Brand Protection in China

by K&L Gates LLP
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Important new amendments to the Trademark Law and The Implementing Regulations of Trademark Law of the People’s Republic of China came into effect on May 1, 2014, as mentioned in our earlier publication China Adopts First Changes in Trademark Law in Over Twelve Years. This present publication briefly summarizes how some of the changes in the new law could affect the protection of your brands in China.

Broader Protection against Trademark Hijackers in China

  • Under the old law, if your trade mark agent applied to register your trademark in China and used the agent’s own name as the trademark applicant, you could oppose that trademark application and the trademark would not be registered.
  • The new law broadens this protection and potentially prevents your business contacts, manufacturers, and distributors from applying to register your trademarks in China. [1]

Multi-Class Applications Available

  • Under the new law, one trademark application can now be filed for multiple classes. [2]
  • The availability of multi-class applications may encourage competitors or trademark hijackers to file trademarks in multiple classes.
  • Consider reviewing your trademark portfolio to ensure that you have trademark registrations in the relevant classes of goods and services in China.
  • Filing separate trademark applications for one mark in one class is still available under the new law. Obtain legal advice to decide whether a multi-class application or separate single-class applications are suitable for your brand protection.

Division of a Trademark Application

  • If your trademark application is partially rejected by the China Trademark Office (“CTMO”), you now may request division of the trademark application, so that the preliminarily approved goods or services in your trademark application can be accepted and published for opposition purposes. [3]
  • Under the old law, in cases of partial rejection, the preliminarily approved goods or services would not be published until an appeal of the partial rejection was completed.

Tougher Damages against Infringers

  • As of May 1, 2014, serious and malicious trademark infringement may result in damages of up to three times the amount of the infringer’s profits, the trademark holder’s losses, or a reasonable license fee. [4] As a result of these enhanced awards, you may wish to review your trademark enforcement strategies in China.
  • Previously, the damages were only in the amount of the infringer’s profits or the trademark holder’s losses, and there were no additional penalty damages even in serious and malicious infringement cases.

Use of Registered Trademarks

  • It is very important to maintain good records to show use of a registered trademark in China. If a registered trademark owner cannot prove that a registered trademark was used in the last three years prior to an infringement action, the infringer of that registered trademark shall not be liable for damages. [5]
  • The old law did not consider use of a trademark within three years as a key factor for determining damages, although, in practice, courts could have considered such use in their discretion. Now, the law is explicit, and the burden of proof for use is on the trademark owner. This may deter trademark owners who have no intention of using a trademark from filing infringement cases.

Accelerated Time Frames

  • There are now accelerated time frames for action by the CTMO and Trademark Review and Adjudication Board (“TRAB”). Time limits have been introduced to speed up the issuance of decisions relating to trademark applications, oppositions, invalidations, and cancellations. For example, the time limit for TRAB to review a CTMO rejection decision is nine months, with a three-month extension. [6]
  • The old law was silent on the time frame, and the time used was at the discretion of the CTMO and TRAB, which, in practice, was generally much longer than the new, accelerated time frames.

Registration of Sound Marks

  • The registration of a sound mark is now possible. The applicant must submit a sound sample, describe the sound trademark to be registered and describe the use of the trademark. When describing a sound mark, the sound must be described with staff or numbered musical notation and appended with a description in words. [7]
  • The introduction of sound marks expands the scope of the old law, where it was only permissible to submit a visual representation of a trademark in the form of a trademark drawing on a trademark application form.

Protection for Prior Users

  • Under the new law, and subject to certain conditions, prior users of a trademark in China may continue to use a trademark without interference by the owner of a subsequent trademark registration for an identical or similar trademark, regarding identical or similar goods. [8]
  • Under the old law, prior users did not have this protection against registered trademark owners that were the “first to file” in China.

Notes:
[1] Article 15 of Trademark Law of the People’s Republic of China (2013 Amendment) “[w]here a trademark applied for registration is identical with or similar to another person’s prior used but yet unregistered trademark, in respect of same or similar goods, and the applicant has contractual or business contacts, or other relations…, with the prior trademark user so that the applicant definitely knows the existence of this person’s trademark, if this person files opposition, the applied trademark shall not be registered.”

[2] Article 22 of Trademark Law of the People’s Republic of China (2013 Amendment).

[3] Article 22 of The Implementing Regulations of Trademark Law of the People’s Republic of China (2014 Amendment).

[4] Article 63 of Trademark Law of the People’s Republic of China (2013 Amendment).

[5] Article 64 of Trademark Law of the People’s Republic of China (2013 Amendment).

[6] Articles 34, 35, and 44 of Trademark Law of the People’s Republic of China (2013 Amendment).

[7] Article 8 of Trademark Law of the People’s Republic of China (2013 Amendment).

[8] Article 59 of Trademark Law of the People’s Republic of China (2013 Amendment).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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