Following its endeavours towards better intellectual property protection, China has unveiled a new Trade Mark Law that will come into force on 1 May 2014. The main aims of this new legislation are to modernise and streamline the trade mark process and to strengthen trade mark enforcement as well as making trade mark squatting and counterfeiting more difficult for the perpetrators.
These changes will affect all aspects of the trade mark practice, including filings, examinations, prosecutions, oppositions, well-known marks and overall trade mark enforcement.
Foreign and local businesses have welcomed the new law saying that it will ease the pressure of both protecting and enforcing their trade marks and brands within China.
Which are the most significant upcoming changes?
1. China will allow multiclass applications
Currently, China only allows each trade mark to be filed in one class. This requires multiple applications if the applicant wants to have the trade mark registered for a variety of goods and/or services. The implementation of this will save considerable costs to local and foreign businesses filing in China.
2. Introduction of Statutory Limits
Statutory limits will be introduced in the case of trade mark registrations, reviews, oppositions, invalidation and cancellation procedures. According to the draft legislation, a trade mark will have to be examined within 9 months from the filing date and oppositions will have to be resolved within 12 months. Other actions, for which the decision time is limited to 9 months, are reviews on refusal decisions, cancelations and invalidations on absolute grounds.
3. Trade Mark Oppositions
Opposition procedures will be shortened under the new law. If the Chinese Trade Mark Office decides in favour of the applicant, the trade mark will be registered as soon as possible. In this case, the opponent will no longer have the right to appeal this decision and will only be able to challenge this through an invalidation request.
4. Opposing Bad Faith Applications
The new law outlines that trade marks have to be registered and used in line with the principles of honesty and integrity. This means that trade mark owners will be able to claim bad faith against third parties in opposition and invalidation procedures.
5. Recognising Squatting & Prior Use
Along with other countries, China’s first to file system has been seen to facilitate trade mark squatting, a practice in which a non-owner illegitimately obtains rights to a potential owner’s marks. This often occurs with foreign famous marks which have not yet been registered in China. The most famous case was the one in which Apple had to settle a trade mark dispute with a local firm because the local firm had applied for the word “iPad” in China before Apple itself had done so  .
Under the new legislation, a registered trade mark owner who is a squatter is not allowed to prevent a prior user from using its mark if this mark is identical or similar. This is a step towards the recognition of prior use.
6. Well-known Trade Mark Protection.
The new law will recognise well-known marks on a case-by-case basis.
7. Trade mark licences.
Trade Mark licences will only be able to be enforced against third parties if they are registered with the trade marks office.
8. Increases in Fines for Trade Mark Infringement.
There will be significant increases in fines for trade mark infringement. As well as this, if repeated infringement occurs, additional penalties will be administered in order to deter those repeat infringers.
9. Trade Mark Profession Ethics
Under the new law, a trade mark agency will not be able to accept instructions from a client if they know or should know that the mark is filed in bad faith, has infringed a third party’s prior right or is filed to pre-empt the rightful owner. A violation of these will be subject to administrative penalties.
New clarifications about the upcoming Chinese legislation are on the way, in particular provisions about bad faith; but overall, brand owners have welcomed the new law as a positive change and are looking forward to seeing the new provisions implemented.
Please do not hesitate to contact us if you have any questions regarding any of the topics discussed above or if you would like to discuss your trade mark requirements with us.
Saioa Echevarria-Idianez, Trade Marks Attorney
13 November 2013