On April 23, 2019, a new amendment of the Chinese Trademark Law was passed at the 10th Session of the Standing Committee of the 13th National People’s Congress by adopting two new sets of regulations. The Trademark Law in China has been amended three times in 1993, 2001 and 2003 respectively, and this fourth amended law will be in effect from November 1, 2019.

The new amendment consists of six articles, primarily focusing on two aspects, which are as follows:

1. Increasing the content against bad-faith registration for the purpose of regulating the acts of bad-faith applications and hoarding registrations.
2. Reinforcing the penalties for infringement on the exclusive right to use a trademark.

ASPECT – 1

AGAINST BAD-FAITH REGISTRATION

(Changes are highlighted in red)

Article 4 (Paragraph 1) is amended to:

Any natural person, legal person or other organization that needs to obtain the exclusive right to use a trademark for its goods or services during production and business operations shall apply for trademark registration with the Trademark Office.

The application of trademark for registration, which is made in bad faith and not for the use purpose, shall be rejected.

Article 19 (Paragraph 3) is amended to:

A trademark agency shall not accept the entrustment of a principal if it knows or should have known that the trademark application entrusted by the principal for registration falls under any of the circumstances prescribed by Article 4, Article 15 and Article 32 of this Law.

Article 33 is amended to:

If a holder of prior right or an interested party holds that the trademark preliminarily approved is in violation of the second or third paragraph of Article 13, Article 15, the first paragraph of Article 16, Article 30, Article 31, or Article 32 of this Law, he may, within three months from the date of publication, file an opposition to the Trademark Office. Any party that is of the opinion that the aforesaid trademark is in violation of Article 4, Article 10, Article 11, Article 12 or the fourth paragraph of Article 19 of this Law may file an opposition to the Trademark Office within the same three-month period. If no opposition is filed within the specified period, the Trademark Office shall approve the application for registration, issue the certificate of trademark registration, and make an announcement thereon.

Article 44 (Paragraph 1) is amended to:

A registered trademark shall be declared invalid by the Trademark Office if it is in violation of Article 4, Article 10, Article 11, Article 12 or the fourth paragraph of Article 19 of this Law, or its registration is obtained by fraudulent or other illegitimate means. Other entities or individuals may request the trademark review and adjudication board to declare the aforesaid registered trademark invalid.

Article 68 

(Paragraph 1) is amended to:

A trademark agency that commits any of the following acts shall be ordered to make correction within a time limit by the Administrative Department for Industry and Commerce, be given a warning, and be fined not less than RMB 10,000 yuan but not more than RMB 100,000 yuan; the persons in charge who are directly responsible and other persons directly responsible shall be given a warning and be fined not less than RMB 5,000 yuan but not more than RMB 50,000 yuan; where a crime is constituted, criminal liabilities shall be investigated in accordance with the law:

1. Fabricating or tampering with legal documents, seals or signatures, or using fabricated or tempered legal documents, seals or signatures during the handling of trademark-related matters;
2. Soliciting trademark agency business by defaming other trademark agencies, or disrupting the order of the trademark agency market by other unjust means; or
3. Violating the provisions of Article 4 or the third or fourth paragraph of Article 19 of this Law.

(Paragraph 4) is added as:

For making the application of trademark for registration in bad faith, the administrative penalties including warning or fine shall be given according to the circumstances; for bringing the trademark lawsuit mala fide, the people’s court shall punish in accordance with the law.

ASPECT – 2

INCREASING PENALTIES FOR INFRINGEMENT

(Changes are highlighted in red)

Article 63

(Paragraph 1) is amended to:

The amount of damages for infringement on the exclusive right to use a trademark shall be determined based on the actual loss suffered by the right holder as a result of the infringement; if it is difficult to determine the actual loss, the amount of damages may be determined according to the profits gained from there by the infringer, if it is difficult to determine both the loss of the right holder and the profits gained by the infringer, the amount of damages may be reasonably determined in reference to the multiples of the trademark for royalties. Where an infringer maliciously infringes upon another party’s exclusive right to use a trademark and falls under serious circumstances, the amount of damages may be determined as not less than one time but not more than five times the amount that is determined according to the aforesaid methods. The amount of damages shall cover the reasonable expenses paid by the right holder for stopping the infringing act.

(Paragraph 3) is amended to:

Where it is difficult to determine the actual loss suffered by the right holder as a result of the infringement, the profits gained by the infringer from the infringement or the royalties of the registered trademark concerned, the people’s court shall render a judgment awarding damages in an amount not more than RMB five million yuan based on the circumstances of the infringing acts.

(Paragraph 4) is added as:

When hearing a trademark dispute case, the people’s court shall, except in exceptional circumstances, order to destroy the goods bearing counterfeit registered trademarks at the request made by the right holder; and shall order to destroy the materials and instruments which are mainly used to manufacture the goods bearing counterfeit registered trademarks without compensation; or in exceptional circumstances, the court shall order the prohibition of the aforesaid materials and instruments from entering the commercial channels without compensation.

(Paragraph 5) is added as:

The goods bearing counterfeit registered trademarks shall not enter the market after merely being removed of counterfeit registered trademarks.

DISCUSSION

In 2018, there were many trademark applications for registration in China, facing some practical problems such as extensive bad-faith trademark squatting, trademark hoarding and continuous trademark infringement. The new amendment to the Chinese Trademark Law provides a solution to all these problems. The Trademark Office is now permitted to refuse the trademark applications for registration which are in bad-faith. The trademark applicants can also include “bad-faith application/registration not for the use purpose” as a legitimate basis in filing the trademark opposition. All the amendments made would be helpful for the real trademark applicants.