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Amendments to the PRC Trademark Law to Combat Bad-faith Trademark Filings and Counterfeiters

 

by Angel Luo

“Several Provisions for Regulating Trademark Application and Registration (“Draft for Comments”)” on 12 February 2019

The National Intellectual Property Administration, PRC (“CNIPA”) recently published “Several Provisions for Regulating Application for Registration of Trademarks (Draft for Comments)” (referred as “Draft” ) on 12 February 2019, aiming to strengthen regulation of trademark applications and registrations, and regulate bad faith trademark application and registration that seriously disorder to the market economy and trademark administration.

According to the Draft Provision listed out in Annex 1 an exhausted list of situations which are regarded as “abnormal application” for trademark registrations:

  1. Applying for registration of a trademark which is a imitation of others’ trademarks that the relevant public are familiar with, in order to ride on other’s business reputations;
  2. Pre-emptively registering a trademark which is already used by others and has a certain influence in order to abstract other’s business reputation via improper means;
  3. Pre-emptively applying for registration of a trademark that is identical with or similar to the marks/logos/names over which others have prior rights, and such existence of prior rights are known or should be known to the applicant;
  4. Applying for registration of trademarks repeatedly with obvious improper purpose;
  5. Applying for a large number of trademark registrations within a short period of time which obviously exceeds a reasonable limit;
  6. Applying for trademark registrations without intentional actual use, where there is no actual need to obtain trademarks exclusive right for goods and services;
  7. Applying for trademark registrations which violating the principle of good faith, infringing the legitimate rights and interests of others or disordering the market; and
  8. Assisting other individuals or trademark agents to perform application for trademark registrations items 1 to 7 above-mentioned.

Activity which falls within the meaning of abnormal application above mentioned shall be regulated according to the Trademark law.

 

Amendments to the PRC Trademark Law - passed on 23 April 2019 and will come effect on 1 November 2019

On 23 April 2019, the Standing Committee of the National People’s Congress (“NPC”) approved several amendments of the PRC Trademark Law (“2019 Trademark Law”) mainly strengthening and regulating bad faith trademark filings (the above said Draft has indeed been primarily embodied into this amendments), which is the fourth amendment of the PRC Trademark Law after the first in 1993, the second in 2001 and the third in 2013.

The swift release of 2019 Trademark Law was unexpected after a short time of the publication of the Draft. This is very likely to facilitate the trade negotiations on one of the topics relating to the protection of Intellectual property between China and the United States.

 

The amendments are primarily in relation to three aspects and change of six Articles:

  • Crackdown on bad faith trademark filings/filers;
  • Penalties for acts of malicious trademark registration and litigation; and
  • Rises of the statutory compensation/damages for trademark infringement.

 

Articles of the PRC Trademark Law amended:

Article 4: this clause “an application for trademark registration filed in bad faith without any intention to use the trademark shall be rejected.” was newly added to Article 4.

Article 19: “trademark agents shall not represent the applicant to file application for trademark registration if the trademark agents know or should know that the trademark violates Article 4.”

Article 33: “any party considers an application for trademark registration violates Articles 4 and 19.4 may oppose it within the publication period.

Article 44: “a trademark registration that violates Articles 4 and 19.4 can be invalidated either by the TMO’s own initiative or an application for invalidation filed by any entity or individual.

Article 63.1: “if malicious trademark infringement is serious, punitive damages is up to 5 times of the actual damages.” It is 3 times under the current Trademark Law.

Article 63.3: “if it is difficult to affirm actual lost, benefits from the infringement, and license fee, the statutory damages is up to RM¥5 million (around US$750,000)”. It is up to RM¥3 million (around US$430,000) under the current PRC Trademark Law.

Article 63.4: this clause “upon request of trademark rights owner, the Courts shall order destruction of the products bearing counterfeit trademarks, materials and tools mainly used to manufacture the counterfeit products without any compensations; or under special circumstances, the said materials and tools are prohibited to entry into business channels without any compensations” was newly added as Article 63.4.

 

Remark

The amendments are of concern to practitioners and true brand owners, who would benefit from these amendments. Under the amendments, applications for trademark registration filed in bad faith without any intention to use the trademark shall be rejected for registration, which shows that CNIPA takes serious actions to prevent pirated trademarks from being registered at the beginning. Besides, the increase of statutory compensation for trademark infringement may act a deterrent to trademark squatters.

In earlier 2018, CNIPA did refuse many applications that were considered as copies/imitations of others’ prior reputable trademarks. For instance, one Chinese company named “Weihai Disu Trading Ltd filed more than 300 applications for marks that fully contains others’ prior reputable trademarks. For more information about please see http://sbj.saic.gov.cn/gzdt/201801/t20180112_271756.html.

The amendments aim to help rights holders take action against bad faith trademark filers and counterfeiters. Nevertheless, this mainly depends on how the authorities implement the amendments in real cases. We are expecting more specific guidance from the implementation of the Amended Trademark Law, which is in general to be released before the effective date of 1 November 2019.

For more reference to the trend of Chinese government, please see http://english.cnipa.gov.cn/news/officialinformation/1138487.htm, after the pass of the 2019 PRC Trademark Law, Shen Changyu, head of CNIPA, said “China will continue to refine its intellectual property laws and improve its punitive damages system” on 25 April 2019.

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