Trade Marks 2020

Last Updated February 26, 2020

China

Law and Practice

Authors



CCPIT Patent & Trademark Law Office is one of the oldest and largest full-service intellectual property law firms in China with 294 patent and trade-mark attorneys and 87 qualified attorneys-at-law. The firm provide consultation, prosecution, mediation, administrative enforcement and litigation services relating to patents, trade marks, copyrights, domain names, trade secrets, trade dress, unfair competition and other IP-related matters. Headquartered in Beijing, the firm has offices in New York, Tokyo, Munich, Madrid, Hong Kong, Guangzhou and Shanghai. CCPIT's trade mark attorneys have rich experience, and are familiar with Chinese and foreign law; many have studied abroad. The international trade mark department is responsible for trade mark prosecution and protection in China and has 30 trade mark professionals, while the domestic trade mark department serves mainly domestic clients and has ten trade mark professionals. After 60 years of development, the firm's trade mark attorneys have established an international network with IP professionals in China and abroad, and assist domestic and foreign enterprises and individuals in obtaining and enforcing trade mark rights all around the world.

In China’s legal system, there are different types of trade marks/service marks, for example, unregistered marks, registered marks, certification marks and collective marks.

According to Article 8 of the China Trademark Law, any sign capable of distinguishing the goods or services of a natural person, legal person or any other organisation from those of other persons – including words, devices, letters, numerals, three-dimensional signs, combination of colours, sounds, etc, as well as the combination of such signs – shall be eligible for application for registration as a trade mark.

Trade dress, company names and trade names are not stipulated types of trade marks in accordance with the China Trademark Law, but they can also be protected under certain circumstances; they are mainly protected by the Anti-unfair Competition Law.

All rights to such trade marks are based on statutory law, rather than case law.

By registering the trade mark with the China National Intellectual Property Administration (CNIPA), the trade mark-owner can enjoy exclusive trade-mark rights over the mark.

Besides registration, the prior use of a trade mark can also be protected in China. For example, a bona fide prior use of an unregistered mark can defend against the tort claim of infringement. An unregistered well-known trade mark can be protected against copy or imitation by a third party on similar goods/services, through oppositions or invalidations, as stipulated by the China Trademark Law. Furthermore, if a mark has prior use and has gained a certain reputation, then a rush-registration of the mark on similar goods/services by a third party is not allowed, in accordance with Article 32 of the China Trademark Law.

Trade dress is not a stipulated type of trade mark in China. If a trade mark is considered as lacking distinctiveness, by proving that the mark has acquired secondary meaning the mark can still be approved for registration.

Trade-mark applications shall be filed with the China National Intellectual Property Administration (CNIPA), the only trade mark register in China. The CNIPA has an online database which is available to the public.

It is normal and necessary to conduct a search for prior filed or registered trade marks, so that the applicant may take action against possible obstacles in advance of filing. The examination period is very short, and is decreasing, so it may be too late to take actions after the application is rejected by the CNIPA. Marks that are already in use but not yet filed with the CNIPA cannot be located through a trade mark search. The CNIPA can do a trade mark search for either word mark or device mark. The required information includes trade mark, class and goods/services description to be covered.

The formal requirements to register a trade mark include the following aspects:

  • name and address of the applicant;
  • clear trade mark sample in electronic form with high resolution;
  • class and goods/services items covered – the applicant should use the standard descriptions to avoid an official action;
  • power of attorney signed by the applicant, if the application is to be filed through a trade mark agent – according to the Chinese Trademark Law, a foreign applicant must entrust a legally established trade mark agency to file trade mark applications; and
  • a copy of the commercial registry (certificate of good standing) for a company applicant, or a copy of passport or ID card for an individual applicant.

Any natural person, legal person or other organisation can apply for trade mark registration with the CNIPA.

Any sign capable of distinguishing the goods or services of one natural person, legal person or any other organisation from those of other persons – including words, devices, letters, numerals, three-dimensional signs, combination of colours, sounds, etc, as well as the combination of such signs – shall be eligible for application for registration as a trade mark. At present, scent cannot be registered as a trade mark in China.

Apart from trade marks, company names, trade names and a well-known commodity’s specific name, packaging and decorating can also be protected, which is mainly stipulated by the Anti-unfair Competition Law.

The above-mentioned rights mainly arose from extensive and long-time use and promotion in China.

After an application for the registration of a trade mark is filed with the CNIPA, they conduct formal examination, especially with respect to the goods/services items. If the goods/services items do not meet standards, the CNIPA will issue notification of amendment and request the applicant to make a response within 30 days since receipt of the notification. If the application does meet the formal requirement, the CNIPA usually issue a filing receipt in approximately one month. However, if there is a notification of amendment, the CNIPA will only issue an official filing receipt after the amended goods/services can be accepted. Per current practice, there’s only one chance to amend the goods/services. If the goods/services after amendment are still unacceptable, the CNIPA may issue a non-acceptance notice to the application, without issuing another notification of amendment.

The CNIPA then conducts substantial examination. The legitimate examination limit for a new trade-mark application is six months. The CNIPA shall either refuse a mark or publish it within the examination limit. If there is no opposition within the three-month opposition period, the mark will be registered.

Since the amendment of the China Trademark Law on 1 May 2014, multi-class application is accepted by the CNIPA. There is no cost advantage for multi-class application compared with that for separate trade-mark applications. After a multi-class application is registered, it is not allowed to be divided. So, if there is an assignment for the mark, all classes for the multi-class application shall be assigned together. At the current stage, multi-class application is not suggested.

China does NOT allow for the registration of series marks, ie, a number of trade marks within the same application which resemble each other to some respect. Separate trade mark applications shall be filed with the CNIPA if the applicant wants to protect all of the series marks.

A trade mark will be refused by the CNIPA based on absolute grounds, such as descriptive character of the mark, lack of distinctiveness, or misleading character, malicious filing with no intent to use.

The absolute refusal grounds are mainly stipulated in Articles 4, 10, 11 and 12 of the China Trademark Law, as follows.

Article 4 states that natural persons, legal persons, or other organisations that need to obtain exclusive rights to their trademarks for their goods or services in the production and business operations shall apply to the CNIPA for trademark registration. An application for the registration of a malicious trademark not for the purpose of use shall be rejected.

Article 10 requires that the following signs shall not be used as trade marks:

    1. those identical with or similar to the State name, national flag, national emblem, national anthem, military flag, army emblem, military anthem, or decorations of the People's Republic of China, etc, and those identical with the name or symbol of a central government department of the State, or with the name of the particular place, or with the name or image of the symbolic building, where a central government department of the State is located;
    2. those identical with or similar to the State name, national flag, national emblem or military flag of a foreign country, etc, unless consent has been given by the government of the country;
    3. those identical with or similar to the name, flag or emblem of an international intergovernmental organisation, etc, unless consent has been given by the organisation or the public is not likely to be misled by such use;
    4. those identical with or similar to an official sign or hallmark indicating control and warranty, unless authorisation has been given;
    5. those identical with or similar to the name or symbol of the Red Cross or the Red Crescent;
    6. those having the nature of discrimination against any nationality;
    7. those having the nature of fraud, being liable to mislead the public about the characteristics of the goods such as the quality or the place of origin; or
    8. those detrimental to socialist morality or customs, or having other unhealthy influences.

