Legislation & Policy

CNIPA’s Reply to the Proposal of Amendment of Trademark Law and Implementation Regulations

SIPSKnowledge, Legislation and Policy

In August 2022, the China National Intellectual Property Administration (“CNIPA”) issued a document (available in Chinese here) offering a summary of its proposals to legislative authorities for amending the PRC Trademark Law. Most of the proposals seem intended – directly or indirectly – to address continuing problems with bad faith trademark registration of trademarks, including both warehousing/hoarding as well as filings that target other brand owners.

CNIPA’s proposals were published in response to an enquiry from the Chinese People’s Political Consultative Conference (“CPPCC”), a policy-making body that provides suggestions to the National People’s Congress (“NPC”), the main legislative authority in the PRC. Very likely, CNIPA has also presented similar proposals already directly to the NPC.

The Trademark Law was last amended in 2019, and the timetable for the next revision has not yet been announced but is not expected to occur before 2024.

New Measures to Address Bad Faith Trademark Registrations

CNIPA is has raised the following proposals to directly address improper behavior by bad faith filers.

  1. Clarifying in the law that bad faith filers should be obligated to pay civil damages to compensate for the harm created by their acts.

Note: Industry associations, including the China Trademark Association and INTA, proposed such a provision for the 2019 amendment, and since then, Chinese courts have issued decisions mostly refusing efforts by victims of trademark piracy to obtain compensation for their legal costs through actions based on unfair competition. As such, CNIPA’s proposal should go far to address industry concerns.

  1. Clarifying legal responsibility for parties that file forged evidence in trademark proceedings.

Note: CNIPA has not yet clarified its intentions in this regard, but very likely, it is proposing the imposition of higher fines, particularly against parties filing forged evidence of trademark use.

  1. Establishing an assignment system for bad faith trademarks.

Note: Again, CNIPA has not clarified its intentions in this regard, but it is likely to be proposing that authorities be given the power to order the transfer of bad faith registrations and applications to the victim brand owner incidental to oppositions and invalidations.

  1. Granting CNIPA the power to order the cancellation on an ex officio basis of bad faith filings after their publication and before registration. As noted below, CNIPA is also proposing that it be granted related powers to demand evidence of good faith use after registration.
  1. Strengthening the supervision and management of trademark agencies, particularly to deter them from assisting bad faith filers.

Note: Over the last two years, CNIPA and local Market Supervision Bureaux have issued significant fines – including up to the maximum permitted by regulations (RMB100,000 or US$13,000) against such trademark agencies. In some cases, CNIPA has also revoked the license of trademark agencies to represent clients before the Trademark Office.

New Obligations to Prove Use  

CNIPA is also proposing that it be granted explicit ex officio powers to require trademark applicants and registrants to submit undertakings of intent to use marks as well as explanations and evidence of actual use. In this regard, CNIPA is proposing that it be granted to cancel registrations where parties fail to provide such satisfactory undertakings or explanations or are otherwise found to have used their registrations improperly.

Note: The TMO of CNIPA recently began issuing notices that require applicants for large numbers of registration as well as assignments to provide such undertakings and explanations. CNIPA no doubt believes it has the authority to issue such notices under Article 4 of the Trademark Law, which requires all applicants to use their marks in good faith. Its latest proposal is clearly intended to strengthen the legal basis therefor.

Suspension of Co-Pending Cases

Currently, CNIPA only rarely agrees to suspend the examination of applications, appeals, oppositions or invalidations where the outcome is contingent on the outcome of a co-pending case. As a result, trademark owners are generally advised to refile applications – in many cases multiple times – and in appropriate cases to abandon applications – in order to minimize costs while still maintaining priority vis-à-vis newly-filed marks.

CNIPA has clearly recognized the inefficiencies and waste that results from its current practices, and it is therefore proposing a change in the law that will facilitate suspensions.

Other Measures to Increase Efficiency

CNIPA has also proposed a range of other measures to increase efficiencies for itself as well as trademark owners, including expanded use of e-filing, docketing and delivery procedures and acceleration and other improvements to opposition proceedings.