China Prepares Third Revision of PRC Trademark Law

The current PRC Trademark Law was promulgated on 23 August 1992 and was revised in 1993 and 2001 respectively. Chinese legislators are now preparing for the third revision of the PRC Trademark Law. The revision aims of simplifying the registration process, strengthening the protection of trademark rights and improving the enforcement against trademark infringement. The latest draft of the third revision of the PRC Trademark Law (“Draft Revision”) has been released by the Chinese legislators for public comments in January 2013. The most notable amendments contained in the Draft Revision are below:

1. Sound and single color are registereable as trademarks

Currently, only visual signs can be registered as trademarks in China. Under the Draft Revision, sound is allowed to be registered, as long as it can distinguish the goods/services of the registrant from others. A single color sign is also registerable, provided that it has gained distinctiveness through use.

2. Simplified Registration Requirements

Under the current law, one trademark application can cover one trademark on the goods or services in one class only. If the applicant wants to register the same trademark in more than one class, separate applications have to be filed with the PRC State Trademark Office (“STO”). This is not in line with international common practice. Under the Draft Revision, the applicant is allowed to combine the applications for registration of the same trademark in several classes into one trademark application.

3. Limited Grounds for Opposition

Under the Draft Revision, only prior right holders and other interested parties are allowed to file an opposition against the registration of a trademark with the STO. The grounds for opposition are limited to the fact that the registration of the trademark might infringe the prior right of the opposing party. If other persons or entities want to challenge the registration of the trademark, instead of the opposition process, they can only institute invalidation proceedings before the STO after the trademark has been granted registration.

4. Punitive Damages against Intentional Infringement

The Draft Revision allows courts to award punitive damages against intentional infringement. The maximum amount of the punitive damages is up to three times of the actual damages incurred by the plaintiff.

5. Increased Statutory Damages

Under the current law, the amount of actual damages for a 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 as a result of the infringement. If both the Illegal Benefits and the Actual Losses are difficult to calculate, the court may at its discretion award damages in the amount of up to RMB 500,000 (“Statutory Damages”). Under the Draft Revision, in addition to the Illegal Benefits and the Actual Losses, the actual damages can be calculated by reference to the amount of royalty payment. Further, the amount of the Statutory Damages is increased from RMB500,000 to RMB 1,000,000.

6. Mitigated Burden of Proof

Under the Draft Revision, the court is empowered to request the infringer to present its accounting books or other information which are relevant to the trademark infringement. If the latter refuses to comply with the above request, the court may order the infringer to compensate the damages which are claimed by the right holder.

The Draft Revision will still be subject to two or three more readings before it is adopted by the Chinese legislators. We will continue to follow the developments closely and report major updates when available.