On January 13, 2023, the China National Intellectual Property Administration ("CNIPA") published the Draft Revision of the China Trademark Law ("Draft Revision"). Compared with previous revisions to the law, this Draft Revision proposes several major changes designed to target a variety of ongoing issues, including trademark piracy, repetitive filings and unused trademarks.
To help brand owners and trademark professionals anticipate what these changes could mean for them, below we highlight five of the most significant proposals contained in the Draft Revision.
1. Non-traditional trademarks, such as odour trademarks, may be registrable
In the Draft Revision, the constituent elements of a trademark are revised to read "words, graphics, letters, numbers, three-dimensional symbols, colour combinations, sounds or other elements, as well as combinations of the above elements."
The introduction of the wording "other elements" potentially opens the door to non-traditional types of trademark elements, including odour, taste, colour, position and certain dynamic qualities. Whether these specific elements will be allowed in the future remains to be seen. However, the CNIPA has previously confirmed that it intends to broaden the types of constituent elements that can be registered.
2. Shorter and more efficient opposition period and procedure
Under current practice in China, trademark registration usually takes about nine to 12 months, assuming the application goes smoothly. Below is a breakdown of the timeline:
- It usually takes up to nine months to go through the trademark examination process after filing the trademark
- If there are no issues for refusal, either on absolute or relative grounds, then the trademark application will be preliminarily approved. It then enters a three-month trademark opposition period
- If there is no opposition filed against the trademark application, it will be granted for registration and the trademark certificate will be issued
Although the trademark application process in China is already relatively quick compared with many other countries, the Draft Revision seeks to make the process even shorter and more efficient. It proposes to do so by changing the opposition procedure in two important ways:
Firstly, the opposition period would be shortened from three months to two months.
Secondly, the applicant would have the option to skip the opposition review process and appeal to the court directly if unsatisfied with the opposition decision. Under the current procedure, if a third-opposition is successful, the applicant must first apply for a review of opposition before the CNIPA. Only if the applicant fails at the review of the opposition proceeding can it appeal to the Beijing IP Court. In the Draft Revision, the applicant may directly file an administrative lawsuit with the court without going through the review of the opposition procedure.
3. An end to repetitive trademark filings
In China, as in other jurisdictions, applicants may choose to file and register several, or even larger amounts, of identical trademarks.
There are various reasons that brands owners may opt for such a strategy. Some are simply filing trademarks in bad faith. Some are filing defensively. Others re-file their trademarks every two or three years to safeguard them against potential three-year non-use cancellations. All of these reasons contribute to an inflated number of trademark filings in China each year.
The Draft Revision proposes to prohibit such repetitive trademark filing. Except in cases where there are legitimate reasons, the trademark filed shall not be the same as the previous trademark on the same goods filed or registered by the same applicant. In addition, in case the previous trademark on the same goods is declared invalid, a subsequent identical trademark cannot be filed within one year from the invalidation date of the previous trademark.
Under the updated legislation, repetitive filing would also become grounds for trademark opposition and invalidation. In addition, the act of repetitive filing in large volumes may be automatically deemed as bad faith trademark filing.
4. Strengthening trademark use requirements
Similar to repetitive filings, there are currently large volumes of trademark registrations in China that are not put into use. This is clogging China's trademark system and goes against the very spirit of trademark registrations.
The Draft Revision introduces a new declaration system for trademark use. Every five years from the date of trademark registration, the registrant would be required to make a declaration to the CNIPA regarding the use of the trademark on the approved goods, or provide legitimate reasons for not using it.
The registrant will have 12 months to make the declaration. If no declaration is given at the end of this period, the CNIPA will notify the registrant. If the registrant still does not make any declaration after receiving the notice from the CNIPA, the registered trademark will be cancelled.
Furthermore, as with repetitive filing, the act of filing a large number of trademarks without the intent to use them can be deemed as bad faith trademark filing under the proposed amendments.
5. Deterring bad faith trademark filings through civil and administrative avenues
As outlined in the Draft Revision, the following behaviours may be deemed as bad faith trademark filing:
- Large volume of trademark filings without intent to use
- Employing deceptive or improper means to register trademarks
- Harming national or public interest, or having other unhealthy influences
- Pre-emptive filing of others' well-known trademarks, pre-emptive filing by an agent or representative of the customer's trademarks, and pre-emptive filing harming others' prior rights, which intentionally harm others' legitimate rights and/or seek illegal gains
- Other acts of bad faith trademark filings
In addition to being the grounds for trademark opposition and invalidation, both civil litigation damages and administrative penalties are available for actions against bad faith trademark filings.
Administrative penalties have been introduced if the applicant's behaviour is deemed to constitute bad faith. The measures include warnings, confiscation of illegal gains, and fines of up to RMB 250000 (c.a. USD $36,000)
Civil litigation damages are possible for third parties suffering a loss as a result of the bad faith trademark filings. Said third parties can sue the bad faith trademark applicant in court and request damages. The damages granted by the court shall at least cover the reasonable expenses incurred by the plaintiff for taking action.
Over the years, CNIPA and the courts have continued to implement measures to combat trademark piracy. The amendments proposed in Draft Revision are further evidence of China's steadfast determination to improve its intellectual property environment and, in turn, boost the confidence of foreign brand owners operating in China's market. Brand owners and trademark professionals alike would be strongly advised to monitor these changes carefully as they make their way through China's dynamic legal practice.