New Changes To Trademark Protection In China

The most prominent change in the Revision is the introduction of judicial review of administrative decisions regarding the administration and adjudication of trademark rights. The TRIPS mandates the right to judicial or quasi-judicial review of administrative decisions relating to the application for registration, maintenance or revocation of trademarks. However, under the old Trademark Law, the Trademark Review and Adjudication Board had the ultimate authority to make final decisions in these areas.

Articles 32, 33 and 43 of the Revision grant to an applicant, opponent and any other relevant party the right to judicial review of administrative decisions, with respect to (i) the Trademark Office's rejection of a trademark registration application, (ii) the opinion of the Trademark Review and Adjudication Board in an opposition proceeding, and (iii) the ruling of the Trademark Review and Adjudication Board on the maintenance or revocation of a registered trademark.

ENHANCED PROTECTION

The Revision provides increased protection of trademark rights by expanding the scope of legal protection for or in relation to the ownership of trademark rights, and restraining activities that might interfere with such rights, as follows:

Owners

Under the old Trademark Law, Chinese individuals had to register a privately-owned company or a proprietorship before they obtained a trademark. The Revision by contrast allows domestic, as well as foreign, individuals to own trademarks. Moreover, the Revision allows two or more natural persons, legal persons or other organizations to be joint trademark holders. Joint ownership not only provides an additional form of trademark ownership for the companies and individuals involved in their strategic planning, but also may serve as a form of compromise for resolving trademark disputes, especially in those situations where the trademarks have been used by many people and the use history of the trademarks is impossible to trace.

Definition of Trademark

The definition of trademark in the Revision has been updated to be consistent with the trademark definition in Article 15 of the TRIPS. Thus trademarks are defined as all visible symbols that can distinguish products and services between different providers, including characters, graphs, letters, numbers, 3-D marks and colour compilations, as well as the compilations of all of the above. The addition in the Revision of 3-D marks and colour compilation marks will afford more choices to product and service providers in deciding or designing their unique trademarks.

Additional Types of Protected Marks

The Revision, in compliance with the requirement of Article 7 of the Paris Convention, has extended protection to group trademarks and certification trademarks. Before the promulgation of the Revision, group trademarks and certification trademarks were protected under the Registration and Administration of Collective and Certification Trademarks Procedures promulgated by the State Administration of Industry and Commerce (the SAIC) in 1994.

In addition, in response to the requirement of the TRIPS (Paragraph 3, Section 2) that geographic symbols be under trademark protection, the Revision provides that if a trademark contains a geographic symbol, but the geographical origin of the products is not the area indicated by the geographic symbol, and the use of such trademark is misleading to the general public, the trademark at issue is not allowed for registration and the use of such trademark is prohibited. However, if the registration of such trademark is obtained in good faith, the registration shall continue to be effective.

Well-known Trademarks

The old Trademark Law does not directly protect well-known trademarks. Rather, they are protected instead by an administrative regulation, the Recognition and Administration of Well-known Trademarks Tentative Provisions, promulgated by the SAIC in 1996. Under that administrative rule, it is difficult to obtain authentication of well-known trademarks and the protection afforded to such marks is by no means comprehensive.

Consistent with the Paris Convention and the TRIPS, both of which require their member countries to provide protection for well-known trademarks, the Revision now prohibits anyone from registering or using a trademark that copies, imitates or interprets well-known trademarks, if the former will mislead the general public or harm the interests of the well-known trademark owner. Article 14 of the Revision sets forth the factors for determining whether a trademark is a well-known trademark. The owner of the well-known trademark has the right to ask the Trademark Review and Adjudication Board to de-register the forged trademark within five years after the conflicting trademark is registered.

It should be noted, however, that the scope of protection allowed a well-known trademark registered in China and that permitted a well-known trademark not registered in China are different. For well-known trademarks registered in China, the protection covers almost all the products, while for well-known trademarks not registered in China, the protection only covers products which are similar to the products on which the well-known trademark is used.

Existing Rights

The Revision provides that no trademark application be allowed to harm the pre-existing right of others; nor shall a trademark applicant register by dishonest means in his own name another's trademark that has gained recognition. The pre-existing rights may include rights to names, portraits, copyrights, industrial designs and enterprise names. The Revision also prohibits registration application agents or representatives from registering trademarks under their names without the prior authorization of the trademark owners, in response to Article 6 of the Paris Convention.

