Legislation & Policy

Implementation of Revised Trademark Law

On May 1 2014, revisions to the PRC Trademark Law will enter into effect, and Chinese authorities have begun issuing draft rules and judicial guidelines that will be used by the Trademark Office (TMO), Trademark Review and Adjudication Board (TRAB) and Beijing courts to apply the revised law. While work on these rules is by no means finished, their contents give valuable insights as to the likely direction on key questions, including:

    • the scope of retroactivity of the revised law on pending disputes;

 

    • deadlines for the filing of arguments and evidence;

 

    • cancellations based on prior rights in personal names and copyright;

 

    • oppositions against marks pirated by companies that are dormant; and

 

    • the use of survey evidence to support arguments of likelihood of confusion.

These clarifications are offered in three documents:

    • the State Council’s draft Implementing Regulations to the revised Trademark Law (Draft IRs);

 

    • the draft revision to the Rules for Trademark Review and Adjudication (TRAB Rules), applicable to cases handled by the TRAB; and

 

    • a document issued in January 2014 by the Beijing Higher People’s Court, the Guidance on the Hearing of Administrative Trademark Cases (BHC Guidelines).

These rules fail to address a number of issues of critical concern to brand owners, including the standards for addressing bad faith trademark registrations, the calculation of damages, and liability for counterfeiting for online trade platforms. However, the Supreme People’s Court (SPC) is reportedly drafting judicial opinions that may address some or all of these issues.

Deadlines

The Draft IRs have sparked deep concern among overseas trademark owners as well as local agents, as they would shorten of the deadlines for the filing of supplemental arguments and evidence in registry cases from three months to 30 days. The Draft IRs compensate for this to a degree by permitting the filing of “new” evidence if it is deemed material to the outcome of the dispute. Notwithstanding this exception, the proposed 30-day time will no doubt compromise the persuasiveness of submissions, particularly from overseas companies that required more time to obtain advice and gather evidence.

Industry associations have made a priority of lobbying for retention of the current deadline or perhaps a compromise solution. But the State Council appears determined to accelerate the registration process, and it is likely the proposed 30-day deadline will be retained in the final draft of the regulations.

Retroactivity

The draft TRAB Rules indicate that the TRAB must apply the revised Trademark Law on substantive issues arising in application appeals and oppositions, but not cancellations that remain pending as of May 1. (The TRAB Rules do not regulate the actions of the TMO. But it seems reasonable to assume that the TMO will also apply the revised law in oppositions pending before it as of May 1).

Assuming the TRAB Rules remain in their current form, companies that need to attack on provisions in the revised law to cancel registrations would be best advised to file petitions after May 1.

Market surveys

The BHC Guidelines recognise, and arguably encourage, parties to file market surveys to support arguments of likelihood of confusion. Specific criteria for the consideration of such surveys are set out, and include standards that are typically adopted by courts in other countries.

Oppositions against pirated marks filed by dormant companies

The BHC Guidelines offer a new basis for opposing pirated marks filed in the name of companies that are dormant.

The BHC Guidelines impose the a number of conditions for action against such marks, including a finding that the mark at issue “copied or imitated” the petitioner’s mark and that there is “a certain degree of association between the goods” at issue. In addition, the guidelines require that the applicant’s business licence be suspended for at least three years as of the TRAB’s decision and that the applicant have failed to respond to the opposition in any way.

The legislative basis cited for this in the HC Guidelines is Article 4 of the Trademark Law, which effectively requires that applicants have an intent to use its mark. The reliance on Article 4 is unexpected and suggests that the courts will support efforts by brand owners to address registry pirates relying on non-traditional theories.

Personal names

The BHC Guidelines widen the scope of protection for personal names of living individuals by clarifying that fame in China is not necessary and that nicknames and other variations of official names can be protected. These provisions should help to avoid inconsistent decisions by the authorities, and at the same time deter pirates from filing for names famous overseas, but not yet so in China.

Copyright

The BHC Guidelines codify existing policy by confirming that copyright can serve as a basis for opposing or cancelling stylised marks. They further clarify that a registration certificate, by itself, is insufficient to prove copyright ownership of a work where the certificate was obtained subsequent to the opposition or invalidation filing date. But other types of evidence can be presented instead.

Other issues addressed by BHC Guidelines

The BHC Guidelines also contain provisions on the handling of less common registry issues, including those relating to geographical indications, the handling of submissions and notices in cases for marks under assignment, and cancellations involving marks registered at different times that raise questions of competing priority. The guidelines also contain provisions on the handling of registry disputes involving well-known marks under Article 13 of the Trademark Law; but no significant changes in current policy are introduced under these provisions.

Troy Rice and Joe Simone