be liable to compensate for the damage.