Legislation & Policy

SIPS White Paper on Proposed Trademark Law Revision in China

SIPSKnowledge, Legislation and Policy

In January 2023, the China National IP Administration (CNIPA) issued a draft revision of the PRC Trademark Law for public comment.

A SIPS translation of the draft is available here and the original Chinese version can be accessed here.

CNIPA is expected to revise the current draft by mid-2023, with the legislature then expected to enact changes to the law – which was last amended in 2019 – in 2024 or 2025.

This white paper summarizes key changes proposed in the draft law and includes suggestions for further amendments to the draft by CNIPA.

1. Provisions on Bad Faith Registration

Most of the changes proposed in CNIPA’s draft are intended to address the problem of bad faith trademark registration, including both mass filings / trademark warehousing and the targeting of brands with the intent of free riding on their fame or leveraging lucrative assignments.

Overall, these proposed changes – together with those introduced in 2019 – would create a more robust toolbox for CNIPA, Chinese courts and trademark owners to address bad faith filings – one that is arguably more comprehensive than that found in any other jurisdiction.

But the proposed changes include some controversial proposals that brand owners may find counter-productive, and which may well outweigh the benefit they bring. Examples in this regard include a proposed requirement to “explain” use of one’s trademark registrations every five years and a prohibition on the refiling of identical marks (a common trick played by pirates, but also a measure that remains an essential tool for brand owners to save on cost and protect their brands from unwarranted attacks).

The following is a summary and assessment of the main changes relating to bad faith.

(a) Five-Year Use Requirement

The draft introduces a new requirement under which all registrants must confirm use of their marks every five years (Article 61).

The language used in the draft suggests that brand owners will only be required to “explain” (说明) how their marks are used, and will not be required to submit concrete evidence of use.

The draft indicates that CNIPA will conduct random audits to verify compliance with the law.

If a registrant were to confirm use only with respect to a portion of the goods or services covered by a mark, it remains unclear whether CNIPA would allow the registration to be maintained on all designated items or seek to delete those which are not supported by use evidence.

It also remains unclear whether CNIPA will impose additional fees at the time of filing, but assuming it does, they are likely to be nominal.

Assessment

If these proposed changes are properly implemented, they may well have a substantial deterrent impact against mass filers and warehousers of marks. The changes may also help to eliminate an enormous number of deadwood registrations.

However, brand owners that suffer the most from bad faith registration may well find their defensive trademark registrations at risk of cancellation under the proposed changes.

Defensive registrations are deemed acceptable by CNIPA as a matter of current policy and are a necessary part of protecting legitimate brands in China, but unless this policy is codified to protect them from cancellation, the new provision would result in cancellation thereof on a mass scale. This would in turn open the door to bad faith pirates to file for such marks and also force bona fide brand owners to file new applications to replace their defensive applications, and in very significant numbers.

Victims of piracy already have the right to file non-use cancellations against bad faith marks three years after their registration, and CNIPA already has the power to cancel abusive registrations. While these powers are not a panacea, they may well be the preferred solutions over any new five-year use requirement.

Recommendations

  • Refrain from introducing a five-year use requirement, as the costs – to CNIPA and brand owners alike – will likely outweigh the benefits.
  • If the requirement is retained, however, clarify in the law or implementing regulations that brand owners can satisfy this requirement by demonstrating that registration is reasonably necessary to protect its overall rights and interests.
  • To pre-empt the need for audits, allow – but do not compel – trademark registrants to file evidence of actual use, rather than simply declaring or describing use.
  • Allow registrations to be maintained upon satisfying use requirements for any of the goods or services covered by a registration, so that bona fide trademark owners will be able to maintain protection for defensive items in the class.
  • Clarify in the law or future implementing regulations that defensive registrations can be maintained without the need to confirm or prove use, subject to reasonable conditions, such as evidence of use of the mark outside China, evidence of fame, evidence of piracy and infringement inside China, etc.

(b) Fines

The draft increases the maximum administrative fine that can be levied against trademark pirates and their trademark agents from the current RMB100,000 to RMB250,000 (US$14,000 to $35,000) (Article 67).

China appears to be the only country in the world that allows the imposition of fines against bad faith filers.

Assessment

To date, fines against pirates and trademark agents have been imposed by local Market Supervision Bureaus (MSB), rather than CNIPA. But MSB fines have been relatively rare, and reports by victim brands to CNIPA and local MSBs have seemingly not been acted upon in most cases. The reasons for this are unclear, but it may in part be due to a lack of resources and experience among relevant authorities.