The geographical name of an administrative division at or above the county level or a foreign geographical name well-known to the public shall not be used as a trade mark, unless the geographical name has another meaning or the geographical name is used as a component part of a collective mark or a certification mark; registered trade marks consisting of or containing geographical names shall continue to be valid.

In Article 11, the following signs shall not be registered as trade marks:

    1. signs which consist exclusively of the generic names, designs, or model numbers of the goods in respect of which the trade mark is used;
    2. signs which consist exclusively of direct indications of the quality, primary raw material, functions, intended purposes, weight, quantity or other characteristics of goods; or
    3. other signs which are devoid of any distinctive character.

Signs mentioned in Article 11 may be registered as trade marks if they have acquired distinctive character through use and are capable of being readily identified and distinguished.

Article 12 says that, where a three-dimensional sign is the subject of an application for registration of a trade mark, the trade mark shall not be registered if it consists exclusively of the shape which results from the nature of the goods themselves, the shape of goods which is necessary to obtain a technical result, or the shape which gives substantial value to the goods.

If the mark is refused based on absolute grounds, the applicant has right to file a refusal review with the Review Division of the CNIPA (Review Division) to present arguments and evidences.

If the mark is refused based on a lack of distinctiveness, to claim acquired distinctiveness the applicant should file solid evidence to show that the mark has acquired distinctiveness through use.

In the CNIPA’s ex officio examination, the CNIPA will not consider the existence of prior rights such as trade name right, copyright, name right, etc, in its examination. It only examines whether the mark shall be refused by absolute grounds and/or whether it is in conflict with a prior filed or registered similar trade mark in the name of another party.

If third parties find the applicant files a large number of malicious trade marks, they can file observations during the registration procedure or file oppositions after the publication of the mark.

Through the substantial examination by the CNIPA, if the mark is preliminarily approved, then the CNIPA will publish the mark in its Trademark Gazette.

During the three-month opposition period, any person can file an opposition against a published mark based on absolute grounds. Only a prior right-owner or interested party can file opposition against a published mark if it is based on a prior right. Evidence shall be filed along with the opposition to prove the qualification as prior right-owner or interested party.

After an application for registration of a trade mark is filed with the CNIPA, the applicant has right to withdraw the application or remove the registration. It is also allowed to delete goods. However, it is not allowed to change or amend the trade mark sample during the application process or after the mark is registered.

A trade mark can be assigned during the application process or after it is registered. For recordal of licence with the CNIPA, only a registered mark can be granted a licence.

China adopts the first-to-file principle. It is not required to use the mark before filing. China encourages the use of a registered trade mark. If a mark is not used for three consecutive years without justified reasons, it runs the risk of being cancelled. However, the cancellation is initiated by a third party, not on the CNIPA’s own initiative. The use of a trade mark, as referred to in the Trademark Law, means the use of the trade mark on goods, packages or containers of the goods or in trading documents, or the use of the trade mark in advertising, exhibition or any other business activities so as to distinguish the origin of goods.

If the applicant is dissatisfied with the refusal, it may file a review with the REVIEW DIVISION. During the process of review, the applicant may take some actions against the cited marks to increase the chance of success, such as non-use cancellation and letter of consent.

China adopts a first-to-file principle. It is not required to use the mark before filing.

China encourages the use of a registered trade mark. If a mark is not used for three consecutive years without justified reasons, it has the risk of being cancelled. But the cancellation is initiated by any third party, not on the CNIPA’s own initiative.

The use of a trade mark, as referred to in the Trademark Law, means the use of the trade mark on goods, packages or containers of the goods or in trading documents, or the use of the trade mark in advertising, exhibition or any other business activities so as to distinguish the origin of goods.

It is possible to divide a trade mark application. However, divisional application shall only be filed after a mark is partially refused by the CNIPA. The divisional application shall be filed with the CNIPA within 15 days after receipt of the refusal notification. The divisional application is irrevocable.

A registered mark is valid for ten years from the registration date. After the expiration date, the trade mark owner can still file a renewal within the grace period (ie, within six months after the expiry date). If no renewal is filed, even in the grace period, the mark will be invalid and the trade mark owner has no way to restore it. Instead, a new trade mark application will need to be filed if the trade mark owner still wants to protect the mark in China.

China sticks to the principle of territoriality. In accordance with the Trademark Law of the PRC, replacing a registered trade mark without the consent of the trade mark registrant and putting the goods into the market with a substituted trade mark shall be regarded as trade mark infringement.

Regarding parallel import, there is no specific stipulation in China’s trade mark law determining whether parallel import is a trade mark infringement or not.

China is one of the participating countries of the Madrid system.

There is no procedure for notification of amendment for international trade-mark registration designating China. If the goods/services are not accepted, the CNIPA will refuse the mark and there is no review on refusal based on non-acceptance of goods/services description. The applicant has to re-designate the international registration into China.

If the information is provided incorrectly due to negligence, such as a typographic error in the name or address of the applicant, the applicant can file a recordal of correction with the CNIPA to amend it.

However, if the information provided for trade-mark filing is by improper means, according to Article 44 of the China Trademark Law, where a trade mark registration violates the provisions of Articles 4, 10, 11, 12 and 19 (4) of this law, or the registration of a trade mark was acquired by fraud or any other improper means, the examination division of CNIPA shall invalidate the registration at issue. Any organisation or individual may request that the Review Division make a ruling to invalidate such a registered trade mark.

According to Article 24 of the China Trademark Law, where any word or device of a registered trade mark is to be altered, a new application shall be filed.

According to Article 63 of the Implementation Regulation of the China Trademark Law, a registered trade mark can be used on goods, package of goods, illustration book or other attachment. It can be denoted “registered trade mark” or ®.

The TM sign can used to indicate that the sign is used as a trade mark, but it is not a sign indicating that the mark is registered.

If a trade mark is assigned, the assignor and the assignee shall sign a written assignment contract. The assignment application shall be filed with the CNIPA. The assignment application can be filed against registered marks or marks in the process of application. All identical or similar marks in respect of identical or similar goods/services in the name of the assignor shall be assigned together.

The assignment of a mark shall be published after it has been approved by the CNIPA. The assignee shall have the exclusive right to use the trade mark from the date of publication.

For filing recordal of assignment of a trade mark in China, please note the following:

  • both the assignor and the assignee shall file the application together;
  • documents needed are application for assignment signed by both parties, powers of attorney signed by both parties, and commercial registry or other documents to show the qualification of both parties; and
  • usually, the assignment contract is not required by the CNIPA.

The assignment needs to be recorded with the CNIPA. If not, the assignment cannot be against bona fide third parties. After the approval of the assignment by the CNIPA, the CNIPA will publish the assignment in Trademark Gazette. Certificate of assignment will be issued by the CNIPA to both the assignor and the assignee.

Only after the approval of the CNIPA can the assignee be the trade mark owner in China. Before the approval of the CNIPA, the assignor remains the owner of the mark in China.

