FAQ for New Chinese Trademark Law

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To improve the efficiency of applying for or contesting trademark applications, to provide greater protection for trademark owners, and to crack down on infringers and bad faith applications.

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1) Strengthened protection against piracy; 2) Shortened trademark prosecution times; 3) Sound marks and multiple class trademark applications made available; 4) Strengthened well-known mark protection; 5) Narrowed legal standing for oppositions and invalidation; 6) A mark proceeding to application if the opposition fails at the first level of adjudication at the Trademark Office; 7) Increased fines, compensation, and statutory damage against infringement.

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Currently, the timeline for most trademark cases, notably oppositions, cancellations, and reviews and appeals before the Chinese Trademark Office and the Chinese Trademark Review and Adjudication Board, can be a lengthy one. The new Trademark Law sets out specific time limits for the completion of cases. After filing the new trademark application, the trademark office must then provide its preliminary determination on registrability within nine months. Similarly, in most cases, opposition and invalidation proceedings must be complete within 12 and nine months, respectively.

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Chinese courts may now award significantly greater statutory damages in infringement cases ranging from RMB 500,000 to RMB3 million (roughly from US$80,000 to US$500,000). Statutory damages are awarded in the event the mark owner’s actual damages, the benefit to the infringer and the royalties for the mark are difficult to calculate. If the infringement is in bad faith and damages are determined according to actual damages, profits or royalties, then damages may be multiplied up to three times. Mark owners are also entitled to the expenses incurred to halt the infringing activity.

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The owners of “well-known” trademarks may now prevent others from using the mark on dissimilar goods if the use would likely cause confusion and potentially prejudice the owners of the well-known mark. The government can only confer “well-known status” in certain situations. For instance, owners can request “well-known status” if they believe their rights have been violated in cases before the Trademark Office, the Trademark Review and Adjudication Board, or certain People’s Courts. Recognition as a well-known trademark depends on several factors, including the continuous use of the mark, breadth of publicity for the mark, protection of the mark and how well the relevant public knows the mark. However, owners of well-known marks cannot advertise that their marks are legally well-known, such as in a laudatory sense for marketing purposes.

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Aside from registrability issues, the new Trademark Law no longer allows parties that are not prior right holders or interested parties to file oppositions or invalidations.

Oftentimes there is a need for third parties to file oppositions or invalidations. For example, to prevent retaliation, a party may wish to have oppositions or invalidations filed in the name of an unrelated third party in order to keep its identity confidential. Once the new Trademark Law comes into effect, that option will no longer be available.

An important change to the Trademark Law is that if an opposition fails at the Trademark Office level, which is the first level of review for an opposition, the mark would immediately proceed to application. This is a drastic change from the current Trademark Law, where the opponent in such a situation may appeal to the Trademark Review and Adjudication Board and apply for judicial review at two levels of court.

Unless the Chinese Trademark Office examiners are willing to take up the fight against pirates, this change will fuel piracy as the application of a pirated mark would embolden the pirates to hold legitimate right holders for ransom.

A key strategic point for foreign companies and their counsel to note is that this change elevates the importance of the evidence for supporting oppositions. It is very important that sufficient use, fame, and other evidence for supporting oppositions is produced for oppositions.

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The application and use of a trademark must now be in good faith, otherwise the government may impose fines or, in some cases, refuse to consider future applications from the violator. The amendments specifically target certain practices of trademark agencies, companies that are retained to establish marks on behalf of clients but are the subject of significant concerns regarding bad faith applications. Namely, the amendments prohibit agents from establishing a mark if they know, or should know, that their client is seeking to establish the mark in bad faith. Agents also cannot establish marks on their own behalf without their principal’s authorization and cannot establish marks that are the same as, or similar to, unestablished marks owned by a third person with whom the agency has a relationship sufficient to make the agency aware of the third person’s mark.

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For applying for a patent of invention or utility model, an application shall be filed first, a request, a description and its abstract, and claims shall be submitted.

For applying for a patent for design, an application shall be filed first, a request, drawings or photographs of the design shall be submitted, and the product incorporating the design and the class to which that product belongs shall be indicated.

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Those foreign people who have fixed residences or business sites, or foreign enterprises or organizations located in China, enjoy same the privilege of Chinese people in the respect of patent right protection, i.e. they have the rights either to apply for patents as same as Chinese people do, or to enjoy protection from the Chinese Patent Law.

Any foreigner, foreign enterprise or other foreign organization having no fixed residence or business site in China files an application for a patent in China, the application shall be treated under this Patent Law in accordance with any agreement concluded between the country to which the applicant belongs and China, or in accordance with any international treaty to which both countries are member countries, or on the basis of the principle of reciprocity.

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Earlier publication is one of China's examination systems to the patent application. According to a research to some countries with sophisticated patent system, a big amount of inventions have little commercial prospects, some inventions are not yet mature while some applications are submitted for the priority right. A research indicates that, generally speaking, one invention will be of little practical or commercial prospect if it has not been commercialized within two years since its filing date. Because of this, some countries always think it is not necessary to spend so much man-power, time and money to do substantial examination to those inventions, and leave a reasonably long time to the inventors to see the value of their inventions and thus to decide whether to apply substantial examination or not. Netherlands is the first country to adopt this method, and now most of countries having patent system adopt the method either. This system is not only good to patent administration, because it can save a lot of time and man-power, but also good to applicants because they can either apply earlier or have the time to evaluate the practical value and prospect to the invention before they spend time and money to apply for further substantial examination.

According to article 34 of China's Patent Law, after receiving an application for a patent for invention, the Patent Administration Department under the State Council, upon preliminary examination, finds the application to be in conformity with the requirements of Law of Patent, it shall publish the application promptly after the expiration of eighteen months from the date of filing.