Recommendations

  • Clarify that the law or implementing regulations thereto allows victim brand owners or other interested parties to file complaints with CNIPA and local MSBs against bad faith filers and their trademark agents, and requires the authorities to process such complaints in a manner similar to infringement complaints.
  • Amend the law to explicitly allow MSBs to commence investigations into bad faith filers and their agents without waiting for final decisions from CNIPA or the Beijing courts.
  • Amend the law to require that each individual pirate application or registration be subject to the maximum allowable fine. Thus, if a pirate has filed 10 marks in bad faith, the maximum fine should be fixed at RMB 2,500,000 (RMB250,000 x 10).
  • Amend the law to clarify that the courts have the same powers to impose fines as CNIPA and MSBs.

(c) Criminal Sanctions

The draft proposes criminal sanctions against bad faith filers in cases where there is “damage to national interests or social public interests, or (where) major adverse effects (are caused)” (Article 83).

If adopted, China would appear to be the first country to criminalize bad faith filing behavior.

Assessment

Under Chinese law and practice, it is not possible to impose criminal sanctions under the Trademark Law, only under the PRC Criminal Law. But the current Criminal Law does not contain provisions that on their face appear to be appropriate for convicting parties engaged in bad faith registration or warehousing.

Recommendations

  • If general provisions in the Criminal Law already allow for criminal sanctions against bad faith filers, request the Supreme People’s Court (SPC) and/or Supreme People’s Procuratorate (SPP) to issue a suitable judicial interpretation to facilitate implementation.
  • If the current Criminal Law does not allow for criminal sanctions against bad faith filers, amend the law as soon as practically possible (perhaps even before the Trademark Law is amended).
  • Consider granting victim brand owners the right to file private criminal prosecutions against bad faith filers and their agents, thus helping to avoid undue burdens on local police and prosecutors.

(d) Prohibition on Repeat Filings

Article 14 of the CNIPA draft prohibits registrants from filing new applications for the same mark on identical or similar goods and services, with narrow exceptions set out in Article 21 of the draft. It appears that no other jurisdictions impose such restrictions on applicants.

These provisions should be considered in conjunction with the draft’s provisions allowing for the suspension of co-pending cases.

To date, the main reason bona fide trademark registrants refile for their marks is because the PRC Trademark Office (TMO), Trademark Review and Adjudication Department (TRAD) and courts generally refuse to suspend proceedings in application appeals until the outcomes of co-pending actions against cited marks (principally non-use cancellations, oppositions and invalidations) are decided. Refiling is also motivated in many cases in response to repeat filings by pirates.

Assessment

This proposed change seems mainly intended to conserve administrative and judicial resources, and if properly implemented, it should also save significant resources for bona fide brand owners, while also helping to accelerate registration of their marks. But to achieve these goals, CNIPA will need to ensure that the TMO, TRAD and courts all agree to suspend co-pending proceedings, something which may not ultimately be possible.

The draft law sets out circumstances under which a party may refile for the same mark notwithstanding the general prohibition, including where the stylization of the mark has been changed. But these exceptions are likely to be ignored by pirates – thus forcing bona fide trademark owners to do the same.

It seems reasonable to assume that applicants will be able to file appeals to the TRAD if their applications are rejected due to the proposed prohibition on refiling. This right to appeal would be of critical importance to bona fide brand owners – but it would also provide another reason for pirates to refile as well.

Recommendations

  • As explained above, it is likely that any prohibition on refiling would fail to meet its objectives. Further, if brand owners are able to reliably have proceedings suspended, the need for refiling and the attraction for pirates to refile will be substantially eliminated. As such, it is recommended that the draft law’s prohibition on refiling be deleted.
  • If adopted, it is recommended that the draft be amended to make clear that victims of bad faith registration may refile in response to piracy risks. It is also suggested that applicants be given the chance to explain the reasons for refiling in their application forms and to otherwise advocate for acceptance of their applications through the “opinion letter” process during examination, rather than seeing applications rejected and forcing applicants to undergo the cost and delays of dealing with appeals before the TRAD.
  • As suggested above, it is critical for authorities to allow suspension of cases in a manner that maximizes efficiency and helps brand owners to avoid unnecessary costs and delays in registration of their own marks.

