Following more than a decade of discussion for better intellectual property protection, China's Trademark Law, the first intellectual property protection law after the opening policy, comes to its new milestone. Approved by National People’s Congress, the top legislative body, on 30 August 2013, the new Trademark Law will take effect on 1 May 2014.

Standing at the threshold of the implementation of this new guideline for trademark protection in China, the following major changes are highlighted for attention.

Internationalized standards

1. Sound marks are protected

With the aim to modernize the trademark process, the new Trademark Law for the first time allows the registration of sound marks. The wording "visually perceptible" is forever deleted from Article 8. With the inclusion of sound mark, the fast consuming product industry and electronic industry in China are likely to be the vanguard for the first try.

Moreover, the inclusion of the word "etc." provides further speculation on new possibilities of non-traditional trademarks.

2. Multi-class application is allowed

For the first time, a multi-class application system will be put into place to speed up registration process as stipulated in Article 22. With the allowance of multi-class application, the application procedure in China is now streamlined and saved the labor for the applicants.

3. The recovery of Examination Opinion

The new law reintroduces the practice of Examination Opinion in Article 29, which was adopted in 1993 version of Chinese trademark law. Where necessary, the CTMO will issue Examination Opinion to request applicants to make explanation and amendments. The failure of making the reply shall not affect the CTMO’s decision. This practice provides a chance for applicants to make amendment and explanation between “approval” and “refusal” of registration. It can be also rationally envisaged that the number of refusal notification will be reduced, the efficiency of trademark right determination will be improved and the miscarriage in the refusal notification will be avoided to the full.

4. E-Filing

To provide sufficiency for trademark application procedure, the e-filing is allowed in the new law. The experiment trail of the e-filing was kicked off in 2009. Due to the technical environment and formality requirement, the number of trademark e-filing is fairly low comparing to the paper filing. However, considering the cost and the efficiency, the new law provides development space and prospect for the e-filing in the coming days.

Time-Calculable Examination

The calculation of trademark examination period is never a guess with the new Trademark Law.

Case	Authority	Time Limit (Month)	Extension (Month)
Trademark application	CTMO	9	No
Review on refusal of application	TRAB	9	3
Invalidation on absolute grounds filed by any party	TRAB	9	3
Cancellation	CTMO	9	3
Review on cancellation	TRAB	9	3
Opposition	CTMO	12	6
Review on opposition	TRAB	12	6
Invalidation on relative grounds filed by a interested party	TRAB	12	6

The extension is left for the authority's decision, which may not be applicable from case to case.

In the mean time of obtaining such a transparent and calculable examination schedule, except the trademark application, the applicants in other types of cases are advised to pay much attention to the time limit since when the deadline is missed, there are no remedies and evidences filed at the expiration of the deadline are not likely to be considered.

However, the time limits for filing a review against the CTMO's decision and for filing an appeal at People's Court against the TRAB's decision are still 15 and 30 days since receipt. No time extension is allowed.

Squatters Face Raised Infringement Compensation

With the help of the new Trademark Law, trademark squatting and counterfeiting are becoming more difficult for the perpetrators in the market.

When interviewed by the state press Xinhua News Agency, Mr. Xu Ruibiao, Director of the Trademark Office of the State Administration for Industry and Commerce, said that the law treated Chinese and foreign enterprises equally and based on the amendments, it would become easier for foreign trademark holders to protect their rights in the case of infringement.

The principle of honesty and credibility has always been the core in China's trademark law and practice. But this is the first time that the principle of good faith is officially written down in Article 7 governing the trademark application and use.

1. Widen scope of infringers.

With the new law, the representative of the person who files the application without authorization from the trademark owner extends to the applicants being of contract, business or other relationship with the trademark owner as set forth in Article 15(2). This shall include not only the distributors of the trademark owners but also the entities/persons involved in commercial relationship. This provision makes trademark hijacking more difficult.

2. More infringement situations.

The infringement of the exclusive right to use a registered trademark has been expanded from the previous five clauses to the new seven clauses as in Article 57.

