Recent Changes to Trademark Law in China
It has long been a complaint of companies doing business, or wanting to do business, in China that Chinese trademark law does not do enough to protect the rights of brand owners.
Legislative amendments were recently passed in China that are intended to strengthen protection for brand owners, discourage trademark infringement and unfair competition, extend protection to non-traditional marks, and streamline registration and opposition processes.
Highlights of the changes that will come into effect on May 1, 2014, are as follows:
1) Harsher Penalties for Infringers
Infringers will face increased fines based on revenue from the illegal use of a trademark. Repeat infringers will face heavier fines.
Maximum statutory damages have also been increased from 500,000 yuan (approximately C$84,000) to 3,000,000 yuan (approximately C$500,000). The maximum compensation can be tripled if it is determined that the infringement was committed in bad faith. The definition of “bad faith” must still be clarified.
Another welcome change is that infringing companies can be forced to disclose sales records for the assessment of damages. If the infringer refuses, damages can be awarded based on the claims of the trademark owner.
2) Good Faith Provisions
The new law contains a provision that trademark applications must be used and registered in good faith.
The amendments provide a means for trademark owners to oppose the registration of identical or similar marks by distributors, manufacturers, or others with whom they have a prior relationship.
The new law also places obligations on trademark agents to act in good faith, e.g. by not handling a trademark application when the agent is aware that the client is acting in bad faith or infringing another party’s rights.
3) Multiclass applications are permitted
Applicants will no longer need to file separate applications for each international class of goods and services. We are hopeful that this will mean reduced costs for our clients who have goods and services in a variety of classes.
4) Trademark Examination Timelines
Timelines have been set out to shorten the registration process. Under the new law, the timeline for the initial examination of an application is nine months.
5) More Limited Right to Oppose
Oppositions based on relative grounds, including confusion with a prior right, may only be filed by the owner of the pre-existing right or an interested party. Prior to the changes, anyone could oppose on relative grounds.
6) Removal of the Opponent’s Right to Appeal Registration
If the opposition is decided in favour of the applicant, the mark will proceed directly to registration with no opportunity for the opponent to appeal. The opponent may file an invalidation action post-registration. However, the opponent would be at risk of infringing the applicant’s trademark until a decision to invalidate the registration is rendered.
This change was presumably meant to restrict vexatious oppositions, but has been criticized for ostensibly favouring bad faith applicants. As a result of this change, opponents will need to place greater emphasis on putting their best case forward at the opposition stage.
7) Registration of Sound Marks
Under the new law, sound marks are now eligible for registration.
8) Well-known Trademarks
The amendments clarify how and when a trademark will be recognized by authorities as a well-known trademark and prohibits the use of the term “well-known trademark” on products, packaging and advertising.
Overall, the changes appear to move China’s trademark law in the right direction, although the full impact of the law will depend on how it is applied in practice.
The Trademark Clearinghouse – What Brand Owners Need to Know
In anticipation of the new generic top-level domains, the Trademark Clearinghouse is designed to provide some protection for holders of registered trademarks.
The current Internet Domain Name System features just 22 generic top-level domain names (gTLDs), including .com, .net., .org, and .biz. In 2012, the international body that oversees the use of Internet domains, known as ICANN, began accepting applications to register new gTLDs.
According to ICANN, nearly 2,000 applications to register new gTLDs were received during the application window. Examples of the applied-for gTLD strings are .amex, .book, .fashion, and .google (for a full list, click here). ICANN expects the first new gTLDs to be delegated as early as April 23, 2013.
The launch of the new gTLDs is expected to bring with it an increase in cybersquatting and trademark infringement.
What is the Trademark Clearinghouse?
The Trademark Clearinghouse is a central database of validated trademarks designed to help protect the rights of brand owners within the new gTLD program.
For a fee, trademark holders may submit their trademark(s) for validation directly with the Clearinghouse, or have a Trademark Agent do so on their behalf.
What are the Benefits?
All new gTLD registries will be required to interface with the Trademark Clearinghouse. This means that once your trademark is submitted to and validated by the Clearinghouse, you will not need to monitor the launch of each new gTLD or register in multiple databases to access the following services:
i) Sunrise Service – gives you priority access to register a domain name that matches your trademark for all new gTLDs as they are launched, before domain names are offered to the general public.
ii) Trademark Claims Service – potential domain name registrants will receive a warning notice if their chosen domain name matches your trademark. If they proceed with the registration, you will be notified. This does not stop others from registering your trademark as a domain, but may alert you to potential infringers so that you can take any appropriate action.
When Should You Register?
There is no deadline per se. The Trademark Clearinghouse opened for registrations on March 26, 2013. As the date of the first sunrise period has not yet been confirmed, you still have time to take full advantage of the Clearinghouse.
Now is a good time to review your trademark portfolio, update any ownership information, compile evidence of use, etc.
What if you don’t have a registered trademark but want to take part in the Clearinghouse?
While there are exceptions, unregistered trademarks are not generally eligible for the Trademark Clearinghouse. If you have not done so already, you should speak to a Trademark Agent about filing applications to register your important marks.
Even if you don’t ultimately record your mark with the Trademark Clearinghouse, a trademark registration carries a myriad of benefits. Should you require information on the trademark registration process, please contact one of our Registered Trademark Agents.