A trade mark is considered intellectual property. It can be subject to rights in rem, assigned by way of security, or be levied in execution.

Pledgor and pledgee shall conclude a written contract regarding the pledge of a trade mark which is assignable. Same or similar marks on the same or similar goods/services shall also be included in the pledge contract. Pledge registration shall be filed with the CNIPA.

For recordal purpose, the licence shall be filed against only registered marks, as required by the CNIPA.

For the licensing of unregistered marks, there’s no specific provision by the China Trademark Law. Usually, contract between the licensor and the licensee regarding an unregistered mark can also be deemed as valid.

All three types of licence – exclusive licence, non-exclusive licence, and sole licence – can be recorded.

The recordal of a licence shall be filed by the licensor. Documents needed for such recordal are application form, power of attorney, commercial registry of both the licensor and the licensee. A licence contract is not currently required by the CNIPA.

Information such as licensor, licensee, licence term, and licensed goods/services shall be clear for the recordal.

It takes the CNIPA about eight months to approve the licence and the official fee for recordal of a licence is CNY150 (approximately USD23).

The licence contract comes into effect after the execution of the licensor and the licensee. Recordal of licence with the CNIPA is required but not compulsory. A trade mark licence shall not be used against any bona fide third party, if no record is made.

A registered trade mark is valid for ten years in China. After renewal, it can be extended for another ten years. A trade mark licence shall be within the valid period of the registered trade mark. If a mark is renewed, a new recordal of a licence shall be filed with the CNIPA.

The licensed goods scope shall be within the registered scope. The licensor shall be prudent to limit the registered goods. Once the CNIPA deems the scope is enlarged, the licence recordal will be rejected.

The opposition can be filed based on absolute grounds, such as malicious filing with no purpose of use, lack of distinctiveness, being misleading as to the characteristics of the goods/services, having bad social influence, etc. The opposition can also be filed based on prior rights such as prior trade mark right, well-known trade mark, prior-use right, etc.

An opposition can be filed within three months after the publication of a trade mark, which is non-extendable. For international trade marks designating China, the deadline for filing the opposition is the last day of the third month since its publication by WIPO, which is non-extendable. Supplementary evidence can be filed within three months from the filing of opposition.

After filing of the opposition, the CNIPA usually issues an official filing receipt in approximately three months. It takes the CNIPA 12 months to make the decision on opposition. The term can be extended for another six months.

Any person can file the opposition based on absolute grounds. Only a prior right-owner or an interested party can file opposition based on prior rights.

A Chinese opponent can file the opposition either personally or through a trade mark agent recorded with the CNIPA. A foreign opponent must file opposition through a trade mark agent.

The official fee for filing an opposition is CNY500 (approximately USD76). The attorney fee is usually charged depending on the complexity of the case, working hours required, etc.

After an opposition is filed, the CNIPA will forward the opposition grounds and evidence to the opposed party and request the opposed party to make a response within 30 days from receipt of the notification. The opposed party has an additional three-month period to supplement evidence. There is no evidence-exchange procedure for opposition. The CNIPA will not forward the grounds and evidence filed by the opposed party to the opponent for counter arguments. Instead, the CNIPA will make a decision on opposition directly.

If the decision on opposition is made in favour of the opponent and the opposed mark is therefore refused for registration, the opposed party has the right to file a review on opposition with the Review Division within 15 days from receipt of the decision.

If the decision on opposition is made not in favour of the opponent, and the opposed mark is approved for registration, then the mark is registered. The opponent, instead of filing a review on opposition, has to file for an invalidation with the Review Division after the registration of the opposed mark.

The legitimate examination period for a review on opposition is 12 months; this can be extended for another six months.

A trade mark registrant could pursue infringement through legal proceedings in the people's court, or request the competent administration – administration for market regulation – to take raid actions against the infringer.

The protections on registered trade marks and unregistered trade marks are different in the PRC. Unregistered trade marks shall be recognised as "well-known" trade marks in order to be protected in accordance with the Trademark Law of the PRC.

The first instance of trade mark infringement cases is generally handled by a basic people’s court.

There are exceptions. One exception is that the first instance of major foreign-related intellectual property-related cases are handled by an intermediate people’s court. "Major foreign-related cases" refers to cases involving a large amount of subject-matter, cases with complicated circumstances, cases in which one side consists of a large number of parties, and other cases having a significant impact. The other exception is for cases involving the recognition of a well-known trade mark, which shall be handled by an intermediate people’s court. In the last year, special IP tribunals were formed in certain intermediate people’s courts to handle cases involving the recognition of a well-known trade mark. 

The litigation initiated against trade mark infringement shall be under the jurisdiction of the people's court at the place where the infringement act occurs, or at the place of domicile of the defendant. The "place where the infringement act occurs" includes both the place where the infringement act is committed and the place where the result of the infringement occurs.

As unregistered trade marks shall be recognised as "well-known" trade marks in order to be protected in accordance with the Trademark Law of the PRC, and most of the infringement actions are initiated based on registered trade marks in the PRC, the CNIPA’s decisions that have influence on the registration status of the registered trade marks will also have influence on infringement actions.

For example, if the CNIPA issues the decision to cancel a registered trade mark, the CNIPA shall publish the cancelled trade mark and the right to use such a registered trade mark exclusively shall be terminated from the date of publication. When the registered trade mark is cancelled, the infringement action might not be initiated based on this cancelled registered trade mark.

Another example is the CNIPA’s decision to declare invalidation of a registered trade mark. The CNIPA shall publish registered trade marks declared to be invalid, then the right to use such a registered trade mark exclusively shall be deemed void at the inception. The CNIPA’s decision to declare invalidation of a registered trade mark will not influence the judgment, ruling, or consent judgment made and enforced by a people's court in a trade mark infringement case, nor influence the decision made and enforced by the administration for market regulation before the trade mark is declared to be invalid. However, the trade mark registrant shall compensate others for losses caused by its bad faith.

The alleged infringer could initiate a lawsuit requesting confirmation of non-infringement. The lawsuit for confirmation of non-infringement could be filed by a specific party which is warned of infringement by an intellectual property right-holder who fails to initiate a lawsuit within a reasonable period.

The people's courts apply a "final after two trials" system. The first instance of trade mark infringement cases is generally handled by a basic people’s court; two exceptions are that the first instance of a major foreign-related intellectual property case and the case involving the recognition of a well-known trade mark are handled by an intermediate people’s court. The second instance is handled by the people’s court at the next highest level.

The party who deems that an effective judgment or ruling is erroneous may file a petition for retrial with the people's court at the next highest level.

Normally, there is no prerequisite to institute an infringement-related civil lawsuit. If the party concerned thinks that his or her legal right is infringed, he or she may sue. But according to the law, for an action to be instituted it must meet all of the following conditions:

  • the plaintiff is a citizen, legal person or any other organisation with a direct interest in the case;
  • there is a specific defendant;
  • there are specific claims, facts and reasons; and
  • the case is within the scope of civil actions accepted by the people's courts and under the jurisdiction of the people's court in which the action is instituted.

