China adopts the Third Revision of Trademark Law

The current PRC Trademark Law was promulgated on 23 August 1992 and subsequently revised in 1993 and 2001 respectively. On 30 August 2013, Chinese legislators adopted the third revision of the PRC Trademark Law ("Revised Trademark Law"). The Revised Trademark Law, which will take effect on 1 May 2014, brings about significant changes to the current trademark regime. Below is an overview of the key changes:

1.

Improving procedural efficiency and transparency

Filing

• The Revised Trademark Law introduces for the first time a multi-class application system. One trademark application is allowed to cover the goods or service in several classes in accordance with the Chinese Classification of Goods and Services. The multi-class application system is in line with international common practice and facilitates the registration process for trademark applicants who want to apply for trademarks in the PRC in several classes.

• The current PRC Trademark Law is silent on the time limit for the examination of trademark applications. According to the Revised Trademark Law, the PRC State Trademark Office ("STO") should complete the examination and decide whether it will preliminarily approve the registration of the applied trademark within 9 months from the date of application.

Opposition

• Upon preliminary approval, the STO will publish the preliminarily approved trademark in the official gazette. Oppositions have to be filed with the STO within 3 months after the publication of the preliminarily approved trademark on the basis of absolute refusal grounds (such as use of restrictive words and lack of distinctiveness etc.) and/or relative refusal grounds (such as conflict with prior rights). Under the Revised Trademark Law, anyone can oppose a preliminary approved trademark based on the absolute refusal grounds. However, only prior right holders and relevant interested parties are allowed to file the opposition on the basis of relative refusal grounds.

• The Revised Trademark Law requires that the STO should complete the opposition proceedings within 12 months from the date of opposition. In exceptional cases, the time limit of 12 months can be extended for additional 6 months subject to the approval of the PRC State Administration for Industry and Commerce ("SAIC").

Invalidation

• Under the Revised Trademark Law, after the registration of a trademark has been granted, the STO may declare invalidation of the registration if (i) the trademark triggers any absolute refusal grounds or (ii) it has been discovered that the trademark was applied for registration in a deceptive manner or by other improper means. Based on the same reasons, anyone is allowed to request the PRC Trademark Review and Adjudication Board ("TRAB") to declare the invalidation of the registered trademark.

• According to the Revised Trademark Law, the TRAB should complete the invalidation proceedings within 9 months from the date of request. In exceptional cases, the time limit of 9 months can be extended for additional 3 months subject to the approval of the SAIC.

• Under the Revised Trademark Law, only the prior right holders and relevant interested parties may request the TRAB to declare the invalidation of a registered trademark on the basis of relative refusal grounds. The request should be submitted to the TRAB within 5 years after the registration is granted. If the time limit of 5 years has expired, the registered trademark cannot be challenged anymore based on any relative refusal grounds, except for bad faith registration of other well-known trademarks in China.

The Revised Trademark Law requires that the above invalidation proceedings should be completed within 12 months from the date of request. In exceptional cases, the time limit of 12 months can be extended for additional 6 months subject to the approval of the SAIC.

Revocation

• The Revised Trademark Law newly provides that anyone may request the STO to revoke a registered trademark if it has become a generic name for its designated goods or services. This means that in addition to revocation for reasons of non-use, genericness forms a new ground for revocation of a registered trademark in the PRC.

• The Revised Trademark Law requires that the revocation proceedings for reasons of non-use or genericness should be completed by the STO within 9 months from the date of request. In exceptional cases, the time limit of 9 months can be extended for a period of 3 months subject to the approval of the SAIC.

2.

Substantive protection of trademark rights

Protecting sounds as a trademark

• Under the Revised Trademark Law, apart from visual signs, sounds are now also allowed to be registered and protected as a trademark in the PRC.

Preventing abuse of well-known trademarks

• The protection of a well-known trademark in the PRC can be extended to goods or services other than those similar to the well-known trademark. The Revised Trademark Law adopts a "passive" approach in terms of acknowledgement of well-known trademarks in China. I.e. no authority is allowed to acknowledge any well-known trademarks on its own initiative. Under the Revised Trademark Law, only the STO, the TRAB or the courts designated by the Supreme People's Court may acknowledge the well-known status of a trademark in the PRC, if it is requested by the owner of the trademark in a specific case.

• Under the Revised Trademark Law, after a trademark has been acknowledged as a well-known trademark in the PRC, the owner of the well-known trademark can neither indicate the term "well-known trademark" on its products or packaging, nor use it in advertisements, exhibitions or other business activities. The local administration for industry and commerce ("Local AIC") may order a rectification and impose a fine of up to RMB 100,000 (approximately EUR 12,500) for each violation.

Strengthening protection against bad faith registration

• "Good faith" is explicitly stipulated in the Revised Trademark Law as one of the fundamental principles for registration and use of a trademark in the PRC. Under the Revised Trademark Law, the application of a trademark squatter shall be rejected as long as the owner of the trademark has evidence proving that the trademark squatter obviously knows the trademark through its contractual, commercial or other relation with the trademark owner.

• The Revised Trademark Law explicitly prohibits local trademark agency firms from registering any trademark in their own names. Further, if any local trademark agency firm knows or should know that its client acts in bad faith to apply for registration of any trademark, the local trademark agency firm shall not represent the client to file the trademark application with the STO. In case of any violation, the local AIC may, on one hand, impose on the local trademark agency firm a fine of up to RMB 100,000 (approximately EUR 12,500) for each violation, and on the other hand, impose a fine of up to RMB 50,000 (approximately EUR 6,250) for each violation on the persons directly responsible for such violation.

Likelihood of confusion

• Under the Revised Trademark Law, likelihood of confusion is for the first time regarded as one of the factors to be assessed when determining trademark infringement. This brings China in line with the international practice on determination of trademark infringement.

Statutory damages increased

• The amount of actual damages for trademark infringement can be the benefits gained by the infringer ("Illegal Benefits") or the losses suffered by the right holder ("Actual Losses") during the period of infringement. If both the Illegal Benefits and the Actual Losses are difficult to calculate, the court may determine the amount of the damages based on the multiple of the trademark license fees. If the latter is also difficult to calculate, the court may at its discretion award statutory damages. Under the Revised Trademark Law, the maximum amount of the statutory damages is increased from RMB 500,000 (approximately EUR 62,500) to RMB 3,000,000 (approximately EUR 375,000).

Punitive damages allowed

• The Revised Trademark Law allows Chinese courts to award punitive damages against intentional infringement. The maximum amount of the punitive damages is up to three times of the actual damages.

Defense

• The Revised Trademark Law introduces the prior use defense, the non-use defense and the genericness defense against a claim for trademark infringement.

• The prior use defense means that the prior user of a trademark may continue to use the trademark within its original scope, although it is identical to or similar with a registered trademark on identical or similar goods. However, the registrant of the registered trademark may request the prior user to add adequate signs to the trademark in order to distinguish them.

• Under the Revised Trademark Law, if a defendant raises a non-use defense, the court may request the plaintiff to submit evidence proving its actual use of the registered trademark in the past three years. If the plaintiff can neither prove the actual use nor prove the existence of other damages, the defendant can be exempted from compensating any damages to the plaintiff.

• In respect of the genericness defense, the Revised Trademark Law provides that if a registered trademark contains any generic term, diagram or model number, or directly indicates the quality, main raw materials, function, intended purpose, weight, quantity and other characters of the designated goods, or it contains a place name, the registrant of the registered trademark cannot prohibit others from the fair use of the above elements.