Amendments to the Trademark Law of the People’s Republic of China will come into effect on 1 November 2019, after they were passed at the 10th Session of the Standing Committee of the 13th National People’s Congress on 23 April.
Six articles of the Law have been amended. They address issues including bad-faith trade mark applications and damages for trade mark infringement.
Legislators have responded to widespread concern among brand owners about bad-faith applications and hoarding of trade marks by adding text into Article 4 of the Law, which sets out who can apply for a trade mark registration. The new sentence states: “If any trade mark applicant obviously lacks the true intention of use and has bad faith in filing a trade mark application, its trade mark application shall be refused by the Trademark Office.”
In addition, there is a new requirement on trade mark agents not to accept instructions to file applications which they know or should know are filed without intent to use or in bad faith (Article 19). Moreover, Article 68 now states: “Any entity filing trade mark applications in bad faith shall be given warnings or imposed a fine, according to current situation. If a trade mark lawsuit is filed on a malicious basis, the people's court will impose a penalty accordingly.”
Bad faith has also been added as a basis for opposing and invalidating trade mark registrations in Articles 33 and 44 respectively.
Regarding infringement proceedings, Article 63 increases the compensation in cases “of bad faith infringement where the circumstances are serious” from three times to five times and increases statutory compensation to a maximum of 5 million yuan.
New text in Article 63 states: “In the civil proceedings with respect to trade mark dispute cases, counterfeit goods shall be destroyed at the request of the trade mark right holder, except other special circumstances. Materials and tooling that are mainly used for manufacturing counterfeit goods shall be destroyed without any compensation, or in special circumstances shall be excluded to enter into commercial channels without any compensation. Counterfeit goods shall not be allowed to enter into the commercial distribution channel after counterfeit labels are removed.”
Julia Zhong, Chair of the MARQUES China Team, said: “On one hand, these amendments show that the Chinese government is paying more attention to the concerns of trade mark owners, particularly in the light of the rapid growth in applications in the past few years – many of which are indeed bad-faith applications. On the other hand, these amendments do not prevent brand owners from filing defensive trade mark applications, which will be treated as having a bona fide purpose due to lack of associated mark and defensive mark registration system in China.”
She added: “In practice, CNIPA and the people’s courts have already been invalidating bad-faith applications on the basis of Article 4. However, the amendments to the Law should lead to greater consistency in the application of the Law, and make it easier to challenge applications that are clearly filed in bad faith with no intent to use the mark.”
The China Trademark Association (CTA) will host a workshop at this year’s MARQUES Annual Meeting which will cover topics including how to use the Trademark Law to counter malicious registrations. Find out more here.