The amount of damage for trade mark infringement shall be assessed on the basis of the actual losses suffered by the right-holder because of the infringement; where it is difficult to determine the actual losses, the amount may be assessed on the basis of the profits the infringer has earned because of the infringement. Where it is difficult to determine the losses the right-holder has suffered or the profits the infringer has earned, the amount may be assessed by reference to the appropriate multiple of the amount of using the registered trade mark under a contractual licence. The amount of the damage shall also include the reasonable expenses of the right-holder incurred in stopping the infringing act. Where it is difficult to determine the losses suffered by the right-holder, the profits the infringer has earned and the fees of licensing a registered trade mark, the people's court shall grant a compensation not exceeding CNY5 million, according to the circumstances of the act of infringement.

The parties in trade mark litigation are not required to be represented by a lawyer. According to the regulations of the PRC, the parties may retain one or two persons as litigation representatives and the following persons may serve as a litigation representative:

  • a lawyer or legal service worker at the basic level;
  • a close relative or staff member of a party; and
  • a citizen recommended by the community or an entity related to a party or a citizen recommended by a social group related to a party.

The interim or preliminary injunctions are available. The application for injunctions could be filed with the court under the condition that the trade mark registrant or an interested party has evidence proving that another person is engaged in (or will soon engage in) an act of infringement of the former's exclusive right to use his or her registered trade mark and that (unless the act is stopped in a timely manner) irreparable injury will be caused to his or her legitimate rights and interests. The application could be filed with the competent court before instituting legal proceedings or in the middle of legal proceedings, requesting for measures prohibiting the act or preserving the assets in accordance with relevant laws.

The applicant shall provide security if ordered by the court. After accepting the application, the people's court must issue a ruling within 48 hours under urgent situations; if it rules to take a preliminary injunction/preservative measure, the measure shall be executed immediately. For application filed before instituting the legal proceedings, the applicant shall initiate an action or apply for arbitration in accordance with law within 30 days after the people's court takes the preliminary injunction/preservative, otherwise the people's court shall remove the measures.

In a trade mark infringement case, the defendant could initiate trade mark cancellation or invalidation action with the CNIPA against the registered trade mark involved in the trade mark dispute. Generally, the court will not suspend the case and wait for the result of the cancellation or invalidation action. In the meantime, the defendant could prepare evidences proving its "fair use" of the relevant trade mark, the "non-infringement defence" or the "prior use" defence.

In accordance with Article 61 of the Civil Procedure Law of the PRC, litigation representatives shall have the right to investigate and collect evidence and may consult materials related to the case. The scope of and measures for consulting materials related to a case shall be prescribed by the Supreme People's Court.

In accordance with Article 64 of the Civil Procedure Law of the PRC, a people's court shall investigate and collect evidence which a party and its litigation representative are unable to collect for some objective reasons and evidence which the people's court deems necessary for trying a case.

In accordance with Article 67 of the Civil Procedure Law of the PRC, a people's court shall have the authority to investigate and collect evidence from the relevant entities and individuals, who shall not refuse to co-operate with such investigation and evidence collection.

For an action to be initiated it must meet all of the following conditions:

  • the plaintiff is a citizen, legal person or any other organisation with a direct interest in the case;
  • there is a specific defendant;
  • there are specific claims, facts and reasons; and
  • the case is within the scope of civil actions accepted by the people's courts and under the jurisdiction of the people's court in which the action is initiated.

There are no special provisions for lawsuits in trade mark proceedings that differ from non-intellectual property proceedings. The trade mark infringement litigations are handled in accordance with the Civil Procedure Law of the PRC.

The plaintiff may relinquish or modify its claims. The defendant in a trade mark action can initiate a counterclaim in response.

Our legal system permits representative actions. If the parties on one side of a joint action are numerous, those parties may recommend a representative or representatives to participate in the action. The litigation conduct of such representatives shall bind all the parties represented; however, to modify or relinquish any claims, admit any claims of the opposing party or reach a settlement, such representatives must obtain consent from the parties represented.

If the subject-matter of an action for each party is of the same kind, the parties on one side of the action are numerous, but the exact number of such parties is uncertain when the action is initiated, the people's court may publish a notice to describe the case and claims and notify right-holders to register with the people's court within a certain period of time. The right-holders who have registered with the people's court may recommend a representative or representatives to participate in the litigation; if no representative is recommended, the people's court may determine a representative or representatives in consultation with the right-holders which have registered with the people's court.

The trade mark right might not be supported when there are “fair use” and “prior use” of trade marks, as described and explained in Article 59 of the Trade Mark Law.

If the registered trade mark contains the common name, design or model of goods, or directly shows  the quality, main raw materials, functions, uses, weight, quantity, and other features of goods, or it contains the geographical names, the trade mark owner does not have the right to prohibit the fair use thereof by another person.

If a three-dimensional registered trade mark comprises a shape resulting from the nature of the goods, a shape of the goods necessary for achieving a technical effect, or a shape to add substantive value to the goods, the trade mark owner shall have no right to prohibit the fair use thereof by another person.

If, before a trade mark registrant applies for trade mark registration, another party has used an identical or similar trade mark with a certain reputation on identical or similar goods, the trade mark-owner could not prohibit the party to continue to use the said trade mark within the original scope, but may require the party to add a distinctive mark on their goods.

The trade mark owner or the interested party can take action against infringement. The interested party can be the licensee for the mark concerned or the legitimate successor of the trade mark property rights.

An exclusive licensee can initiate a lawsuit with the court directly if the registered trade mark right is infringed. A sole licensee can file a lawsuit against an infringement with the trade mark owner, or file the lawsuit itself if the trade mark owner does not file. With clear authorisation from the trade mark owner, a non-exclusive licensee can also file a lawsuit against an infringement.

It is suggested that the trade mark-owner takes action to stop infringement after the registration of the trade mark, unless the trade mark owner has adequate evidence to prove that its trade mark could be recognised as a "well-known" unregistered trade mark by a people’s court in the PRC.

At least two factors must be taken into consideration in determining whether the use of a sign constitutes trade mark infringement, which are similarity of signs (trade marks) and similarity of goods. The following principles shall be followed when determining whether the signs are similar or not:

  • they should be judged according to the common perception of the relevant public;
  • they should not only be compared in overall appearance, but also in the main part of the marks – the objects should be compared in isolation; and
  • distinctiveness and reputation shall be taken into consideration.

Similar goods means the goods are similar in respect of function, usage, manufacturing section, sales channel and consuming target, etc, or the relevant consumers deem they have certain association and are likely to be confused. Similar services means the services are similar in respect of service purposes, content, manner, target, etc, or the relevant consumers deem they have certain associations and likely to be confused.

It is necessary to establish that the defendant has used the sign as a trade mark. In the Trademark Law of the PRC, it is regulated that "use of a trade mark" means using a trade mark on goods, on the packages or containers of goods, in the trading documents, or for advertisements, exhibitions, and other commercial activities for the purpose of identifying the origin of goods. Trade mark infringement acts are defined based on the "use of a trade mark". Therefore, it is necessary to establish that the sign is used as a trade mark. Nominative and descriptive use is a defence for "trade mark fair use".

