The fourth amendment to the Trademark Law of the People’s Republic of China took effect on November 1, 2019. As a complementary measure, Provisions for Regulating Trademark Application Actions, which further specify the amendment at the operational level, took effect on December 1, 2019.
Below is a summary of the trademark law changes.
1. Bad-Faith Applications (Articles 4, 19, 33, 44 and 68)
In practice, bad-faith trademark application and massive hoarding of trademarks exist for improper profit. The lack of direct, clear and operable provisions in the current law leads to insufficient strikes against such actions. This new Amendment intends to combat this by the following three changes:
The first is to strengthen the duty to use trademarks. Article 4 added a provision "bad-faith applications filed without intent to use shall be rejected", granting examiners the right to voluntarily reject bad-faith applications on their own initiative at the stage of examination; accordingly, Article 33 and 44 stipulate this situation respectively as grounds for raising oppositions and invalidations. It is directly applicable to the procedure of opposition and invalidation.
The Trademark Office will consider the following factors to judge "bad-faith applications filed without intent to use shall be rejected".
1) the trademark filing volumes, the designated goods and services as well as the trademark transfer history of the applicant and/or its related entities/individuals (e.g. excessive amounts of trademarks going beyond business needs);
2) the specific industry and operating conditions of the applicant;
3) prior judicial or administrative decisions finding that such person or company conducted bad-faith filings;
4) applying for marks identical or similar to marks which have some reputation in the market;
5) applying for famous personal names, company names, company abbreviations or other commercial signs; and 6) a 'catch-all' provision: any other factors that the TRD may consider relevant.
Secondly, the responsibilities of trademark agencies are tightened by adding in Article 19 “Trademark agency shall not accept client instructions in case they know or should know the applications are filed without intent to use or in bad-faith". Trademark Agency is subject to a warning, fine or other administrative punishment in light of circumstances for violating this rule.
Thirdly, bad-faith applications or lawsuits are subject to punishment. Article 68, as amended, stipulates that administrative departments for Industry and Commerce shall "give warnings, fines and other administrative punishment according to the circumstances" for malicious applications, and "the people's court shall impose punishment for malicious trademark litigations”.
2. Higher Damages
In order to increase the cost of infringement and punish malicious infringers, Article 63 has amended the amount of punitive damages for malicious infringement from “not less than one time but not more than three times” to “not less than one time but not more than five times” the amount determined either according to the actual loss suffered by the right holder or according to the profit gained by the infringer, or by reference to the multiples of the trademark royalties. And the maximum statutory damages available to the People’s Court rose from RMB 3 million to RMB 5 million.
3. Destruction of Counterfeit Goods, Materials and Tools
Article 63, as amended, stipulates the People's Court, at the request of the right holder, may order the destruction of counterfeit goods, and materials and tools mainly used to manufacture counterfeit goods. The counterfeit goods shall not enter the commercial channels after only removing the counterfeited trademarks.
