Suggestions for the trademark law amendments

2013/08/01,By Kevin Nie, China IP,[Trademark]

In December 2012, the 13th Session of the 11th National People’s Congress Standing Committee of the People’s Republic of China preliminarily reviewed the draft revision of PRC Trademark Law (the Draft). The Draft was published on NPC’s official website by the Legislative Affairs Commission of the Standing Committee of NPC (the Legislative Affairs Commission) to solicit public opinions till January 31st 2013. This signifies that the third revision to the Trademark Law entered into its final stage. On January 28th 2013, a few days before the soliciting of opinions ended, some intellectual property academies and associations including China Intellectual Property Law Association and China Trademark conference to discuss the revision of the Draft. Judges from the Supreme People’s Court and courts at all levels, experts and scholars from universities, experienced trademark practitioners, lawyers and attorneys exchanged their opinions during the conference.

It is reported that the opinions and suggestions collected at the conference had been presented to the Legislative Affairs Commission. It is also the last event held by related organizations to collect suggestions on the revision of the Draft.

Basic Provisions

Cheng Yongshun, Director of Beijing Intellectual Property Institute stated that the Trademark Law does not give a specific definition to “trademark.” first place, then give stipulations to “registered trademark,” “collective trademark” and “certif ication trademark;” meanwhile it should also clarify that trademark is a sign for a commodity or service, which is used to distinguish the source of that commodity or service.

Yang Yexuan, former Deputy Inspector of the Trademark Appeal Board of State Administration for Industry & Commerce of China (the Appeal Board), suggested that the concept of “the exclusive right to use the trademark” should be replaced by “trademark right.” The former one is based on registered trademarks, while the latter one also includes unregistered trademarks. We can conclude from the previous amendments of the Trademark Law that in addition to registered trademarks, unregistered trademarks are also protected by the law. Besides, in order to effectively control trademarks registration applied for in bad faith, it is necessary to list the trademark registration applied for in bad faith on the absolute grounds for refusal in the Trademark Law.

Granting process

According to the current Trademark Law, any person may, within three months from the date of publication, file an opposition against the trademark that has, after examination, been preliminarily approved. The Trademark Office should rule after examining the opposition application. If the opponent is dissatisfied with the ruling delivered by the Trademark Office, he can apply for a review at the Appeal Board. Where the opponent is dissatisfied with the Appeal Board’s decision, he may file a lawsuit in court. The scopes of opponent as well as the reason to file an opposition provided in the current Trademark Law are too broad, and the process is too complicated. The scopes and process mentioned above may prevent the applicant from getting the trademark without delay. Therefore, the Draft improves the opposition system in the following aspects: firstly, limits the scope of opponent. The Draft changes “any person” into “prior right holder or any interested party” who believes that the application of the trademark registration infringes its existing rights; secondly, restricts the opposition reason to “the prior right which already existed before the trademark registration application.” People outside this scope can file an opposition to invalidate the trademark after it is approved in accordance with the Trademark Law.

Well-known trademark

The Draft adopts the approach of individual trademark identification and passive protection to protect well-known trademarks. The well-known trademark system exists with the aim of providing special protection to trademarks which related publics are familiar with: no matter whether it has been registered; its holder can prohibit others from registering and using the trademark which is identical to or similar with the well-known trademark within a certain scope. A well-known trademark is valid only encountered infringement. However, the owner of the well-known trademark often misleads consumers by saying that its products or services get approval from the authority because of good quality. Therefore, the Draft provides that well-known trademarks should be determined on only trademark related cases and shall be based on the application of a relevant person.

The wide spread misuse of the well-known trademark system has seriously violated the original intention of the system. There are many reasons which lead to the above phenomena, some experts pointed out that the saying, “well-known trademark,” is inappropriate. One expert named Yang Yexuan suggested that Trademark Law should clearly prohibit the use of well-known trademark on enterprises’ advertisements and product packaging.
In China, in order to protect well-known trademarks, issues like which standard should be applied, “likelihood of confusion” or “dilution,” are still hotly debated.

According to Article 13(2), “A trademark shall not be registered and its use shall be prohibited where the trademark constitutes a reproduction, an imitation, or a translation, of a well-known trademark of another person already registered in China and is likely to mislead the public and damage the interests of the owner of the registered well-known trademark. If the trademark is the subject of an application for registration in respect of goods which are not identical or similar to the goods to which the well-known trademark applies.” How to interpret “mislead the public” in this article, does it mean “likelihood of confusion” or “dilution?”

