Clearer protection of well-known trademarks

(i) unauthorised use of a trademark on (a) goods/services which are identical or similar to the Plantiff's unregistered trademark and (b) goods/ services which are dissimilar to the Plaintiff's well-known trademark (registered in China), thus constituting a breach of Article 13 of the PRC Trademark Law (中华人民共和国商标法);

(ii) unauthorised use of a trade/ enterprise name that is identical with or similar to a registered trademark in China, thus constituting a breach of the Plaintiff's trademark rights or unfair competition;

(iii) unauthorised use of a trademark which infringes on the Plaintiff's registered trademark, with the Defendant raising a counterargument or counterclaim that it has an earlier unregistered well-known trademark.

The Interpretation also clarifies that it is not necessary to recognise the well-known status of trademarks in disputes involving the registration/ use of domain names which are identical with or similar to the registered trademark under consideration.

The well-known status of a trademark is to be determined on a case-by-case basis and recognition of such well-known status is case specific and therefore not binding on subsequent similar cases.

Under Article 7 of the Interpretation, however, a trademark which has been previously recognised as a well-known trademark in earlier cases may be used as strong preliminary evidence in other cases, unless challenged by the counterparty.

In general, the courts must take into consideration all the factors set out in Article 14 of the Trademark Law when determining whether a trademark is well-known. These include the degree of knowledge of the relevant public, the duration of use, the time, extent and geographical range of any publicity of the mark, and any records of protection of the mark as a well-known mark.

Meanwhile, the Rules for the Recognition of Well-known Trademarks (驰名商标认定工作细则), which were issued in April 2009, assist in supplementing the Interpretation. Under the Working Rules, the determining factors set out in Article 14 of the Trademark Law should be applied; however, not all of the above-mentioned factors need to be fulfilled in order for the mark to be considered well-known.

Under the Interpretation, other relevant evidence that will be taken into consideration for the determination of whether a mark is well-known would be: the sales volume, market share, marketing regions, profits and taxes of the products bearing the trademark; the duration of continued use of the trademark; market survey reports; market value assessment reports; and industry rankings. In addition, the Interpretation clarifies that the duration of continued use of a trademark includes use before its registration in China.

In relation to marks that are already widely known by the general public in China, the burden of proof to support the fame or reputation of the trademark is lowered in that the Plaintiff would need to furnish only preliminary proof. The courts are allowed to use their discretion to determine the well-known status of the trademark based on the prima facie evidence produced by the Plaintiff, unless challenged by the counterparty.

Impact of the Interpretation and Rules

In general, the recognition of the well-known status of a trademark is the only effective means to protect trademarks against the unauthorised use of an identical or similar mark in respect of dissimilar goods or services. This is the reason why brand owners claim for well-known status in infringement cases and bad faith registration (cancellation actions) in respect of dissimilar goods or services.

Due to the strict requirements of the well-known trademark regime, it has generally been difficult for brand owners to claim well-known status given that substantial evidence has to be provided to support the same and examination proceedings are time-consuming.

The Interpretation aims to facilitate the enforcement of trademarks by well-known mark owners by lowering the burden of proof for Plaintiffs in respect of trademarks which already have a high degree of recognition nationwide. The Rules also alleviate the evidential burden by clarifying that not all the factors set out in Article 14 of the Trademark Law need to be fulfilled for a finding of well-known status.

However, it appears that the Interpretation and the Rules will generally only protect those brand owners who have trademarks which are widely known in China. Accordingly, brands which are well-known overseas, but have only recently entered the Chinese market, may still face difficulties in going against infringers. These brand owners should seek to secure trademark registrations at the earliest opportunity since the Chinese trademark registration system generally operates on a first-to-file basis.

Ai-Leen Lim, partner and head of IP portfolio management Asia, Bird & Bird (Hong Kong)

Draft trademark law amendments

A draft of the third amendment to the PRC Trademark Law was released for public comment and feedback in August 2007. The draft aims to improve the efficiency of the trademark registration and review system, and targets bad-faith trademark registrations and the continuing problem of trademark infringement. Key proposals include:

• Widened definition of a trademark: The proposed amendments aim to expand the scope of registrable trademarks to include non-visual signs such as sounds and scents as well as marks such as hologram marks, motion marks and single colour marks.

• Introduction of multi-class applications: Under the present Trademark Law, one application must be made for the registration of a trademark in each Class. Under the proposed amendments, multi-class applications would be allowed and this would assist in reducing the administrative workload currently faced by the examiners of the Chinese Trade Mark Office (CTMO).

• Reduction in timeframe for examination of applications: The proposal seeks to reduce the timeframe from examination of any trademark application to the completion of the same by the CTMO to within 12 months of the filing date of the application.

• Abolishment of relative grounds for refusing trademark applications: Under the Trademark Law, the CTMO is required to substantively examine a trademark application for refusal on the bases of both absolute and relative grounds. The proposed amendments seek to remove the requirement on the part of the CTMO to consider relative grounds in order to improve efficiency.

• Improved measures to prevent the abuse of opposition and invalidation procedures: In an attempt to reduce the number of vexatious and frivolous requests for opposition and invalidation, the proposed amendments stipulate that only parties holding rights in respect of prior trademarks or geographical indications may file trademark oppositions/invalidations (contrary to the current law under which any person may initiate proceedings). It is also proposed that the permissible grounds for opposition/invalidation be restricted. In addition, the proposed amendments provide that the unsuccessful party in an opposition or invalidation must pay the successful party's reasonable legal costs. In opposition cases, where the unsuccessful party is held to have filed proceedings in bad faith, he will also be required to indemnify the successful party for any losses suffered which resulted from the untenable opposition.

• Increased damages for trademark infringement: Under the proposals, the maximum fines for trademark infringement at both statutory and administrative levels will be increased. The quantum of statutory damages for infringement is proposed to be raised from a maximum of Rmb500,000 (approximately US$70,000) to a maximum of Rmb1 million. The maximum administrative fines are proposed to be increased from Rmb100,000 to Rmb1 million.

The draft is still subject to change and is still open for public consultation as well as being under examination by the Trademark Office. It is understood that the Trademark Office is aiming to speed up the finalisation of the draft, especially since the amendments to the PRC Patent Law (中华人民共和国专利法 ) will come into force on October 1 2009. It is anticipated that the proposed amendments will be submitted to the State Council sometime in late 2009 or early 2010. Whether and which of these amendments will eventually be incorporated in the amended Trademark Law remains to be seen, and is no doubt being anticipated by brand owners worldwide.