"Uses of a trademark that is similar to a registered trademark in relation to identical goods, or uses a trademark that is identical with or similar to a registered trademark in relation to similar goods, without the consent of the owner of the registered trademark, and liable to create confusion" and "intentionally provides facilities to a person who infringes the exclusive right to use a registered trademark so as to help the person to execute an infringement on the exclusive right to use the registered trademark" are added as clause 2 and clause 6.

It is clear that the likelihood of confusion is the only criteria to judge whether two trademarks are similar.

The clause of intention was previous indicated in the Implementation Regulations. The inclusion of this clause in the new law provides the officials of local AICs to a thorough base to rely when identify and determine the infringement in order to stop the trademark infringement activities.

3. Higher compensation.

The statutory damage of RMB 3,000,000 (approximately USD 500,000) in Article 63(3) is the most eye-catching number in the new law. But this is not the only change for infringement compensation.

The repeated infringement activities shall be given heavier punishment as prescribed in Article 60. These activities include the situations where any person who commits trademark infringement acts more than two times within five years or has other serious circumstances.

In this new law, the infringement compensation can be calculated and the basis is the trademark contractual license. In the case that 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 trademark under a contractual license as indicated in Article 63(1).

As the materials relating to the infringement act are mainly under the control of the infringer, it is difficult for the trademark owners to submit evidences and therefore cannot obtain justified compensation. Article 63(2) guarantees that when the right holder has tried his best to provide the evidence, but the infringer does not cooperate, the People’s court may determine the amount of damage by reference to the claim and evidences provided by the right holder.

Finally, in the circumstances that 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 trademark, the people's court shall grant a compensation not exceeding RMB 3,000,000, according to the circumstances of the act of infringement.

Special attention

1. Prior use

For the first time, the concept of right of prior use is explicitly introduced in the Trademark Law in Article 59. This provision imposes greater importance to the use of the trademark and enhances the protection of unregistered trademarks.

However, the ambiguous wording “before a trademark registrant applies for the registration of a trademark, another person has used a trademark” in Article 59.3 is likely to cause uncertain result in trademark examination. Literally, this requires the date on which the proprietor claims the trademark right should be earlier than the date on which the other person uses the trademark, which is different from the practice in most countries and regions. It is believed that the Commission of Legislative Affairs of the NPC and the People’s Court will provide further judicial interpretation.

2. Trademark agents

The number of trademark agents has rapidly increased in recent years, which inevitably leads to uneven quality of the agents. Article 19 of the new Trademark Law stipulates certain legal liabilities of trademark agents. It is believed that such provision shall help in regulating the trademark agent business and clamping down the bad-faith pre-emptive applications to some extent.

Meanwhile, the revised Trademark Law stipulates certain prohibitive behaviors of trademark agents and establishes relevant punishment mechanism, improving the feasibility of the provision.

3. Well-known trademarks

According to Article 14, recognition and protection of well-known trademark shall follow the principles of passive protection, necessity check and case-by-case recognition.

For a long time, the “well-known trademark” is regarded as an honorary title and is used in promotional activities. This time the new law explicitly stipulates that the wording “well-known trademark” cannot be used for advertising purposes, which shall prevent well-known trademarks from being abused as an advertising tool and decrease the blind pursuit for well-known trademark recognition.

4. New opposition procedure

The opposition procedure is dramatically changed in the following two aspects. First of all, the opponent is no longer any third party but only the owner of prior right or interested party in order to prevent oppositions filed in bad faith.

Secondly, if the ruling of the opposition is not in the opponent’s favor, the opponent has no right to file the review on opposition. Instead, they can only take an invalidation action before the TRAB after the opposed mark is registered. However, the opposed party still has the right to file the review on opposition if the ruling is in the favor of the opponent.

This revision aims at raising the efficiency of opposition proceeding, but as such, the burden of proof of opponent during the opposition procedure has been increased.

Conclusion

The new Implementation Regulation and Rules for trademark Review and Adjudication is under fiery discussion and active preparation, which shall provide further clarification for the issues discussed above. It is expected that the Regulation and the Rules will be put into force as from May 1, 2014 with the new trademark Law in order to safeguard the right for trademark applicants.

With the implementation of the new Trademark Law, Regulations and Rules, it will provide more choices in application, more efficiency in examination, more reliable protection and more fair play to trademark owners home and abroad.