Chinese Legislation to Give Better Protection to Trademark Owners this November

On April 23, the Standing Committee of Nation People’s Congress in China issued the new amendments of Chinese Trademark Law which will take effect on November 1, 2019. Six articles of the current Trademark Law are amended to further curb trademark squatters and trademark infringement.

We provide a brief summary as below to show what have been added and/or changed.

Article 4: Any trademark applications which are filed in bad faith for purpose other than use shall be rejected.

Article 19: Any trademark agencies shall not accept the entrustments from the applicants of such bad faith applications.

Article 33: Anyone can file opposition against such bad faith applications within opposition period.

Article 44: Such bad faith application can be invalidated after its registration.

Article 63: The statutory amount of damages of trademark infringement can be up to five million Chinese Yuan (‘three million’ in the current law).

Article 68: Administrative warning and/or penalty may be issued for such bad faith trademark application, and the people’s court may impose penalty for trademark lawsuits filed in bad faith.

We believe that the new amendments are truly good news for trademark owners in good faith, especially foreign brand owners who substantially face trademark squatting and infringement when they enter into the Chinese market without enough knowledges and experiences on Chinese Trademark Law.

Appendix: Detailed Content of the Amendment to the Chinese Trademark Law

Words in red refer to the amended and added contents.

1. Article 4.1

“Where any natural person, legal entity or other organization, in the course of his or its production or business operations, intends to acquire the exclusive right to use a trademark for his or its goods or services, an application should be filed with the Trademark Office for registration of the goods trademark. Applications for trademark registrations in bad faith which are not intended for use shall be refused.”

2. Article 19.3

“Where the trademark agency knows or should have known that the trademark applied by a client falls into any circumstance under Articles 4, 15 or 32 of this Law, the trademark agency may not accept the engagement.”

3. Article 33

“The prior right owner or any interested party may, within three months from the date of publication, files an opposition against an accepted and published application for registration of a trademark, if he finds that the application stands in violation of the provisions of Article 13, paragraph two or three, Article 15, Article 16, paragraph one, Article 30, Article 31, Article 32 of this law, or any person finds that the application stands in violation with the provisions of Articles 4, 10, 11, 12 or 19(4) of this Law. If no opposition is filed within the specified period, the trademark shall be registered, a certificate of registration shall be issued, and the registration shall be published.”

4. Article 44.1

“The Trademark Office shall annul any registered trademark against the provision of Articles 4, 10, 11, 12 or 19(4) of this Law or that is registered by fraud or other improper means. Other organizations or individuals may request the Trademark Review and Adjudication Board for invalidation of the registered trademark.”

5. Article 63

“The amount of compensation for infringement of the exclusive right to use a trademark shall be determined based on the right owner’s actual losses as a result of infringement or the infringer’s gains from infringement if difficult to determine the actual losses. If both the right owner’s losses and the infringer’s gains are difficult to be determined, the amount of compensation for infringement may be determined as reasonable times of the royalties of the trademark. If the malicious infringement is serious, the amount of compensation may be more than one time and less than five times of the amount of compensation determined above. The amount of compensation shall cover the reasonable costs incurred by the right owner to stop infringing conducts.

For the purpose of determining the amount of compensation, where the account books and information regarding infringement are held by the infringer while the right owner puts to the proof as practical as possible, the people’s court may order the infringer to submit the relevant account books and information; if the infringer refuses to submit such account books and information or submit false account books and information, the people’s court may award the amount of compensation with reference to the right owner’s claim and proof.

Where it is difficult to determine the right owner’s actual losses as a result of infringement, the infringer’s gains from infringement or the royalties of the registered trademark, the People’s Court shall award the amount of less than RMB 5,000,000 in damages based on the circumstance of infringement.

When hearing trademark disputes, the people’s court shall, at the request of the right holders, order to destroy the goods bearing the counterfeit registered trademarks, except for special circumstances, and order to destroy the materials and tools used predominantly for manufacture of goods bearing counterfeit registered trademarks, without any compensation. In exceptional cases, the people’s court shall ban the said materials or tools from entering commercial channels, and without any compensation.

Goods bearing counterfeit registered trademarks are not allowed to enter commercial channels after simple removal of counterfeit registered trademarks.

6. Article 68.1

“If a trademark agency has any one of the following conducts, the administration for industry and commerce shall order to make correction within a prescribed time limit, give a warning, and impose a fine of more than RMB 10,000 and less than RMB 100,000. The management and other persons directly in charge shall be imposed with a fine of more than RMB 5,000 and less than RMB 50,000. Those who commit crimes shall be held for criminal liability:

(i) to forge or alter legal documents, seals or signatures, or to use the forged/altered legal documents, seals or signatures in the course of dealing with trademark-related matters;

(ii) to solicit trademark agency business by slandering other trademark agencies, or to disturb the trademark agency market order by other improper means; or

(iii) to violate the provision of Articles 4, 19(3) or 19(4) of this Law.

Where a trademark agency engages in the conducts specified in the previous paragraph, it will be recorded by the administration for industry and commerce in credit files; if the circumstances is serious, the Trademark Office and the Trademark Review and Adjudication Board may decide to stop accepting the trademark matters filed by the trademark agency and make a public announcement.

Where a trademark agency infringes clients’ legitimate interests against the principle of good faith, the trademark agency shall bear civil liability according to the law and accept the punishment imposed by the trademark agency industry organization in accordance with relevant regulations and rules.

In case of bad faith application for trademark registration, administrative penalties such as warnings and fines shall be imposed depending on the circumstances. If a trademark lawsuit is filed in bad faith, people’s court shall impose penalties according to law.”

About IP Twins

IP Twins is an ICANN-accredited domain name registrar with 15 years of experience in domain name strategy and management. We represent trademark holders in UDRP proceedings.

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Should you need to complete these investigations, our team based in China can help.

Do not hesitate to contact us: juristes@iptwins.com.