(e) Transfer of Pirated Marks

The draft would allow authorities to order the transfer of registered pirate marks to the rightful trademark owner incidental to invalidations (Article 45), but only in cases where marks have been invalidated under provisions of the law prohibiting registration of well-known marks (Article 18), where there is a prior business relationship between the parties (Article 19 ) and other cases where bad faith has been determined (Article 23 – corresponding to the current Article 32).

This provision has corollaries in trademark laws in other countries but is most widely adopted in the context of domain name arbitrations, including UDRP and C-DRP (applicable to .cn domains) disputes.

Assessment

This provision could save enormous time and costs for bona fide trademark owners, and result in greater efficiencies for CNIPA and the courts.

However, because invalidations can take four to six years to complete (assuming all appeal and retrial opportunities are exploited), the actual savings in time and costs in cases against more aggressive pirates would be fairly limited.

The proposed provisions do not allow for transfer of applications for pirate marks in the context of opposition proceedings.

Recommendations

Allow the transfer of pirated applications, as well as registrations upon decisions by the TMO and TRAD.

(f) Elimination of One-Year Bar on Approval of New Applications

The draft would eliminate the one-year time-bar on approval of applications that were blocked due to a registration, which has been invalidated due to bad faith (Article 50).

Assessment

In effect, this proposed change should help to accelerate registration for victims of bad faith registration by as long as one year.

Recommendation

The proposed change to Article 50 should be retained.

(g) Civil Compensation

The draft would grant victim trademark owners access to civil compensation for legal costs, as well as other harm caused by bad faith filers (Article 83).

Assessment

Decisions by Chinese courts in recent years have confirmed that bad faith filing can be deemed a compensable act of unfair competition – but generally only where the pirate has engaged in other egregious acts, including use of the pirate mark (thereby causing consumer confusion) and/or the filing of enforcement actions against the victim brand owner, or its distributors or suppliers. Examples include the disputes involving the marks COPPERTONE (see SIPS article: Case Note – Analysis of Bayer vs. Li Qing), STAUD, UFC and BRITA (see SIPS article: Case Note – Analysis of Brita vs. Kangdian).

With one exception, Chinese courts to date have consistently rejected cases where the victim brand owner sought compensation for losses caused solely by the pirate’s act of filing, without showing that the pirate also engaged in other forms of unfair competition. This is consistent with judicial practice in China (and globally) under which the filing of a trademark application is not deemed a “civil act”.  Some observers have argued that the recent case involving the mark IN-SINK-ERATOR qualifies as an exception to this rule and thus represents a breakthrough in judicial thinking in China. However, this case is arguably distinguished by the fact that the defendant applied for the mark in question after the Beijing Higher People’s Court had already issued a final decision recognizing the defendant’s bad faith.

That said, CNIPA’s efforts to change the status quo are laudable and arguably necessary to deter pirates and encourage early settlements.

Assuming the National People’s Congress is supportive, the question remains whether the impact of this provision will be substantially diluted by the fact that it typically takes two or more years to receive a final decision awarding compensation, and that compensation is often insufficient to provide real deterrence.

Recommendations

  • Retain the proposed provision allowing compensation for victim brands.
  • Clarify in the law or accompanying judicial interpretations that trademark owners can secure compensation by filing and consolidating civil actions with registry proceedings before the Beijing IP Court and Beijing Higher People’s Court. Doing so would reduce the costs and time required to seek justice through separate proceedings and in less experienced courts in other cities.
  • Clarify in the law or accompanying judicial interpretations that victim brands can pursue preliminary injunctions in civil proceedings in clear-cut and egregious cases which thus pose a risk of “irreparable harm”. Such injunctions would need to be limited in scope – e.g., prohibiting the pirate-defendant from refiling, commencing use, enforcing, or assigning the pirated mark or opposing or invalidating the victim’s mark. But such orders may well encourage early settlements.

(h) Malicious Litigation

Article 84 of the draft law reinforces the right of trademark owners to seek compensation for “malicious litigation” by registry pirates, and to at least secure compensation of legal costs.

However, the draft law does not appear to provide trademark owners the right to compensation for attacks against their trademark registrations and applications.

Recommendation

Consistent with recent civil decisions by local courts in China (see for example the 2022 decision by the Dongguan Intermediate People’s Court in the STAUD case), Chinese courts should be empowered under the law to award compensation for legal costs incurred by victim brand owners in defending against registry attacks, and for the loss of profits that would have been accrued were it not for such attacks.

(i) Acceleration/Consolidation of Cases

CNIPA regulations issued in 2019 allow for the acceleration and consolidation of related cases involving bad faith registration. But these have not been widely implemented in practice (perhaps due to lack of resources), thus missing an enormous opportunity to generate deterrence against bad faith filings and assist victims of piracy in securing their rights more quickly.

