China Adopts New Trademark Law

On 30 August 2013, a new amendment to the Chinese Trademark Law was passed by the Standing Committee of the National People's Congress (NPC), China's top legislature. This is the third amendment of the law after previous amendments in 1993 and 2001 respectively since its adoption in 1982. The new law will take effect from 1 May 2014.

This amendment to the Chinese Trademark Law attempts to facilitate the applicants in trademark registration, to maintain market order for fair competition, and to strengthen protection for exclusive rights in use of trademarks. The following are some of the key changes brought by the new Trademark Law.

1. Facilitative procedures for trademark registration

The new law adds sounds as a new registrable trademark element; accepts multi-class applications so that one single application can cover a trademark for more than one class of goods; allows e-filing of trademark applications; and provides for the office action procedure to enable communication between the examiner and the applicant where necessary.

It also specifies the time limits for trademark examination, review, and adjudication processes by the Chinese Trademark Office (CTMO) and the Trademark Review and Adjudication Board (TRAB); and modifies trademark opposition procedures, among them, an opposition request on the grounds of right of prior use may be filed by owners of prior rights or interested parties only, and where opposition is not established, the trademark will be registered directly by CTMO.

2. Well-maintained market order for fair competition

The new law specifies that well-known marks are to be determined on case-specific basis by CTMO, TRAB, or the court, and the term "well-known trademark" is banned from use on advertisement, exhibition or other commercial activities. It also lays down that the use of a well-known mark or a registered mark as an enterprise name constitutes an act of unfair competition if such act causes misleading to the public.

Moreover, it prohibits pre-emptive registration of a trademark by the applicant who is aware of the prior use of the mark due to contractual, business or other relationship; and stipulates that the alleged infringer is not held liable for damages if the trademark owner fails to support actual use of the trademark at issue in the past three years. Legal accountability of trademark agencies is also stated in the new law, which imposes on them the obligation of confidentiality for the clients, and restrains them from knowingly representing pre-emptive registrations as well as registrations beyond their business scope.

3. Strengthened protection for exclusive rights in use of trademark

The new law provides that to intentionally facilitate or assist others in committing any act that infringes on another party’s exclusive rights in trademark constitutes infringement; and elevates the maximum statutory damages for trademark infringement from RMB500,000 to RMB3 million.

It also introduces punitive damages for serious trademark infringement on bad faith, and states that committing trademark infringement for two times or above within five years will be subject to aggravated punishment. Furthermore, according to the new law, the court may order the alleged infringer to produce their accounting data for determining damages if a trademark owner in a trademark infringement action has provided all available evidence.