Business Law

The fourth revision of PRC Trademark Law

This partial, however fast, revision of the PRC Trademark Law might be one of the effects of the continued change negotiations between China and the United States. The revision focuses on critical issues: (1) the proliferation of unused trademarks, and (2) the enforcement moves against infringers.
The proliferation of unused trademarks

More than 7 million logos carried out for three hundred and sixty-five days is, certainly, becoming a hassle. Obviously, lots of these trademarks are implemented for and registered for different reasons than the use of them (e.G., receiving subsidies, re-selling, and many others.). Some of those logos are even filed in overall bad faith.

The revision touches especially article 4 (the general precept defining who might also practice for a trademark), not directly by using a reference to article 7 (precept of correct faith in making use of for and using trademarks). Article 4 affords that a person who “…. Desires to gain the exceptional right to apply a trademark for (one’s) goods or offerings throughout production and enterprise operations” may file a utility for a hallmark.

The State Council proposed, on 20 April 2019, to feature the following wording: “Any utility for the registration of a hallmark that isn’t always meant to be used shall be rejected.” This far-attaining proposition created trouble.

This proposed modification changed into in contradiction with article forty-nine of the regulation which presents that where a hallmark has no longer been used for three consecutive years without proper reason, any man or woman may additionally report an application with the Trademark Office for the revocation of the trademark. Since article 49 does no longer impose any obligation to apply for the duration of the primary three years following the registration, how ought to a trademark application be refused for lack of intention to use?

Besides, members of the National People’s Congress (NPC) objected that it is not unusual for valid organizations to record “protecting” logos so one can defend their marks in lessons of products greater or much less associated with their core enterprise, and avoid the risk of dilution or having to record hard oppositions based totally on popularity.

This is why, after deliberation, the NPC decided to feature the phrase “horrific faith” (which is immediately related to the principle of article 7), so that the final textual content reads: “Any bad religion application for the registration of an indicator that isn’t always meant for use will be rejected.”

Two unbiased situations are, consequently, wished: no intention to use, and terrible religion.

As it can be tough for an examiner to realize whether or not an software is made in the top or terrible faith, a good way to be fully effective, this amendment become prolonged to (1) the duty of trademark retailers, and (2) oppositions and invalidation techniques.

In term of (1), Article 19. Three now gives that a hallmark agent ought to no longer take delivery of being entrusted where he is aware of or ought to recognize that the amended article four is violated. Furthermore, article sixty-eight provides that if a trademark agent documents emblems in horrific faith it is able to be warned or punished, and if proceedings are initiated in horrific faith, it could be punished by means of the Court.

In the time period of (2), Article 33, as amended, presents that oppositions may be filed by using any birthday party that believes that the amended article four and the item 19. Four are violated. For article 44 (invalidations) the equal connection with article four and article 19. Four is introduced.

Another question may be asked: will the brand new article 4 practice to emblems already registered or logos in the system of registration? Theoretically now not, because a new regulation has to no longer have a retroactive impact. But one may don’t forget that the 2001 Trademark Law had such retroactive outcomes for well-known marks. It will be interesting to see whether the brand new regulation will be capable of dealing with the inventory of already registered/filed, and not used, emblems.
Enforcement of emblems

Article sixty-three gives that, wherein an act of infringement is dedicated in terrible religion and the circumstances are extreme, the quantity of compensation may be elevated by way of 3. The new article sixty-three raises this viable augmentation as much as “five instances”.

Article sixty-three additionally gives for the most statutory damages of RMB3 million (US$436,000) in case it seems hard to calculate the precise quantity of prejudice or illegal profits. The amended law raises the statutory quantity to RMB5 million.

And subsequently, the revised article 63 deals with the stock of counterfeit items and offers that, besides in special circumstances, they ought to be destroyed, together with the “substances” and equipment “especially” used to manufacture them. Furthermore, the stated materials and tools, if they’re not destroyed, may not re-input the commercial enterprise channels. Finally, the revised article 63 clarifies that counterfeit items may not re-enter the business channels, even supposing the trademark has been eliminated.

This is pretty an encouraging improvement, as in addition to tools, the court can order the destruction of substances particularly used for the manufacture of counterfeit items. This amendment fills an opening and is welcome.

This development isn’t without regret:

It issues simplest registered trademarks which exclude unregistered famous marks;
It is constrained to “commodities bearing a counterfeit registered trademark”, which excludes all other infringing goods (comparable trademarks) or any goods bearing unregistered well-known emblems. Is this restriction made on the cause? Why must the powers of the courts be narrower than that of the administration?

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