Introduction to the 2013 Trademark Law, Part 2

(By Zhan Yi) On August 30, 2013, the Standing Committee of the National People’s Congress promulgated Decisions of the Standing Committee of the National People’s Congress Concerning Alterations to the Trademark Law of the People’s Republic of China, which shall be implemented on May 1, 2014. Our website previously translated the Full text of 2013 China Trademark Law, we provided a Comparison Version highlighting the differences between the 2001 and 2013 Trademark Law. In today’s post, our website will introduce and discuss the revised content within the 2013 Trademark Law. Without further ado, we will now move on to the second part of our examination of the 2013 Trademark Law.

Part III Details: A More Convenient Application

The 2013 Trademark Law improves many aspects of the trademark registration procedure, resulting in greater convenience for trademark applicants.

1. A trademark within multiple classifications

Pursuant to the 2001 Trademark Law, if an applicant wants to apply a trademark to multiple classifications, he or she may file an application for the same trademark in each respective classification. This means 2001 Trademark Law restricted a trademark to a single classification.  However, according to the 2013 Trademark Law, if an applicant wants to apply a trademark to multiple classifications, the applicant may file one application. This means that the 2013 Trademark Law adopts trademarks with various classifications, coming more in step with the universal practice of the Madrid Agreement concerning the International Registration of Marks.

2. Electronic application

Pursuant to the 2013 Trademark Law, relevant documents concerning a trademark application can be filed either in writing or by a form of electronic data transmission. The 2013 law gives legal effect to electronic applications for the registration of a trademark.

Moreover, the 2013 Trademark Law stipulates other revisions made with the intent to provide trademark registration applicants with a greater degree of convenience. For example, with regard to communication procedures utilized in review opinions, where the content of a trademark registration application requires further explanation or revision, the Trademark Office may request the applicant to provide such an explanation or revision. This newer procedure provides trademark registration applicants a chance to better communicate with the appropriate authorities, as well as providing applicants more opportunities to revise and edit an application, if necessary. The immediate benefit to such a procedure should appear obvious: by providing this method, it is far less likely that an applicant’s registration will be outright refused. To provide another example, where a registrant or applicant intends to continue to use the registered trademark beyond the statutory ten-year period, an application to renew such a trademark registration should be made within twelve months prior to the date of expiration, rather than the six months previously given pursuant to the 2001 Trademark Law.

 

Part IV Famous Trademarks: A Return to the Original

The 2001 Trademark Law officially established a protection system for famous marks, partially to fulfill the need to meet obligations pursuant to the TRIPs Agreement when China joined the WTO. Before this law went into effect, China had no statute speaking directly to famous trademarks; indeed, the current system set in place for the protection of famous trademarks mainly relies on the provisions of the Paris Convention for the Protection of Industrial Property.

Due to the marketing effect of famous trademarks, the famous trademark protection system in our country has tended to cause a number of problems recently. Some government departments and enterprises in China consider the possession of a famous trademark as being something of an honor. Some enterprises regard famous trademarks as tools that can be used in promoting products and disseminating marketing propaganda. However, all too often these so-called famous trademarks are, in reality, famous in name only, reminding us of an old Chinese proverb speaking to the difficulty of living up to a great reputation. These problems, unfortunately, often harm the consumer’s interest and damage the orderly functioning of a healthy, competitive market.

Famous trademarks shall revert to the original. In the 2013 Trademark Law, such a revision is recognized.

1. Principles of Determination upon an Individual Case, and Requests for Famous Trademark Protection

Article 14 of the 2013 Trademark Law stipulates “a famous trademark, based on the parties’ request, can be defined to prove the facts in dealing with the case involving the trademark.”

2. The phrase “famous trademark” as defined pursuant to the 2013 Trademark Law may not be used on goods or in other commercial activities.