The draft law is silent with respect to acceleration and consolidation of cases.

Recommendations

  • Amend the law to permit – and indeed require – both CNIPA and the Beijing courts to accelerate their handling of egregious cases.
  • Permit the consolidation of related cases when justified for the sake of efficiency, and in appropriate circumstances, cases that are pending before administrative authorities (the TMO and TRAD) and the courts. Naturally, this would only be appropriate where the marks, the evidence and arguments are substantially identical.
  • Merely amending the law will, of course, achieve nothing if CNIPA and the courts do not have sufficient resources to fast-track cases involving bad faith filers.

(j) Faster Registration for Victim Brands

The CNIPA draft eliminates the right to administrative appeals for applicants whose marks have been successfully opposed before the TMO (Article 39).

The draft amendment allows pirates to challenge opposition decisions by the TMO through an appeal before the Beijing IP Court, thus ensuring access to further review of the matter. As such, resolution of such oppositions would effectively be accelerated by about one year.

Assessment

This proposed change is laudable particularly because it would increase costs for pirates by forcing them to file appeals of opposition decisions to the courts, rather than to the TRAD. As such, many pirates are more likely to abandon their applications more quickly than otherwise.

However, in cases where pirates decide to appeal opposition decisions to the courts, the proposed change would only reduce the total time for final resolution of disputes by one year – still requiring three to four years in most cases.

Recommendations

  • To help bona fide trademark owners achieve earlier registration of their applications that have been blocked by pirate applications, it is recommended that the law be amended to clarify that such pirate marks will not be cited against victim applications even here the opposition decision has been appealed to the courts.
  • To maximize due process, it is recommended that the petitioner in oppositions and non-use cancellations be given the right to review and comment on the arguments and evidence filed by pirates in first-instance proceedings before the TMO. If this is not practical due to limitations in resources at the TMO, it is recommended that petitioners be given this right at least in cases where they have presented a prima facie case that the respondent has acted in bad faith.

(k) Pirates Associated with Victim Brand Owners

CNIPA has not proposed changes to the current Article 15, which prohibits registration of marks by agents or parties with a business connection to a victim brand owner.

This provision offers satisfactory protection in cases where the pirate is an “agent” or “entrusted” party, such as an OEM factory supplier, with protection extending to dissimilar goods and services.

By contrast, where the pirate is not an agent, but was made aware of the disputed mark through a “contractual, business, or other relationship” with the victim brand owner, protection is only allowed vis-à-vis identical or similar goods and services, thus denying protection where the items are deemed “dissimilar”. In practice, CNIPA currently defines “contractual, business, or other relationships” quite narrowly.

Recommendation

Amend Article 15 to broaden the scope of protection to dissimilar goods and services where it has been shown that the pirate gained knowledge of the mark through either a direct or indirect relationship with the victim. In practice, this typically includes resellers that did not purchase the goods directly from the victim brand owner, but through authorized or unauthorized wholesale distributors.

(l) Five-Year Time Limit on Invalidations

Consistent with the current law, Article 45 of the CNIPA draft imposes a five-year time limit on the filing of invalidations – including under Article 23 (the equivalent of Article 32 of the current law) which is the primary tool used to address bad faith registration.

Recommendation

Remove the five-year time limit for invalidations involving any bad faith behavior, without requiring that the brand owner’s mark be deemed a well-known trademark. This is particularly reasonable given the limits in trademark searching technology and the vastness of the Chinese market in geographic and economic terms.

2. Beyond Bad Faith

This section provides comments on proposed amendments that are not directly focused on bad faith registration. It also offers recommendations for amending the law with the aim of solving other significant problems not currently addressed in the CNIPA draft.

(a) Shortening of Opposition Period

The draft shortens the current three-month opposition period to two months (Article 36).

This proposed change is clearly intended to accelerate the registration process.

While laudable in its aims, it imposes significantly greater burdens on both foreign and domestic trademark owners.

Recommendations

  • Retain the current three-month opposition period, keeping in mind the need for victims of piracy to investigate the circumstances, gather evidence and develop a suitable strategy and budget plan.
  • Consider making legal protection for newly-registered marks retroactive to the filing date, thus creating consistency with marks extended to China through the Madrid system. Protection could be conditioned on the infringer having actual or deemed notice of the existence of the trademark application, e.g., through a warning letter.
  • Allow for the filing of notices of opposition, with a month or two given to file substantive arguments.
  • Allow for cooling off periods and extensions of deadlines to file opposition arguments and evidence, subject to the mutual consent of the parties.