There are procedural defences and substantive defences. For procedure defences, the alleged infringer could file opposition against jurisdiction, challenge the qualification of the plaintiff, prove the legitimate sources of the accused infringing goods, etc.

Substantive defences include “fair use” or “prior use” as regulated in Article 59 of the Trade Mark Law and discussed in 4.13 Restrictions on the Trade Mark Owner Asserting its Rights. The alleged infringer could also challenge the effectiveness of the trade mark right. As discussed in 4.3 Effect of Trade Mark Office Decisions, the status of the trade mark right might be influenced by the official decisions. If the trade mark is cancelled or invalidated during the litigation, it will influence the result of the litigation against the trade mark infringement.

Defences against trade mark infringement also include “non-infringement” defences, claiming both the trade marks and the goods involved are not identical or similarly. Besides, the alleged infringer could challenge the use status of the trade mark involved. If the trade mark registrant could not prove the use of the trade mark within three years before filing the infringement litigation, the alleged infringer will not bear the liability for compensation.

According to the regulations, the parties concerned may apply to the people's court to have one or two experts to appear in court to offer answers to the specialised questions relating to the case. If the people's court approves such applications, the relevant expenses shall be borne by the party that makes the application. The judges and parties concerned may interrogate the experts that appear in court. Upon the approval of the people's court, the experts – as applied for by each party concerned – may express their opinions on the issues concerned in the case. The persons with professional knowledge may inquire of the authenticators (ie, the qualified identification experts).

Generally speaking, the experts and/or survey regarding likelihood of confusion, secondary meaning, and the generic quality of the mark are considered as ordinary evidence. Other supporting evidences shall also be submitted.

It is clearly regulated in the Trademark Law of the PRC that the competent administration (the administration for market regulation) shall have the authority to investigate and punish according to the law any infringement upon the right to use a registered trade mark exclusively; those suspected of a crime shall be transferred to the judicial authority in a timely manner according to the law.

Regarding the administrative offence, the trade-mark registrant could file a complaint with the administration for market regulation, when trade mark infringement disputes arise. If the administration handling the dispute determines that an infringement is constituted, it shall:

  • order immediate cessation of infringement;
  • confiscate and destroy the infringing goods and the tools specifically used to manufacture the infringing goods and counterfeit representations of the registered trade mark; and
  • may impose a fine of not more than five times the illegal business revenues if the amount of illegal business revenues reaches CNY50,000, or a fine of not more than CNY250,000 if there is no illegal business revenue or the amount of illegal business revenues is less than CNY50,000.

Any person who commits trade mark infringement acts more than twice within five years or has other serious circumstances shall be given heavier punishment. If any party unknowingly sells goods that have infringed the exclusive right to use a registered trade mark and can prove that the goods were obtained from a legitimate channel and can indicate the suppliers of the goods, the administration for market regulation shall order them to stop selling the infringed goods.

Regarding the criminal offence, it includes the following three circumstances:

  • when without being licensed by the trade mark-owner, a party uses a trade mark identical with the registered trade mark on identical goods, if any crime is constituted, the party shall be subject to criminal liability according to the law, in addition to compensating the victim for losses;
  • when a party forges or manufactures without authorisation the labels of a registered trade mark of another party or sells the labels of a registered trade mark forged or manufactured without authorisation, if any crime is constituted, the party shall be subject to criminal liability according to the law, in addition to compensating the victim for losses; and
  • when a party knowingly sells goods on which a registered trade mark is falsely used, if any crime is constituted, the party shall be subject to criminal liability according to the law, in addition to compensating the victim for losses.

The Chinese legal system provides for customs seizure of counterfeits. China started to adopt customs protection of intellectual property rights (IPRs) in 1995. For the purpose of customs protection, the owner of IPRs – which might include trade mark, patent and copyright being already approved, granted or registered by competent state authorities – should record its IPRs with the China General Administration of Customs on the basis of a certificate for each recordation. If a designated IPR has been successfully recorded with the China General Administration of Customs, the information of the IPR will be added to the official computer system of the China General Administration of Customs to be shared by every customs office within Chinese territory. When customs officers carry out routine inspection on imported or exported goods, they will pay more attention to the goods bearing the recorded IPRs. If customs suspect some goods have infringed the recorded IPR, it will notify the IPR owner and, upon application filed by the IPR owner with remittance of the required security bond, customs will detain the suspected goods. The security bond will be based on the value of the suspected goods.

Where a registered trade mark has no effectiveness or has a bad social influence, or the registration of a trade mark has been acquired by fraud or any other unfair means, the CNIPA shall declare the registered trade mark invalid; any other organisation or individual may request the CNIPA to declare such a registered trade mark invalid.

Where a registered trade mark is a copy, imitation or translation of a prior well-known trade mark, or it has a misleading geographical indication, or the registrant is an agent or has another relationship with the true owner of the mark, or the registered mark is similar to a prior registered or applied mark on similar goods/services, or it is an infringement of another’s prior right or a copy of another’s mark which has been used and has gained certain reputation, the earlier right-owners or any interested party may, within five years from the date of registration, request the CNIPA to declare the registered trade mark invalid. Where the registration has been made in bad faith, the owner of a well-known trade mark shall not be bound by the five-year time limit.

Where a trade mark registrant, in using a registered trade mark, alters the registered trade mark, or changes the name or address of the owner of a registered trade mark, or other matters contained in the registration, without the prescribed procedure, the CNIPA shall order it to make corrections within a specified time-limit, or the registered trade mark can be cancelled by the CNIPA, if no corrections are made at the expiry of the specified time-limit. Where a registered trade mark has become a generic name for its designated goods, or has not been used for an uninterrupted period of three years without justified reasons, any entity or individual may request the CNIPA to cancel the registered trade mark.

If the registration is obtained with improper means, anyone can file revocation.

Revocation or cancellation can only be brought before the Examination Division or REVIEW DIVISION of the CNIPA. If dissatisfied with the decision on such a revocation/cancellation of the REVIEW DIVISION, an administrative litigation can be filed with the Beijing Intellectual Property Court.

Regarding non-use cancellation, anyone can file it after one trade mark has been registered for more than three years.

Regarding the revocation/cancellation based on absolute grounds, there is no time limit within which the revocation/cancellation must be filed.

If the revocation/cancellation is filed based on prior rights, etc, as described in 6.1 Remedies and Reasons for Revocation/Cancellation, then the revocation/cancellation shall be filed within five years since registration of the disputed mark.

However, if the mark was filed in bad faith, a well-known trade mark owner is not bound by the five-year limit.

If the revocation/cancellation is based on absolute grounds, any person can file the revocation with the Review Division. If the revocation is based on relevant grounds (prior well-known trade-mark right, prior similar marks, other prior rights, etc), only the prior right-owner or an interested party has right to file the revocation.

Regarding the cancellation based on non-use, anyone can file it with no need to provide any evidence.

A revocation/cancellation can be filed against part of the goods/services registered.