Rui Songyan, Judge at the Beijing First Intermediate People’s Court explained that there is no consensus on the above Article, the courts apply “dilution” standard in practice. In hearing the well-known trademark infringement cases, courts mainly refer to Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law to the Trial of Cases of Civil Disputes over the Protection of Famous Trademarks; while for the unregistered well-known trademark infringement cases, the court can only rule the infringer to cease infringing actions, but cannot order the infringer to compensate the right holder’s losses.

However, there is also another voice claiming that the application of “dilution” standard means more protection on well-known trademarks, which will cause more misuses of the well-known trademark protection system.

Punitive damages

The introduction of the punitive damages system is highly praised by people from all circles, which is also considered to be the most outstanding amendment of the Draft. Moreover the compensation amount was also raised. Currently, the expenses in right safeguarding are high, and sometimes may even higher than the losses. To solve the above problem, the punitive damages provides that if the circumstances are serious in the infringement of the exclusive right to use of a trademark in bad faith, the People’s Court shall decide the amount of compensation for infringement to be one to three times that of the amount of the profits that the infringer has earned as a result of the infringement during the period of the infringement, or the amount of losses that the infringed has suffered as a result of the infringement during the period of the infringement, or the amount of license fee when using a registered trademark.

Where the profits earned by the infringer and the losses suffered by the infringed as a result of the infringement or the license fee when using a registered trademark, as mentioned in the preceding paragraph, are hard to determine, the People’s Court shall, on the basis of the circumstances of the infringement, decide to make it no more than one million yuan, which is twice of the amount provided in the current Trademark Law.

Besides, the infringed party often finds it is difficult to prove the infringing acts, therefore it can only receive a lower compensation than it should have. In reference of the foreign countries’ practice, the Draft also introduced some provisions to solve the above problem.

The Newly added provisions

The newly added Article 47 of the Draft provides, “The use of a trademark, as referred to in the Trademark Law, refers to the use of the trademark on goods, packages or containers of the goods or in trading documents, and the use of the trademark in advertising, exhibition or any other business activities, with the aim of identifying the source of the goods.”

Liu Xiaojun, Judge at the Beijing Higher People’s Court thought that using the enumerative approach cannot list all the uses of a trademark. Besides it also has to clearly specify that the illegal use of a trademark cannot be considered as the use of a trademark.

The newly added Article 58(3) provides, “Prior to the trademark register application filed by the trademark registrant, another party has already used the trademark which is identical or similar to the registered trademark on the same or similar goods. In such circumstance, the proprietor of the exclusive right to use the registered trademark shall have no right to prohibit the use within the original use scope thereof by another person, but the proprietor can request the other party to add some proper marks to distinguish itself with the original trademark.”

Zhou Zhongqi from China Council for the Promotion of International Trade Patent and Trademark Law Office expressed his concerns, he stated that the fraud evidence is common nowadays; more conflicts will occur if there is no sufficient restrictions to define the prior use of a trademark.

Other literal amendments

People in the conference also pointed out some problems on the wordings and phrasings of the Trademark Law, such as inconsistent title, blurred reference and loopholes in wording. Meanwhile they also made other suggestions on the amendment.

The newly added Article 57 provides, “Enterprise who mislead the public by using other’s well-known trademark or registered trademark in its enterprise’s name constitutes unfair competition, and should be handled in accordance with the Anti-Unfair Competition Law of the People’s Republic of China. Judge Wang Yan thought that it is improper to equally list “the well-known trademark” and “the registered trademark” in this Article.

Zhang Guangliang believed that the phrase “in bad faith” being used in the new Article 62(1) in the sentence “infringing the exclusive right to use of the trademark in bad faith” should be changed into “intentionally,” which is easier for determination. Judge Liu Xiaojun expressed his thoughts on Article 10 of the current Trademark Law. Article 10 provides that, “No geographical names of administrative divisions at or above the county level… may be used as trademarks…” He suggested to adding “People’s Republic of China” before the above sentence to have a more explicit limitation. It is because that in some countries such as Japan, “county” does not refer to the same scope of land as in China. Some experts suggested keeping the number of laws consistent. Since the number of laws were changed in every newly amended law, and the bibliographies have to be changed accordingly which become an obstacle in remembering the laws and conducting comparative studies for IP practitioners.

Experts expressed that 30 years has passed since the implementation of the Trademark Law, and China has undergone profound changes, with years of practice, China has accumulated a great deal of experience while also encountered a lot of problems. For this reason, the amendment of the trademark law should be compatible with the socio-economic development.

(Translated by Emily Tan)


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