Priority Rights Under Paris Convention

Until the promulgation of the Revision, a SAIC notice grants priority right to a trademark applicant from a member country to the Paris Convention who had already applied for registration of the same trademark in a foreign country, as required by the Paris Convention (Articles 4). And despite the requirement in the Paris Convention (Article 11) for tentative protection of trademarks that are used in an international exhibition, there is no legal provision for such tentative protection in the old Trademark Law.

The Revision now provides protection for both types of situations (Article 24 and Article 25). An applicant will be able to enjoy priority right in its application for registration (i) within six months after the applicant for the first time applies for registration of the same trademark in a foreign country, if the applicant applies in China for the same trademark on the same products or (ii) within six months after a trademark is used for the first time on products which are presented in an international exhibition hosted or recognized by Chinese government.

Reverse Counterfeiting

Article 52 of the Revision provides that "reverse counterfeiting" constitutes an infringement under the Trademark Law and shall be punished. Reverse counterfeiting refers to the practice in distribution or trading whereby a distributor or a dealer purchases products from others and replaces the trademark of the purchased products with the trademark of his own. After the replacement, the distributor or the dealer will put the products in the market as if they were his products. Under the old Trademark Law, there is no legal basis to punish such practice.

Excluded Trademarks

In response to Article 6 of the Paris Convention which prohibits a member country from registering the official symbols and examination seals of other member countries as trademarks, the Revision now prohibits the registration as trademark of all the following items: (i) symbols identical or similar to official symbols and examination seals of other member countries which indicate control implementation or guaranty, unless otherwise authorized, and (ii) symbols bearing the names of the specific location of the central government authorities, or the names and drawings of central government buildings.

With respect to 3-D trademarks, those 3-D shapes which are in the 3-D form because of the nature of the products, the need to achieve some specific technical effects, or of which substantial value depends on such form are not permitted to be registered as trademarks under the Revision.

STRENGTHENED ENFORCEMENT POWER

The Revision strengthens the enforcement of trademark law by providing more remedies for violations, and increases and clarifies the amount of damages for such violations.

Remedies for Violation

While the Old Trademark Law only allows two forms of remedy for infringement, confiscation of illegal income and imposition of fines, Article 53 of the Revision, consistent with TRIPS' requirement, has granted greater enforcement power to administrative authorities to penalize trademark infringement by such additional measures as injunction against infringement activities, confiscation and demolition of infringing products and equipment used for the sole purposes of manufacturing infringing products or forging registered trademarks, and the confiscation of materials, tools and equipment used mainly for infringement purposes.

The TRIPS requires member countries to take tentative measures if credible evidence of infringement exists to avoid any delay that may result in irrevocable losses to the trademark owner or the evidence of infringement. Consistent with such a requirement, the Revision permits the People's Court to issue injunctions against infringing activities, and orders for preserving the property or the evidence involved where credible evidence of infringement is presented.

Damages Clarified

Article 56 of the Revision reflects TRIPS' requirement that the damages for trademark infringement be sufficient to make up for the losses suffered by the trademark owner, and that the infringing party, at the discretion of the adjudicating authorities, pay all the expense incurred in related legal or administrative proceedings. The Revision allows damages in the form of any of the following:

• the actual loss of the trademark owner;

• the illegal income of the infringers; or

• an amount not exceeding Rmb500,000, if neither the loss of the trademark owners nor the illegal incomes of the infringers can be ascertained.

Reasonable expenses incurred by the trademark owners for stopping the infringement, such as legal and investigation fees, are to be included as part of the damage claims.

WTO ACCESSION COMMITMENT

In its WTO accession agreement, China made the following commitments on trademark protection upon its accession:

• China will amend the Trademark Law, and the PRC Trademark Law Implementing Rules;

• China will allow trademark registration of three-dimensional symbols, combinations of colours, alphabets and figures;

• China will introduce group trademark, certification trademark and official symbol protection;

• China will also protect geographic indications, well-known trademarks and will fully respect priority rights;

• China will offer interested parties the opportunity for judicial review and determination of trademark rights; and

• China will crack down on all serious trademark infringement activities, increase the statutory compensation amount, and strengthen the measures against trademark infringements.

CONCLUSION

The Revision, like the new Copyright Law, reflects most of China's intellectual property right commitments under the WTO. The changes in the Revision hold the promise for greater trademark protection in China in the future. However, apart from the fact that the Revision is yet to be interpreted by the PRC, Trademark Law Implementing Rules, a significant amount of time and further efforts are needed for China to significantly improve its protection of trademark rights.