After a mark is registered, it is not allowed to be amended. Thus, if a mark is under a revocation/cancellation proceeding, it is not possible to amend the mark. But the applicant/registrant has the right to delete some items of goods/services.

Usually, revocation/cancellation is examined case-by-case. For revocation with the same nature (the same application, same registrant of the disputed mark, same supporting evidence) and filed at the same time, it is possible to request the examiner to examine them together. However, decisions are still made case-by-case.

Revocation/cancellation and infringement are not heard together. The court for infringement has discretion to determine whether the court will wait for the decision on revocation/cancellation.

There are no special provisions for lawsuits in trade mark proceedings that differ from non-intellectual property proceedings. Trade mark infringement litigations are handled in accordance with the Civil Procedure Law of the PRC.

The case is determined by a collegial bench. When a people's court tries a first-instance civil case, a collegial bench consisting of judges and jurors, or consisting of judges only, shall be formed. There must be an odd number of members of a collegial bench. Civil cases tried under summary procedure are tried by a sole judge.

Generally speaking, the parties do not have any influence on who is the decision-maker. However, under certain circumstances, the parties could request disqualification of the judge, court clerk, interpreters, identification or evaluation expert, and surveyor, either verbally or in writing.

The defendant could file an application for mediation and both sides of a civil action may reach a settlement themselves.

When a people's court conducts mediation, it may be conducted by one judge or by the collegial bench; mediation shall be conducted on the spot, as much as possible. When a mediation agreement is reached, the people's court shall prepare a consent judgment. A consent judgment shall state the claims, facts of the case and results of mediation. The judges and court clerk shall affix their signatures and the people's court shall affix its seal to a consent judgment, which shall be served on both sides. Once a consent judgment is signed by both sides, it becomes legally binding.

According to the law, if the current cases depend on the results of the trial of another case which has not been concluded, the current cases shall be suspended.

In the meantime, the collegial bench of the current proceeding has the right to decide whether to suspend the current case to wait for the result of another proceeding.

The court could rule that the infringer bears civil liabilities, including stopping the infringement, eliminating negative influence, compensating for the losses, etc. The amount of damages for trade mark infringement shall be determined according to the actual losses suffered by the trade mark proprietor. When it is difficult to determine the actual losses, the amount of damages may be assessed on the basis of the profits the infringer has earned because of the infringement. When it is difficult to determine the trade mark proprietor's losses or the profits the infringer has earned, the amount of damages may be assessed by reference to the appropriate multiple of the amount of using the registered trade mark under a contractual licence. When it is difficult to determine the actual losses of the trade mark proprietor, the profits the infringer has earned and the fees of licensing a registered trade mark, a people's court may award damages of no more than CNY5 million, according to the circumstances of the infringement.

The collegial bench has discretion in ordering the remedies.

Generally speaking, if a defendant prevails in the trade mark infringement case, the court will declare that the defendant is not guilty of trade mark infringement. If the defendant would like to request compensation from the plaintiff, the defendant shall file a counterclaim or initiate new litigation for compensation.

Remedies for different types of trade marks are generally the same.

The appellate procedure of a trade mark proceeding is generally the same as the appellate procedure for other civil proceedings.

If any party is not satisfied with the judgment of the first instance, it shall have the right to file an appeal with the people's court at the next highest level within 15 days from the date of service of the written judgment. The original trial people's court shall, within five days after receiving a written appeal, serve the copies of the written appeal on the opposing parties, and the opposing parties shall, within 15 days after receiving the copies, submit their written statements of defence. The original trial people's court shall, within five days after receiving the written statements of defence, serve the copies of the written statements of defence on the appellant. After receiving both the written appeal and the written statements of defence, the original trial people's court shall, within five days, transfer them along with the entire case file and evidence to the people's court of second instance.

The people's court of second instance shall try a case around the party's claims in appeal. Where a party does not file claims, the people's court shall not try the case, unless the first-instance judgment violates prohibitive provisions in laws or damages the interests of the state, public interests, or the legitimate rights and interests of other persons.

According to the Civil Procedure Law of the People's Republic of China, a people's court shall complete the trial of an appeal case against a judgment within three months after the appeal is docketed. Any extension of the aforesaid period under special circumstances shall be subject to the approval of the chief justice of the people's court.

A people's court shall issue a final ruling for an appeal case against a ruling within 30 days after the appeal is docketed.

There is no clear law or regulation against trade mark dilution in the PRC. While well-known trade marks may obtain a certain degree of protection against trade mark dilution, both in trade mark registration and in trade- mark infringement cases.

According to the Trademark Law of the PRC, if a trade mark for registration to be used on different or dissimilar goods is a copy, imitation, or translation of a well-known trade mark of another party which has been registered in China, misleads the public, and may cause damage to the interests of the registrant of the well-known trade mark, it shall not be registered and shall be prohibited from use.

Marks that are famous outside China but are not yet in use or registered in China cannot be protected under the Trademark Law of the PRC.

The special rules with regard to geographic indicators are included in both Trademark Law and the Implementing Regulations of the Trademark Law.

If a trade mark contains a geographic indication of the goods but the goods do not originate from the region indicated thereon, thus misleading the public, the trade mark shall not be registered and shall be prohibited from use; however, those that have been registered in good faith shall continue to be valid. Geographic indicators may be registered upon application as certification marks or collective marks.

Regulations for the Registration and Administration of Collective Trademarks and Certification Marks describes the special rules with regard to certificate marks in detail.

There is no special regulation on using one’s own surname (or name) as a mark. It is regulated that in certain domains using the name of a public figure to file a trade-mark application would be regarded as “having any other adverse effect” – which is prohibited from registration in accordance with Article 10 of the Trademark Law.

The costs for investigations into the possible defendant, as well as the costs for evidence collecting – especially for the notarised preservation of the relevant evidences – are the costs typically arising before filing a lawsuit.

The typical costs include investigations fees, notarisation fees, translation fees paid to the qualified translation firm (if documents in foreign languages are involved), attorney fees and expenses, court fees.

The plaintiff could request that the defendant shall bear the reasonable costs in the litigation. If the plaintiff wins the case, the judge could request the defendant to bear a certain amount of the reasonable costs, including the attorneys’ fees. It is at the judge’s discretion to decide the amount of reimbursements based on the evidence submitted by the plaintiff.

Alternative dispute resolution is not a compulsory element of settling a trade-mark infringement case. In accordance with the Trademark Law of the PRC, when trade bmark infringement dispute arises, the parties concerned shall resolve the dispute through negotiation; if they are reluctant to resolve the dispute through negotiation or the negotiation fails, the trade mark registrant or an interested party may initiate a civil litigation in a people's court or request the administration for market regulation to handle the dispute.

Disputes concerning trade-mark matters can be handled/resolved through arbitration, if agreed by the opposing parties.

A trade mark can also be protected by copyright if it satisfies the requirements of the Copyright Law. If a patent is granted on the trade mark, it could also obtain protection by design patent. The trade dress of a famous product is also under protection in accordance with the PRC's Anti-unfair Competition Law.