(b) Madrid Applications

Under current practice, to enforce an international registration extended to China under the Madrid Arrangement, a rights holder must first obtain a Chinese-language certification document issued by the TMO. Presently, the TMO will not issue a certification until 12 or 18 months have passed following WIPO’s notification of extension. (The exact period depends on whether the mark was filed under the Madrid Agreement or the Madrid Protocol.) By contrast, applications filed directly with the TMO can be registered and enforced in as little as seven months.

Recommendation

Appropriate changes in TMO rules and policies are therefore recommended in order to accelerate registration for IR extensions and bring greater harmonizing in treatment between applications filed directly v. those filed under the Madrid system.

(c) Well-Known Marks

The draft appears to broaden protection of unregistered well-known marks through protection of dissimilar goods where the conflicting trademark misleads the public in a way that likely impairs the legitimate interests of the owner of the well-known mark (Article 18). This article has also been expanded to protect well-known marks against “use” (not just against registration of conflicting marks).

The CNIPA draft further affords greater protection for well-known marks that are deemed famous among the general public, specifically by allowing protection without the need to prove a likelihood of confusion or mistaken purchases, and instead merely requiring mistaken “association” (Article 18).

Recommendation

The suggested changes are laudable, in that they introduce more substantial protection for well-known marks, including against dilution.

However, consideration should be given to providing equivalent protection to all well-known marks, as otherwise the law would improperly discriminate against small and medium-sized enterprises and trademark owners whose products are focused on narrower consumer segments.

(d) Consents

In 2021, CNIPA and the Beijing courts began rejecting consent arrangements in the vast majority of cases where they are submitted to support application appeals. The policy justification for the change in practice remains unclear, but it is assumed the primary concern relates to the risk of consumer confusion, as well as possible abusive practices, e.g., through compensation arrangements between the parties, which function effectively as licenses.

Consents are a normal and essential tool for facilitating registration and legal use of trademarks worldwide. China’s current conservative approach to granting consents has caused enormous harm, costs and inconvenience to both foreign and domestic brand owners.

Recommendations

To remedy this situation the Trademark Law should be amended to facilitate and more effectively regulate the practice of recognizing consents.

Consistent with international practice – as well as practice in China up to 2021 – consents need not be deemed dispositive but can be subject to reasonable conditions.

(e) Defensive Trademarks

While CNIPA has expressed support for defensive marks, their existence has not been recognized in statute, and it remains unclear whether the newly-proposed use requirements represent a change in CNIPA policy.

Recommendations

As defensive trademarks are (for now) an essential tool for owners of trademarks due to high levels of piracy, it is recommended that their legality be recognized in the Trademark Law, at least to the extent suggested in section 1(a) above, i.e., by allowing registrants to avoid cancellation of such registrations (in whole or in part) by providing a reasonable justification for their filing in lieu of evidence of use of the covered goods and services.

(f) Suspension of Examination, Appeals and Disputes

Article 42 of the CNIPA draft allows the TMO and TRAD to suspend the handling of appeals and disputes (including oppositions and invalidations) the outcome of which depends on the rules of co-pending actions.

Recommendations

The proposed Article 42 represents a positive step, but the revised language leaves important gaps that are arguably necessary to achieve greater efficiencies and reduce costs – for trademark owners and relevant authorities, equally.

  • It does not give trademark owners the explicit right to request suspensions and receive formal responses to those requests. (Under current practice, requests are made informally, but there is no formal response – thus creating uncertainty and concern over the lack of transparency in the decision-making process.)
  • The amended provision does not apply to initial examination of trademark applications – only appeals and disputes.
  • Finally, the amended provision would explicitly allow courts to ignore changes in circumstances “except when the principle of fairness is clearly violated” – a term which is vague on its face and can lead to abuse – thus warranting a clear definition, if adopted.

In addition to addressing the foregoing gaps and ambiguities, the law should be amended to allow more time for disputing parties to negotiate settlements. This could be achieved by adopting measures available under the laws of other countries, such as:

  • cooling-off periods; and
  • suspension of deadlines for filing arguments and evidence based upon the mutual agreement of the parties.

Consistent with international practice, such suspensions could be restricted to a reasonable period, with limits on the number of suspension requests allowed.

