A new amendment of the Chinese Trademark Law was recently passed at the 10th Session of the Standing Committee of the 13th National People’s Congress on April 23, 2019. The amended Trademark Law will take effect on November 1, 2019.

 

This amendment involves six articles, mainly concerning two aspects:

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.

 

Among the above amendment, the first aspect of increasing the content against bad-faith registration has significant influence to the trademark application for registration, trademark opposition, as well as trademark invalidation. This Article will focus on this aspect and briefly  comment on the new Trademark Law of taking more effort in regulating the acts of bad-faith registrations with practical cases.

Ⅰ. Amendment for regulating the acts of bad-faith applications and hoarding registrations

 

(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 preliminary approved is in violation of the seconder 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 Offices hall 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 crimeis 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.

Brief summary:

This amendment to the Trademark Law has increased the content for regulating the acts of bad-faith applications and hoarding registrations, mainly including: adding “The application of trademark for registration, which is made in bad faith and not for the use purpose, shall be rejected.” into Paragraph 1 of Article 4; adding Article 4 into the conditions contained in Paragraph 3 of Article 19, Article 33, Paragraph 1 of Article 44, and Item 3, Paragraph 1 of Article 68;moreover, adding Paragraph 4 of “penalties on bad-faith applications for registration and trademark lawsuit mala fide” into Article 68. Specifically, a trademark agency shall not accept the entrustment of a principal if it knows or should have known the application of trademark for registration is made in bad faith and not for the use purpose; “bad-faith application/registration not for the use purpose” is regulated as a legal basis in filing trademark opposition or invalidation and any person is entitled to file a trademark opposition or invalidation on this legal basis; for making the application of trademark for registration in bad faith, administrative penalties may be imposed according to the specific situations; for bringing the trademark lawsuit mala fide, the people's court shall punish in accordance with the law.

 

In the above regards, the Trademark Law has formed a relatively completed legal review system for regulating “bad-faith application/registration not for the use purpose”.

Ⅱ. Significant influence of Amendment on Regulating Acts of Bad-Faith Applications and Hoarding Registrations

 

Before this new amendment, it is often seen the acts of bad-faith applications and hoarding registrations in practice. However, on the one hand, the Trademark Office is not entitled by the law to actively examine such kind of acts; on the other hand, the Trademark Law before this new amendment has not specifically included this kind of acts into the trademark opposition regulating area. Such kind of acts is only slightly involved in the provision of “other illegitimate means” in Paragraph 1 of Article 44 of the Trademark Law. But Article 44 is applied registered trademark. Therefore, in practice of trademark opposition case, if the opposed party did applied the trademark in bad faith for hoarding, the Trademark Office was quite awkward in making the decision, and most of time had to apply Article 7 of “the principle of good faith”, which is quite controversial. For example, in the trademark opposition against the application No.10726394 “”, the opposed party had rushed to apply in bad faith the opponent’s over 20 trademarks, thus, the Trademark Office decided to reject the application of the opposed mark by applying Article 7 of “the principle of good faith”.

The new amendment to the Trademark Law can help to avoid the above situation which had applied improper provision in the opposition case and regulate the acts of bad-faith applications for registration not for the use purpose. During the examination process of trademark application for registration, the Trademark Office is able to nip those “bad-faith applications for registration not for the use purpose”in the bud, helping to reduce the burden of the real trademark proprietors in protecting their trademark rights. Besides, the real trademark proprietors are also able to argue “bad-faith application/registration not for the use purpose”as a legal basis in filing trademark oppositions or in validations to reject or invalidate these bad-faith application/registration, which also helps to crackdown bad-faith applications and hoarding registrations and better protect the real trademark proprietors’ trademark rights. In addition, the amendment on Paragraph 3 of Article 19 and Article 68 has increased the reasonable and cautious obligations of trademark agency in accepting the entrustment of trademark application for registration, urging trademark agency to provide more normative and professional services.

Ⅲ. Amendment on Increasing Penalties for Trademark Infringement

 

The new amendment has further increased the penalties for trademark infringement,amending the amount of punitive damages from “not less than one time but not more than three times” to “not less than one time but not more than five times”,and amending the maximum amount of damages from “no more than RMB three million yuan” to “no more than RMB five million yuan”.

 

Besides, the new amendment has also increased the force against the goods bearing counterfeit registered trademarks and prohibited such infringing goods from entering into the market again.

Ⅳ. Further Regulation concerning the New Amendment

 

On April 24, 2019, Beijing High People’s Court published the Guidelines for the Trial of Trademark Right Granting and Verification Cases (2019), in which it prescribes the application of Article 4 of the Trademark Law and specifically request that the trademark applicant shall bear the burden of proof for “true intention of use”.

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