CCPIT Patent & Trademark Law Office

10/F, Ocean Plaza
158 Fuxingmennei Street
Beijing 100031
China

+86 10 6641 2345

+86 10 6641 5678

mail@ccpit-patent.com.cn www.ccpit-patent.com.cn
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Trends and Developments


Authors



Zhong Lun Law Firm is one of the largest full-service law firms in China. With over 310 partners and over 2,100 professionals working in 18 offices in China, Japan, UK, USA and Kazakhstan. The intellectual property department of Zhong Lun has over 100 professionals based in the six main cities in China. The scope of services provided by the intellectual property team includes non-contentious and contentious matters in relation to trade marks, copyright, patent, domain names, unfair competition and trade secrets, etc. Zhong Lun offers legal services across a wide range of industries and sectors, enabling its intellectual property team to understand the clients’ needs from different perspectives and co-operate with other teams to solve complex and large-scale intellectual property matters. Clients include Amazon, Daimler, Pearson Group, Sanrio, Conde Nast, Treasury Wine Estates, Mothercare, Cath Kidston and Beam Suntory.

The years of 2018 and 2019 witnessed a series of unprecedented changes in the field of trade mark laws and regulations in China. We believe that these changes, as explained in detail below, herald an improving environment of trade mark protection in 2020 and years beyond.

Amendment and Promulgation of Trade Mark Laws to Enhance Protection Against Bad-Faith Registration and Malicious Hoarding of Trade Marks

The fourth amendment of the Trademark Law of the PRC came into force on 1 November 2019. It is worth noting that the law was initially promulgated in 1982 and subsequently amended in 1993, 2001 and 2013, with around ten years in between and each amendment involving a comprehensive revision of the framework of the law. The fourth and most recent amendment, however, occurred only five years after the third amendment, which took place in 2014, and rather than a full-scale review, involved the revision of six articles only, highlighting the significance and urgency of the most recent changes.

The six articles revised in the fourth amendment mainly focus on two issues: suppressing bad-faith registration and malicious hoarding of trade marks; and strengthening protection of trade mark rights. Regarding the former, bad-faith trade mark registration refers to application for trade mark registration for the purpose of free riding on other brand’s fame while malicious hoarding of trade marks refers to making applications for trade mark registration for the purpose of selling trade marks to others for profit. Especially in respect of malicious trade mark hoarding, previous Chinese trade mark laws lack specific and operable provisions. The most recent amendment, however, explicitly states that bad faith applications for trade mark registration not for the purpose of use shall be rejected. This provision can also be cited as legal basis in oppositions and invalidation actions. Further, according to the amended Trademark Law, a trade mark agency is not allowed to accept a client’s delegation if the agency knows or should have known that the client's trade mark application constitutes bad-faith application for a purpose other than use. The amended Trademark Law also imposes administrative punishments, such as warnings and fines, on bad-faith registration behaviours, as well as judicial punishments on bad-faith lawsuits.

On the subject of strengthening trade mark rights, pursuant to the newly amended Trademark Law, the upper limit of punitive damages for wilful infringement of trade mark rights has increased from three times the value of damages to five times the value of damages. Under the circumstances that the actual losses of the right holder, the unjust enrichment of the infringing party, and the licence fees of the registered trade mark are difficult to determine, the upper limit of damages for infringement to be awarded at the court’s discretion has increased from CNY3 million to CNY5 million. In relation to infringement, the amended Trademark Law has also added provisions regarding destruction of the infringing goods, materials and tools and prohibition of infringing goods, materials and tools from entering into commercial channels.

In order to implement the amended articles as soon as possible, the PRC National Intellectual Property Administration (CNIPA) also made departmental rules, Rules on Regulating Trademark Registration Applications, which took effect on 1 December 2019. The rules provide more specific regulations on how to recognise, examine, reject and punish trade mark application behaviours which violate the principle of good faith.

In practice, according to the CNIPA’s data, the number of rejections of improper trade mark applications in the examination procedure and in opposition proceedings reached about 100,000 in 2018 and the number of trade mark applications in mainland China in the first half of 2019 was about 3.438 million, 4.1% lower than in the same period of the previous year (the number of patent applications in mainland China in the first half of 2019 was 9.4% lower than the same period of the previous year). These declining numbers (especially the swiftly dropping number of improper patent applications and malicious trade mark applications for hoarding) are commonly regarded as indications of the success of the optimisation of the structure and the enhancement of the quality of intellectual property applications in China.

These improvements have been further supported by the first law in China regarding the field of e-commerce, the E-Commerce Law of the PRC, enacted on 1 January 2019. This law, consisting of eighty-nine articles, is considered a comprehensive and fundamental law conducive to the protection and regulation of the e-commerce industry. In respect of the protection of intellectual property rights, this law explicitly stipulates the “Notice-and-Takedown” rule on suspected intellectual property infringements in the e-commerce field. Accordingly, for trade mark infringing behaviours commonly seen on e-commerce platforms, the trade mark owners are allowed to directly notify the e-commerce platform operators with prima facie evidence of infringement, requiring them to take necessary measures, such as deletion, blocking or disconnection of links to infringing products and termination of relevant transactions and services. This rule could stop infringing behaviours in a timely manner and prevent expansion of the right owners’ damages. At the same time, this rule helps reducing legal costs for the trade mark owners and solving online trade mark infringement issues efficiently. In the past year, we have been very pleased to witness the fast growth of the trade mark infringement complaint systems on the largest e-commerce platforms in China, such as Alibaba.com, JD.com, and WeChat.

The issuance of opinions on strengthening protection of intellectual property rights has also had an impact. In November 2019, the General Office of the CPC Central Committee and the General Office of the State Council issued the Opinions on Strengthening the Protection of Intellectual Property Rights. This emphasised the importance of strengthening the protection of intellectual property rights at the macro level and, at the same time, provided specific goals: by 2022, infringements on intellectual property rights in China shall be effectively curtailed and the situation shall be significantly changed where the right holders find it difficult to protect their rights because of difficulty in collecting evidences, prolonged trials, high costs and low compensations; and by 2025, the society's satisfaction in intellectual property protection shall reach and maintain a high level; the capabilities of IP protection shall be greatly enhanced; the system of IP protection shall be upgraded; the business environment shall be improved and knowledge well-respected; and the intellectual property right system shall play a more effective role in stimulating and protecting innovation.

With the development of the aforesaid laws, rules and opinions, we firmly believe that the practice of trade mark laws in China will enter a brand-new era, in which the subjective intention of trade mark applications, the needs of trade mark use and the actual trade mark use behaviours will be attached to greater importance in the administrative and judicial proceedings, and much stronger protection will be granted to the rightful owners of brands.

Restructuring of the Administrative Departments Granting and Verifying Trade Mark Rights: Unified Management of IP Rights and Improved Administrative Efficiency

The restructuring of the CNIPA, initiated in March 2018, was considered of strategic significance and marked a new era of strengthening protection of intellectual property rights.

