On 30 August 2013, the PRC National People's' Congress adopted the third revision of the PRC Trademark Law (“Revised Trademark Law”), which took effect on 1 May 2014. On 29 April 2014, the PRC State Council released the revised Implementing Regulations of the PRC Trademark Law (“Regulations”). The Regulations also took effect on 1 May 2014. Below is an overview of the major changes brought by the Regulations:
1. Trademark Applications
The Revised Trademark Law introduced for the first time a multi-class application system. I.e. one trademark application is allowed to cover goods or service in several classes in accordance with the Chinese Classification of Goods and Services.
According to the Regulations, the multi-class application can be divided, if some goods or services have been partially refused for registration by the PRC State Trademark Office (“STO”). I.e. the trademark applicant may, within 15 days upon receipt of the STO's partial refusal notification, request that the STO divides the application, and thus, the application process for those goods preliminarily approved by the STO can proceed. The STO will assign a new application number in respect of the application of the goods preliminarily approved while the original filing date of the first application remains effective.
As consequence, the registration process of the trademark designating the preliminarily approved goods will not be suspended due to the partial refusal of the STO. After the division, the STO will publish the above application for public opposition for three months. If no opposition against registration of the trademark is raised before the above deadline, the STO will grant a trademark registration certificate covering the preliminarily approved goods to the applicant.
In the past, anyone could file an opposition against registration of a trademark with the STO 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 may still apply for opposition with the STO on the basis of absolute refusal grounds. However, now only prior rights’ holders and relevant interested parties are allowed to file an opposition on the basis of relative refusal grounds. The Regulations specify that for the above, the opposing party shall submit evidence to the STO proving that it is a prior rights’ holder or an interested party. This considerably limits the groups who can file oppositions before the STO in the future.
Until now, a supplementary statement and evidence could be filed within 3 months after the application date of the opposition or the date of the submission of the statement of defense regarding the opposition. In the future, if supplementary statements and evidence are submitted later, they will normally not be accepted by the STO anymore. An exception only applies for evidence which occurred after the expiration of the above time limit or if the parties had justified reasons for not submitting the supplementary statement or evidence in time. In such circumstances, the STO may still accept such supplementary statement and evidence after the STO has forwarded the above documents to the counterparty and the latter has submitted a counter-statement to the STO. However, in the future, the parties are well advised to try their best to submit any supplementary statement and evidence with the STO within the time limit i.e., within 3 months after the application date of the opposition or the date of the submission of the statement of defense.
c) Review of Refusal Decisions of the STO
According to the Revised Trademark Law, if the STO refuses the registration of a trademark application, the applicant may apply for review of the refusal decision of the STO with the PRC Trademark Review and Adjudication Board (“TRAB”). When examining the review on a refusal decision by the STO, the TRAB may decide to refuse a trademark registration on absolute refusal grounds, even if the STO did not quote such absolute refusal grounds in its original refusal decision. However, under such circumstances, the TRAB shall consider the trademark applicant's opinions before making a decision on the review of a refusal decision.
d) Time limits
The Revised Trademark Law stipulates time limits for registration, review, opposition, invalidation and cancellation procedures. The Regulations clarify that the following periods shall not be taken into account when calculating the time limits:
(1) The period of the public service announcements by the STO and the TRAB;
(2) The period during which the parties request to submit supplementary evidence or documents for amendment, as well as the period during which a defense needs to be re-submitted due to the change of a party;
(3) In regard of parties who applied for registration of the same or similar trademarks referring to the same or similar goods on the same day, the period required to submit evidence of prior use of the trademark, or to conduct consultations, or to draw lots;
(4) The period during which a priority right needs to be ascertained; and
(5) Where during an examination/review, the involved prior rights are to be determined based on the results of another case being tried and the applicant requests to wait for the respective trial decision, the period of waiting for that decision.
e) License recordal
In the past, the recordal of a trademark license had to be filed with the STO within 3 months after the parties have concluded the trademark license agreement. For the above recordal, inter alia, an original trademark license agreement had to be submitted to the STO. The Regulations now cancel the 3 months period and state that the recordal of a trademark license may be filed within the validity term of the trademark license agreement. Further, the parties do not need to submit an original trademark license agreement any more. Only a standard form covering basic information of the trademark license such as names of licensor and licensee, the licensed trademark and the term of license etc. is required. Consequently, in the future, confidential information contained in the trademark license agreement will no longer be disclosed to the STO.
f) Newly introduced chapter regarding the international registration of trademarks under the Madrid Agreement and Protocol
In the past, international registration of trademarks was regulated under the Measures for the Implementation of the Madrid International Registration of Trademarks (“Implementation”). The Regulations now add a new chapter on the international registration of trademarks on the basis of the Implementation. Basically the new chapter just repeats the content of the Implementation and the current practice of protection of the international registration of trademarks. Further, the Regulations clarify the conditions and general procedures for the application and examination for international registration. The Regulations also emphasize the differences between the procedural aspects of a domestic application and an international registration in regard to, e.g. renewals, assignments and deletions of goods or services.
2. Trademark Enforcements
a) Definition of “Intentionally Facilitating a Trademark Infringement”
According to the Revised Trademark Law, a trademark infringement is established if a person intentionally provides facilities to another person who infringes the trademark right and helps the other person to conduct an infringement of the trademark rights. The Regulations now clarify that “intentionally facilitating a trademark infringement” refers to acts of providing storage, transport, mailing, printing, concealing, business premises and internet trading platforms etc. to a trademark infringer.
b) Calculation of Illegal Turnover
One of the remedies against trademark infringement is administrative actions. This means that the local Administration for Industry and Commerce (“AIC”) has the power to determine whether a trademark infringement is established. The local AIC can conduct raids against the infringer and impose administrative fines on the infringer. The above administrative fines are calculated on the basis of the “illegal turnover” of the infringer.
The Regulations specify that when calculating the illegal turnover, the following factors may be taken into account:
(1) The price of the sold infringing products;
(2) The price stated on the unsold infringing products;
(3) The ascertained actual average sales price of the infringing products;
(4) The average market price of the infringed products;
(5) The infringer’s illegal turnover of its business operations arising from the infringement; and
(6) Other factors that may be used to properly calculate the value of the infringing products.
c) Defense of the Seller of Infringing Products
The Revised Trademark Law stipulates that if the seller of infringing products can prove that the products have been obtained lawfully, no fine will be imposed on the seller. However, the AIC shall order the cessation of sales. The Regulations further state that the seller shall prove the following in order to be able to use the above defense:
(1) Supplier list with the supplier’s seal and payment receipt verified or recognized by the supplier;
(2) True purchase contract signed by the supplier and the seller which has been already performed;
(3) Legal purchase invoice and records on such invoice corresponding with the goods involved; or
(4) Other circumstances able to prove that the goods involved have been obtained lawfully.
The Regulations clarify some issues which have not been provided in the Revised Trademark Law. However, they still leave a number of open issues. Take opposition procedures as an example, the Regulations do not define who qualifies as an “interested party”. Also, the Regulations do not clarify what documents can be used as evidence to prove that the opposing party is an “interested party”. As to these open issues, the STO, TRAB or even the courts may need to issue further guidelines in the future. On the positive side, the Regulations together with the Revised Trademark Law are a major step forward which can help to ensure that trademark owners can effectively enforce and protect their trademark rights in China.