(g) Legalization Requirements

Brand owners – particularly in the United States – must bear enormous costs and delays, and sometimes lose the ability to defend their rights, due to the Beijing IP Court’s legalization requirements for powers of attorney and other documentation.

Recommendation

Consistent with international practice, the legalization requirements for judicial appeals of registry cases should be dropped or relaxed in a reasonable manner. Options for relaxation include:

  • Allowing the trademark agent originally entrusted to file an application to certify the existence of the foreign party; and
  • Allowing commencement of the substantive case with a decision delayed until the required legalized documents are submitted.

(h) Communication with TMO Examiners

The PRC Trademark Law does not explicitly permit third parties to file interference letters or otherwise provide information to TMO examiners to assist in the evaluation of new applications. No changes in this regard are set out in the CNIPA draft.

In practice, the TMO has for many years been willing to review informal interference letters which bring to the examiner’s attention important information – including patterns of bad faith behavior, prior registry decisions or prior enforcement actions taken by relevant authorities against a pirate. But examiners are not obliged to consider, respond to or act upon the content of such letters.

Recommendation

Amend the Trademark Law to allow applicants and third parties to bring to the attention of TMO examiners limited information concerning pending applications. While this may result in greater work for examiners in some cases, on balance it should increase efficiency and facilitate decisions that will ultimately reduce the number of appeals, oppositions and other challenges against new filings.

(i) Confidentiality for Personal Data

Neither the current law nor CNIPA’s draft revision provide means for foreign individuals that are required to submit their personal identification data – such as passports and other identification certificates – to keep such information from being disclosed to disputing parties. The next draft of the law should address this serious gap in current legislation.

(j) Punitive Damages

No changes have been proposed to Article 77 of the law, which sets out the options for trademark owners to seek actual damages, punitive damages – based on a multiple of one to five times actual damages – and statutory damages (which are applied where the trademark owner has difficulty in securing evidence of actual damages.

There is a perception among practitioners that Chinese courts have been increasing the level of statutory damages awards, particularly in cases involving counterfeiting. However, in cases which are clearly egregious and have serious impacts, the level of punitive statutory damages imposed by local courts is often disappointing, particularly given that infringers in such cases have generally succeeded in hiding relevant transactional and financial records – thus raising a presumption that actual sales were much higher than the damages awarded.

Given the foregoing, new provisions should be added to the Trademark Law to encourage courts to award higher compensation where statutory damages are claimed.

(k) Administrative Fines for Infringement

The CNIPA draft authorized local MSBs to impose “heavier fines” against more egregious violations, but does not clarify how such fines should be calculated.

This gap should be addressed, whether through new provisions in the law or through the timely issuance of new implementing regulations by CNIPA or the State Administration for Market Regulation (SAMR).

(l) Preliminary Injunctions

In comparison to other countries, courts in China are extremely conservative in granting preliminary injunctions in even the most obvious cases of infringement – including counterfeiting.

The CNIPA draft does not propose any amendments to Article 81 of the Trademark Law – which allows access to preliminary injunctions against infringements that pose a risk of “irreparable damage”.

CNIPA should work with the SPC to explore options for expanding access to preliminary injunctions, including through a broader interpretation of the term “irreparable damage”. In this regard, at a minimum, any case of overt trademark counterfeiting should be regarded as satisfying this standard.

(m) Online Enforcement

The draft law introduces two positive provisions that should help support administrative enforcement in online-related infringement cases. First, it authorizes local MSBs to access banking records, and second, it explicitly recognizes online trade platforms as parties that may be deemed liable for contributory infringement.

However, in practice, MSBs rarely impose penalties against online platforms – whether for contributory liability or as direct infringers. Further, the MSBs efforts to educate platform operators lack sufficient transparency.

Moreover, MSBs rarely investigate online vendors in response to complaints by consumers or trademark owners, notwithstanding the vast scale of infringements taking place online. CNIPA and SAMR should conduct urgent research into the reasons for the lack of greater involvement in supervision and enforcement relating to online market operators, and relevant provisions in the Trademark Law should be strengthened to support new initiatives in this regard.

Finally, Article 72(3) of the CNIPA draft appears to limit the obligations of online trade platforms to intervene against infringements where trademarks and their covered goods and services are similar. As such, this provision seemingly excludes other types of infringements, including where well-known marks are infringed through their use on “dissimilar” goods and services. Greater obligations should be imposed on platforms to take reasonable measures in response to all types of infringements, with the aim of offering more practical and effective protection for consumers and brand owners.

–END–