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.
It’s a New Year. Time for a Trademark Audit?
Now is the time when many of us are making goals and plans for the coming year, both on a personal level and in our businesses. In the course of developing your business objectives, it would be a good idea to consider a trademark audit.
A trademark audit involves a review of your trademarks and existing applications and registrations to take stock of your assets as well as identify any vulnerabilities or deficiencies in protection. A trademark audit should be conducted on a regular basis – once a year at a minimum for most brand owners. The following are just some of the reasons to conduct a trademark audit.
1) Identify new trademarks
Have you recently adopted a new name, logo or tagline? If so, it may be prudent to file applications to protect the new marks. Are you in the process of re-branding? Trademark clearance searches should be conducted to identify potential obstacles and risks associated with any new marks under consideration.
2) Identify gaps in trademark protection
Do you currently have applications or registrations for all of your important trademarks? You may have already protected your primary brand with a word mark, but are you using a distinctive logo, tagline or product name that also needs protection?
Do your current registrations cover all of the goods and services that you provide in association with the trademark(s)? Business focuses change over the years. You may think the trademark registration you obtained years ago is sufficient because your trademark hasn’t changed. However, if your products and/or services have changed or expanded, there is a good chance that your existing registration is not giving you the protection you need. You may need to consider filing a new application or expanding your existing registration to cover the new products and services.
Do you have registrations in all of the countries in which you do business? Many businesses disregard the importance of registering their trademarks in other countries, or put off foreign applications for budgetary reasons. Doing so may force you to deal with disputes in foreign countries that are extremely costly and time consuming and/or may require you to re-brand in certain parts of the world. If you are doing business or planning to do business on an international scale, now is the time to consider an international trademark strategy.
3) Identify vulnerabilities in your existing applications and registrations
Did you file your own trademark application? Some people try to save money by filing their own trademark application rather than using a registered Trademark Agent. While you can obtain a registration this way, you may not realize until it is too late that mistakes were made at the time of filing that left the registration at risk of being invalidated. Now is a good time to have a Trademark Agent review your applications and registrations to identify any vulnerabilities, and implement a plan to correct them.
Are your trademarks still in use? Trademarks become vulnerable to expungement if they are not used for a period of 3 or more years. If you have registrations that you would like to maintain but that you are not currently using, find a way to incorporate the marks into your product packaging (for goods) or marketing materials (for services).
Have you made changes to trademarks that you have already registered? As a general rule, trademarks should be used exactly as registered or the registration will become vulnerable to expungement. If you have made any modifications to your trademark, including addition or removal of words or adjustments to the design or the layout of the mark, it is a good idea to consult with your Trademark Agent to determine whether a new application is appropriate.
Do you have documentary evidence of trademark use? If it comes time to defend or enforce your trademark rights, you will want to be able to produce documentary evidence supporting your trademark use dating back to the date of first use. If you are unsure what qualifies as suitable evidence, a Trademark Agent can advise you.
4) Update Ownership and Contact Information
Have you moved or changed your corporate name? Name and address changes should be recorded at the various trademark offices where you have applications and registrations. It is also important for your Trademark Agent to have your current contact information to avoid missed deadlines and inadvertent loss of rights.
Has the owner of the trademark changed? It is always a good idea to document any transfers of ownership with formal assignment documents. Assignments should also be recorded at the relevant trademark offices.
Do you have a designated point person for trademark matters within your company? Due to changes in personnel, the person who originally dealt with trademark matters may no longer be with your company, leaving you in the dark about your existing rights and what deadlines may be coming up. Designate a new point person and have that individual reach out to your Trademark Agent. Your Agent can provide an updated status report and advise on any upcoming deadlines and outstanding issues.
In addition to the above, a thorough trademark audit should incorporate the following:
– monitoring for infringement and taking appropriate steps to stop infringers
– reviewing existing license agreements to ensure they are up to date and in order
– following up with licensees to confirm they are using the marks as authorized and meeting designated quality control standards
If it has been a while since you last audited your trademark portfolio, now is the time to reach out to your Trademark Agent.