We are just a few months into 2023, but we are already seeing a number of proposed changes to Chinese Trademark Law.
We wish to draw attention to some of the upcoming structural changes to the China National Intellectual Property Administration (commonly known as CNIPA) and to highlight a few draft amendments to China’s Trademark Law issued by the CNIPA on 13 January 2023.
Overall Theme and Key Takeaway
It should be noted that this will be the 5th round of major amendments to the China Trademark Law since it was first adopted in 1982. Consistent with the most recent amendments in 2019, the current proposed changes aim to continue the Government’s efforts to combat bad faith filings, protect genuine brand owners as well as the general public from problems caused by trade mark pirates, and deal with the overcrowded trade mark register.
The changes may, however, also affect the way genuine brand owners handle their trade mark portfolios and there is therefore a need to reconsider filing and portfolio management strategies accordingly.
While many of these proposed amendments may not yet have come into effect, it is important to start taking a closer look since these reflect the current trend on how things will likely change in practice.
Structural Changes to the CNIPA
The First Session of the 14th National People’s Congress (NPC), held in March 2023, announced (to the surprise of many) that the CNIPA will now become an institute directly under the State Council, and no longer administered by the State Administration for Market Regulation (SAMR).
This structural change should significantly improve the standing of the CNIPA in the hierarchy of the State Council, and is in line with the growing attention being given to the protection of intellectual property rights in China. In addition, the CNIPA will have the right to enact and revise its own rules. Its regulations related to intellectual property should therefore have the opportunity to be adjusted/improved in a much more timely and in-depth manner.
(1) Measures to Combat “Bad Faith” Filings
- Definition of “Bad Faith”
Five specific circumstances are set out which will constitute bad faith trade mark filings (Article 22). These include for instance mass filings without intent to use and applying using deceptive or other improper means. It is noted that a catch-all clause has also been included which should give wider flexibility when interpreting what can constitute bad faith.
- Criminal and Civil Remedies
The fines for bad faith trade mark filings are to be increased to a maximum of RMB250,000 (around USD35,000), and illegal income can also be confiscated (Article 67).
Furthermore, genuine brand owners may be able to claim civil compensation for losses caused by bad faith filings (Article 83), as well as losses suffered defending malicious trade mark law suits (Article 84).
- Mandatory Transfer
The authorities will be able to order the transfer of bad faith trade mark registrations to genuine trade mark owners following a successful invalidation (Articles 45 to 47). Such transfers of trade marks are not commonly seen in other jurisdictions, though the concept is more widely adopted in the context of domain name disputes.
(2) Requirement of Use to Maintain Registrations
A fundamental change to be introduced by the draft is that all trade mark registrants must submit a declaration of use of their registrations every five years from the date of registration (Article 61). The CNIPA will cancel registrations where a registrant fails to provide the declaration. The draft also indicates that the CNIPA will conduct spot-checks to confirm authenticity.
This requirement, if implemented, should help eliminate “deadwood” registrations that are not being put to use by their registrants on China’s already overcrowded register. However, this requirement will also impact the portfolio management strategies of genuine brand owners, especially those with numerous defensive registrations.
If this new requirement comes into force, brand owners will need an internal system in place regularly to gather evidence and high-quality specimens to show proof of use, rather than waiting for the deadline to file the declaration.
(3) Prohibition on repeated filings for the same marks
The draft proposes that a trade mark applicant can only own one identical trade mark covering the same goods or services (Article 14).
An applied-for mark cannot be identical to those already applied for or registered by the same applicant for the same goods or services, or a prior mark that has been removed, cancelled or declared invalid within one year prior to the application date (Article 21). Exceptions are provided, including where due to production and operational needs, minor modifications have been made to a prior mark in actual use and the applicant can explain the differences, or if the prior mark was not renewed due to reasons not attributable to the applicant, etc..
This requirement, if implemented, may change the way in which brand owners prosecute their trade marks. In particular, under current practice, brand owners often find themselves re-filing identical applications to deal with prior mark citations, since suspensions or extensions of time of the original application are not usually granted.