On 13 January this year, the China National Intellectual Property Administration (CNIPA) issued a notification on soliciting public opinions regarding the draft revision to the China Trademark Law. The draft is published on CNIPA’s website (in Chinese) to solicit public opinions until 27 February 2023.

In the first of a two-part analysis, Ling Zhao, Shufang Zhang, Xiaoping Wei, Qin Li and Lei Fu look at the proposed changes to substantive examination.

The second part of the analysis will be posted on Class 46 shortly and will focus on procedural changes.

A comprehensive revision

This will be the fifth revision of the China Trademark Law since 1983. The proposed draft is a comprehensive revision, and the total number of provisions in the Law has increased from 73 articles to 101 articles.

However, there will still be a series of long procedures to go through before the draft becomes legislation. The current version is published for public opinions and further improvements and amendments will be made.

The revision aims to improve trade mark protection. Efforts have been made to reshape the law to shift from the current registration-based system to be more use-focused.

Under the draft revision, a statement of trade mark use will be required, and repeat trade mark registration will be forbidden, except in certain circumstances. Stronger protection will be given to well-known trade marks, either registered or unregistered in China. Bad faith trade mark filings are strictly forbidden and compulsory transfer to the legitimate trade mark holder will be possible.

In addition, the draft revision aims to improve the efficiency of trade mark examination, by shortening the opposition procedure.

Substantive examination

Regulation of bad faith trade mark filings

The banning of bad faith filing has been specifically added to the draft revision. The following situations are considered as constituting bad faith filing:

• Filing a large number of trade marks without the genuine purpose of use and disrupting the order of trade mark registrations;
• Filing trade marks by fraud or other improper means;
• Filing trade marks which cause damage to the state interests, public interests, or may cause other substantial negative influence;
• Filing trade marks that are in violation of Articles 18 [well-known trade mark], 19 [preemptive registration of agents, representatives, and interested parties] and 23 [preemptively register other people's trade mark that is used and has certain influence], or intentionally damage other parties’ interests and rights.

The draft revision further lays down administrative punishment and civil compensation for bad faith trade mark filings. The draft revision stipulates that parties that constitute bad faith filings will face a warning from the trade mark law enforcement departments or will be subject to a fine of no more than 50,000 yuan.

For those with serious offences, a fine of 50,000 yuan to 250,000 yuan will be imposed and illegal gains will be confiscated.

For the bad faith filings that cause damage to other parties, parties may initiate a lawsuit with the courts and claim civil compensation. The compensation may cover reasonable expenses to stop the bad faith filings. For bad faith filings that cause damage to the state interests and public interests, the procuratorial authorities may initiate legal prosecution.

Compulsory transfer of trade marks registered in bad faith

The draft revision provides that, if a registered trade mark violates the relevant provisions of the Trademark Law, the prior right holder or interested party may request the IP administrative department of the State Council to declare the registered trade mark invalid.

For those who violate the provisions of Article 18 of this Law on the protection of well-known trade marks, and Article 19 of this Law on the preemptive registration of agents, representatives and interested parties, or violate the provisions of Article 23 of this Law to preemptively register another person’s trade mark that is used and has a certain influence, the prior right holder may request to transfer the registered trade mark to his own name.

Establishment of credit and good faith

The draft clarifies that oppositions and invalidations can be filed based on bad faith filings and stipulates administrative punishments on dishonest behaviours in trade mark filings such as providing false documents. The credit supervision has also been introduced in trade mark registration and use.

The draft also strengthens the supervision and management of the trade mark agencies, laying out the admission requirements and obligations.

Strengthening of well-known trade mark protection

The draft reinforces the protection on unregistered well-known trade marks, adding anti-dilution protection to the well-known trade marks. It adds the principles on the protection of well-known trade marks, specifically the principles of determination on case-by-case basis, passive protection and on-demand recognition.

The draft stresses that the scope and level of protection of a well-known trade mark shall be in line with the degree of distinctiveness and reputation of the trade mark.

One of the major proposed amendments concerning well-known trade mark protection is that a well-known trade mark, which is unregistered in China, can enjoy protection on both identical and similar goods and dissimilar goods. Under the current law, an unregistered well-known trade mark can only enjoy protection on the same or similar goods.

Emphasis on the obligation of trade mark use

A statement of use shall be filed every five years after the registration of the mark. More circumstances are added as the basis of cancellation of a registered trade mark, such as: the use of a registered trade mark is misleading in respect to the quality or origin of goods.

Repeat trade mark registration forbidden

The draft provides that the trade mark registration applied for shall not be the same as one already applied for or registered by the same applicant on the same goods, or the same as a trade mark that is removed, cancelled or declared invalid within one year, except if the applicant agrees to remove its prior registration, or under certain circumstances.

Cancellation of trade mark registration

More circumstances are added for the cancellation of a registered trade mark, in addition to the circumstances of generic name and three years’ non-use as stipulated in the current law.

According to the draft, anyone can file a petition of cancellation, wherein the use of a registered trade mark is misleading to the relevant public in respect to the quality or origin of goods; wherein the registrant of collective mark or certification mark violates the obligations of collective mark and certification mark, with extremely serious circumstances; and wherein the use or enforcement of a registered trade mark severely damages the public interests and causes significant negative influences.

Trade mark infringement related to e-commerce activities

The infringement of the exclusive right to use registered trade marks through e-commerce activities is added in the draft. The scope of trade mark use covers the use of information networks such as the Internet.

The draft provides that trade mark infringement activity includes using signs identical or similar to the registered trade marks of others in e-commerce related to the same or similar goods without the permission of the trade mark registrant and causing consumers confusion.

Public interest litigation concerning trade mark infringement

The procuratorial authorities may initiate litigation against the infringement of the exclusive right to use a registered trade mark with the people’s court according to the law under the conditions that:

• The infringement of the exclusive right to use a registered trade mark causes damages to the interests of the State or the society and public;
• The holder of a right to exclusively use a registered trade mark or the interested party does not initiate litigation against the trade mark infringement; and
• The administration responsible for enforcement of the trade mark law has not dealt with trade mark infringement.

Counterclaim for malicious litigation

The people’s court shall punish according to the law anyone who files trade mark litigation maliciously. If this litigation causes losses to another party, there should be compensation for the losses.

The amount of compensation shall include reasonable expenses paid by the other party for stopping the trade mark litigation in bad faith.

Trade mark agencies

The draft intends to stipulate the admission requirements for trade mark agencies and further regulates trade mark agency behaviour. It strengthens the supervision and management of trade mark agencies, clarifies the admission requirements of trade mark agencies, and improves the quality of trade mark agency services (Article 68).

It also strengthens the responsibilities and obligations on trade mark agencies and practitioners, and standardises trade mark agency behaviour (Article 69); improves the duties and obligations of the trade mark agency industry organisation, and requires the organisation to better play the role of industry self-discipline (Article 70).

It further clarifies the illegal acts of a trade mark agency, and increases the restrictive requirements on the person in charge of an illegal trade mark agency, the person directly responsible, and the shareholder with management responsibility for new positions (Article 86).

The authors are Ling Zhao, Shufang Zhang, Xiaoping Wei, Qin Li and Lei Fu, who are trade mark attorneys with CCPIT Patent and Trade mark Law Office. Ling Zhao is a member of the MARQUES China Team