In China, for a long time granting and recognition of different industrial property rights was administered by multiple departments. The CNIPA used to be in charge of the examination of cases involving the granting and verifying of patent rights. The former State Administration for Industry and Commerce of the People's Republic of China (including the Trademark Office and Trademark Review and Adjudication Board) was responsible for the examination of cases involving granting and verifying of trade mark rights and the General Administration of Quality Supervision, Inspection and Quarantine of the People's Republic of China managed protection of geographical indications. This situation led to inconsistent standards, disordered implementation, lack of overall planning, waste of administrative resources, administrative inefficiency and negative impacts on the government’s authority.

The restructured CNIPA will uniformly administer matters of patents, trade marks and geographical indications, and is expected to integrate resources, improve enforcement efficiency, fully release the potential of intellectual property rights to promote market competition and build an orderly competitive environment for business.

Under the management of the CNIPA since March 2018, the time period for trade mark examination has been significantly shortened (the average time for the examination of a trade mark application has been reduced from nine months to five months, and is expected to be further reduced to under four months in 2020). Further, the government fees for trade mark applications have been reduced and the electronic system for trade mark filings has evolved to include registration of changes of owner name/address, registration of trade mark assignment, trade mark renewal, recordal of trade mark licence, etc. More decisions on trade mark review cases have been made publicly accessible and all will be made available in the future. Finally, oral trials in certain cases have been tested and advocated. All of the above will contribute to more transparent, consistent and credible trade mark review procedures.

Exploring the Application of Increased Punitive Damages

The third amendment of the Trademark Law of the PRC, promulgated in 2013, included treble damages for wilful, bad-faith infringements based on conventional methods of calculation (actual losses suffered by the right holder, unjust enrichment of the infringing party, or the licence fees of a trade mark registration), which was the first time that punitive damages were introduced to trade mark legislation in China. Now, in the fourth amendment, the upper limit of punitive damage awards has been increased to five times the damages.

The understand the perspective behind the changes brought in the fourth amendment and future changes, in the five years following the enactment of the third amendment of the Trademark Law of the PRC on 1 May 2014, according to publicly accessible data of the courts there have been only five civil trade mark infringement cases in which punitive damages were awarded, in courts of all levels in Beijing. In Shanghai, punitive damage was not awarded in court until September 2019. Since the practice of courts in Beijing and Shanghai are normally considered as setting the standards of judicial examination throughout the entire country, we estimate that the adoption of punitive damages nationwide was likely to have been even worse.

However, we learned that to solve the problem of applications of punitive damages, the Supreme People’s Court of the PRC and Beijing Higher People's Court are currently exploring other possibilities. They are planning to promulgate rules on the specific conditions to apply punitive damages, as well as detailed rules on calculation of the damages.

In order to further enhance intellectual property protection and strengthen enforcement against infringement, in addition to punitive damages the people's courts are considering expanding the application of pre-trial injunctions against malicious infringement to protect the interests of the rightful trade mark owner in a more timely and effective manner. Meanwhile, we noticed that, in the past two years, although in more than 90% of the cases the amount of damages is still determined by the courts at their discretion (this situation is, to a large extent, due to the plaintiffs’ difficulty in fulfilling their burden of proof), the amount of damages determined by the court has increased significantly. Furthermore, it is not uncommon for the courts to award the maximum amount of punitive damages under the law, both before and after the fourth amendment increase.

In a recent case of trade mark infringement and unfair competition tried by Jiangsu Higher People’s Court, the Court considered the well-known status of the prior registration owned by the infringed party, the obvious bad faith and malicious behaviour of the infringing party and the serious consequences that the infringement had caused, determined that the amount of damages shall be three times of the profits made from the infringement by the infringing party and fully supported the infringed party’s claim of CNY50 million on the damage. The judgment shows that courts in China are gradually implementing the punitive compensation system in trials, vigorously fighting against trade mark infringements and protecting the true owner’s right to obtain sufficient compensation.

Our Suggestions

We forecast that the IP legal environment in China will continue to improve. Therefore, we suggest companies file applications for trade mark registration in a comprehensive way as soon as possible, even for certain applications that did not successfully proceed to registration in the past. As long as the trade marks are of key importance, it is still advisable to refile them and make another attempt application.

Companies may consider actively adopting various measures, including non-use cancellation actions, anonymous trademark purchases, invalidation actions, business negotiation, etc, against prior trade mark obstacles. In view of the shortening of examination period of new applications, it is also advisable to file backup applications in a timely manner.

It is advisable for companies to monitor third parties’ trade marks regularly and to take legal actions in time when spotting others’ bad-faith applications/registrations or malicious hoarding of trade marks in order to avoid confusion among the consumers or dilution of the owners’ trade marks.

Facing trade mark infringement behaviours, the trade mark owners could be more creative in thinking and consider adopting multiple dispute resolution mechanisms or a combination of strategies, such as sending warning letters, filing complaints at e-commerce platforms, lodging administrative lawsuits or civil lawsuits (including pre-trial injunctions), etc, to achieve efficient resolution and obtain sufficient remedies.

Facing malicious infringements, the trade mark owners shall actively collect and promptly solidify evidence showing the infringing parties’ bad faith and the amount of illegal gains in order to obtain higher punitive awards.

Zhong Lun Law Firm

28/31/33/36/37F
SK Tower
6A Jianguomenwai Avenue
Chaoyang District
Beijing
China
100022

+86 10 59572265

+86 10 6568 1022/1838

jimmyhuang@zhonglun.com www.zhonglun.com
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Law and Practice

Authors



CCPIT Patent & Trademark Law Office is one of the oldest and largest full-service intellectual property law firms in China with 294 patent and trade-mark attorneys and 87 qualified attorneys-at-law. The firm provide consultation, prosecution, mediation, administrative enforcement and litigation services relating to patents, trade marks, copyrights, domain names, trade secrets, trade dress, unfair competition and other IP-related matters. Headquartered in Beijing, the firm has offices in New York, Tokyo, Munich, Madrid, Hong Kong, Guangzhou and Shanghai. CCPIT's trade mark attorneys have rich experience, and are familiar with Chinese and foreign law; many have studied abroad. The international trade mark department is responsible for trade mark prosecution and protection in China and has 30 trade mark professionals, while the domestic trade mark department serves mainly domestic clients and has ten trade mark professionals. After 60 years of development, the firm's trade mark attorneys have established an international network with IP professionals in China and abroad, and assist domestic and foreign enterprises and individuals in obtaining and enforcing trade mark rights all around the world.

Trends and Development

Authors



Zhong Lun Law Firm is one of the largest full-service law firms in China. With over 310 partners and over 2,100 professionals working in 18 offices in China, Japan, UK, USA and Kazakhstan. The intellectual property department of Zhong Lun has over 100 professionals based in the six main cities in China. The scope of services provided by the intellectual property team includes non-contentious and contentious matters in relation to trade marks, copyright, patent, domain names, unfair competition and trade secrets, etc. Zhong Lun offers legal services across a wide range of industries and sectors, enabling its intellectual property team to understand the clients’ needs from different perspectives and co-operate with other teams to solve complex and large-scale intellectual property matters. Clients include Amazon, Daimler, Pearson Group, Sanrio, Conde Nast, Treasury Wine Estates, Mothercare, Cath Kidston and Beam Suntory.

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