New Trademark Law in China

The Chinese trademark law underwent a substantial reform and modernisation effective from 1 May 2014, allowing trademarks to be protected more easily and more comprehensively in China. Given the problems surrounding trademark and product piracy in the Far East, this is a significant step in the right direction. However, trademark owners should also actively take advantage of the possibilities offered by the new trademark law. In what follows, we set out the most important changes and improvements.

Introduction of Multi-Class-System

Prior to the modernisation, a trademark could only be applied for in relation to one class of goods or services (the so-called “Single-Class-System”). Companies accordingly regularly had to register several trademarks to achieve a level of protection equivalent to that they could attain in, for instance, Germany, by filing a single trademark application. Now trademarks can be applied for in several classes (the “Multi-Class-System”), with the company's trademark portfolio thus being capable of a much more clear structuring. It also reduces the costs of applications and the related administrative expenses incurred in filing same.

Accelerated Procedure

The modernisation furthermore introduces deadlines for the review of trademark applications and opposition proceedings. The Chinese trademark office now has to determine whether a trademark is worthy of protection within nine months of an application being filed. Thereafter, the trademark will be published for purposes of filing an opposition, if any. Any such opposition must be filed within three months, and opposition proceedings must be completed within twelve months of the filing of the opposition. These provisions streamline application and opposition proceedings, thus allowing applicants and opponents to obtain legal certainty in relation to a matter concerning them much more quickly.

Protection from Trademark Applications made in Bad Faith

The new law provides that trademark applications must be rejected when there is evidence that the applicant acted in bad faith. The presence of bad faith is assumed when the applicant knew at the time of its application, on the basis of contractual, business or other relationships existing with the true owner of the trademark, that the trademark belonged to a third party. In addition, Chinese trademark agencies are now prohibited from applying for trademarks in their own names. If they know or should know that the trademark applicant is acting in bad faith, they are not entitled to represent the applicant. Applicants and trademark agencies that violate this rule can expect to be fined. The protection resulting from these provisions is particularly welcome for foreign companies attempting to conduct business in China. It nevertheless remains important for such companies to register their trademarks as soon as possible.

Limitation of Right to File Opposition

In terms of the former Chinese trademark law, no limitations existed as to who could file an opposition to a trademark application. Any person was entitled to assert all and any grounds for opposition. The new trademark law now distinguishes as follows: If an opposition to a trademark application is based on an older trademark, only the owner of the trademark or a person with a justified interest can file an opposition. If the opposition is based on an absolute prohibition of / to registration (such as lack of distinctiveness), any person can (still) file an opposition. These new provisions are consistent with our European law and simplify trademark registrations.

Protection of Trademarks acquired by Use

The modernised Chinese trademark law also provides for the protection of trademarks acquired by use (Benutzungsmarken). A registered trademark cannot automatically be used to challenge a trademark that was demonstrably used before the trademark was registered, and had thus obtained a certain reputation. The trademark owner may, however, require the user of the older trademark to make such additions to its mark, as may be necessary to prevent confusion.

Increase of Available Statutory Damages

As a rule, the amount of the damages to be paid for a trademark infringement in China is determined by reference to the amount of the damages actually suffered, the profit obtained by the infringing party through the infringement, or a fictitious licensing fee payable for the use of the trademark infringed. If it is difficult to quantify damages by using these methods, statutory damages can be claimed. The amount of such damages has now been increased considerably, with the maximum amount being capped at RMB 3 million (approximately EUR 350,000). In cases of flagrant infringement, punitive damages in the amount of three times the actual damage can be claimed, in addition. This significantly strengthens the rights of trademark owners and punishes infringements much more severely.

Introduction of Sound Marks

The new Chinese trademark law introduced a new form of trademark in China: Thus it is now possible to register sound marks (Klangmarken). Previously only traditional trademarks could be registered (e.g. word marks, design marks and colour-combination marks). Now a melody, tones or sounds can also be protected as distinctive marks. This represents a further expansion of the available trademark protection.

Comment

The modernisation of the Chinese trademark law makes it easier, quicker and more cost effective to apply for trademarks, and thereby to obtain greater protection. Companies conducting business in China should take advantage of these new opportunities. We would gladly assist you with any questions that you may have in this regard.