The 2013 Trademark Law also stipulates that a manufacturer or operator shall not use the term “famous trademark” on its goods, including packaging, on a container, or in advertising, commercial exhibitions or other commercial activities, and where a manufacturer or operator violates said provision, the local administrative authority for industry and commerce shall order the parties to rectify the situation and impose a fine of RMB 100,000. Of course, in practice specific cases will need to be distinguished in order to ensure fair use of these new administrative tools.

 

Part V More Powerful Rights Protection

The 2013 Trademark Law grants far more powerful rights protection within its new provisions, including new types of infringement, punishments meted out by the industry and business administrations, the possibility for civil compensation, as well as defense and the burden of proof. The following deserve particular attention:

 (i) Punitive Damages for Willful Infringement

In regard to standards of compensation for the infringement of the exclusive right to use a registered trademark, it is generally considered that there are four types: the first one is actual losses that the rights holder has suffered as a result of the infringement; the second one is where the losses suffered by the rights owner cannot be determined; in this event, the amount of damages due for trademark infringement shall be the profits that the infringer has earned as a result of the infringement during the period of the infringement; the third one is where the losses suffered by the rights holder, or the profits earned by the infringer cannot be determined accurately. Under these circumstances, the amount of damages shall be determined based on a reasonable amount that would be paid for a licensing royalty for the trademark right. Finally, the fourth one is where the above-mentioned ones cannot be determined; in this case, the amount of damages shall be determined in accordance with a statutory compensation system.

If there is malicious infringement and the circumstances surrounding the infringement are particularly serious, the 2013 Trademark Law provides a punitive compensation system, i.e., where malicious infringement occurs, the amount due in damages may be more than one up to three times the aforesaid determined amounts.

 

 (ii) The statutorily defined amount of compensation has been revised to RMB 3,000,000 from RMB 500,000.

The statutory compensation system outlined and defined in the 2013 Trademark Law provides that a People’s Court may determine an amount in damages up to RMB 3,000,000. This is a rather drastic change in light of the previous 2001 Trademark Law, which ruled that the court could authorize damages of up to RMB 500,000.

 (iii) Contributory infringement has become its own category of infringement pursuant to the 2013 Trademark Law

Contributory infringement, as defined pursuant to the 2013 Trademark Law, refers to helping any others to infringe one’s exclusive right to use its registered trademark, with the intention to provide convenience and help in infringing the exclusive right to use a registered trademark. Examples of contributory infringement may include acts like providing transportation of infringing goods, or providing a place where sales can be made of infringing products, with the intention to infringe.

 (iv) Orders to Provide Account Books and Related Information

Accepting the general fact that many trademark holders find it very difficult to completely safeguard their legally protected rights, it is notable that many rights holders find it incredibly difficult to obtain evidence of profits made by infringing parties. An order for an allegedly infringing party to provide its account books and related information could be an excellent solution to solve this rather common problem. In accordance with the relevant laws, for the purpose of determining the amount of damages, where the account books and information related to the infringement are held by the infringer, and where the rights owner has presented as much proof of its claims as is practically possible, a People’s Court may order the infringer to submit such account books and information.

 (v) Actual use of a registered trademark

In reality, some parties register multiple trademarks, and subsequently neglect to ever make commercial use of them in manufacturing and trading. Instead, they will bring lawsuits after registration of the trademark for the purpose of obtaining compensation. Speaking to this issue, the 2013 Trademark Law stipulates that, if the trademark rights holder would like to obtain compensation due to trademark infringement, then the rights holder must in fact actually use the trademark. Where the rights owner cannot provide the aforesaid proof or proof of losses due to the infringement, the infringer suspected shall bear no liability for any claimed losses.

2013 Trademark Law improves on many aspects of trademark law in China, and represents a significant advancement in the reliability and efficiency of intellectual property legislation in China. Of course, the law alone is not enough. That being said, through our work posted here on our website, to our daily practice, we hope to contribute to the further improvement of the trademark law in the future.

 


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