Comments on China’s Third Revision of Trademark Law

From King & Wood Mallesons Trademark Group
China Marches Toward Third Revision of Trademark Law

by Yang Hua, Connie Zhuang and Xiao Yuexin

On September 2, 2011, the Legislative Affairs Office (the “LAO”) of China’s State Council released the Circular on Seeking Public Opinions on the Trademark Law of the People’s Republic of China (Revised Draft for Comments) (the “Draft Amendments“). Based on the receipt of public comments, the LAO has made further revisions to the Draft Amendments and the updated Draft Amendments will be deliberated at the Working Meeting held by the Premier. The Draft Amendments are expected to be promulgated by the end of 2012.

The Draft Amendments make a number of significant changes, some of the most notable being provisions aimed at preventing bad faith filings and changes to the trademark opposition procedures. The changes are as follows:

1. The Draft Amendments provide that “[s]pecific measures for applying for a trademark with respect to goods of multiple classes through one application shall be specified by the administrative authority for industry and commerce under the State Council.”

This revision specifies that the Chinese trademark registration system is trying to gear to the international trademark registration system, and the principle of “single registration for one classification” will be gradually replaced by “single registration for several classifications”. This is a meaningful change for both trademark applicants and the China Trademark Office (CTMO) for it can effectively simplify the application procedures and the examination procedures.

2. The Draft Amendments provide that if a trademark applicant, due to a contractual relationship, business contacts, geographic location, or other relationship, obtains knowledge of an owner’s prior rightful use of a trademark in Mainland China and nonetheless applies to register that same trademark in bad faith, such an applicant may be rejected or have its registration canceled. Such rejection or cancellation may occur even if the rightful owner’s trademark has not gained the required amount of influence through use by the filing date of the bad faith trademark.

This provision amends Article 31 of the prevailing Trademark Law (2001 Trademark Law), which provides that “[a]nyone applying for trademark registration may not damage the existing rights of others obtained by priority, neither may it register, in advance, the trademark that has been used by others and has gained certain reputation.” Article 31 sets the rule that a pre-emptive trademark application made by unfair means may be rejected if the trademark owner can prove that the trademark has been used in China and has acquired a certain influence. Under the Draft Amendments, if a contractual, geographical or other relation has been established between the challenged trademark applicant and the unregistered trademark owner, the trademark owner needs not prove that “the trademark has gained a certain influence in China” in a trademark opposition procedure.

However, the Draft Amendments do not address an exceptional circumstance: in certain cases the rightful owner’s trademark may have been used in China and gained a certain level of influence, but there is no contractual relationship, business contact, geographic location, or other relationship between the parties. In such circumstances, the trademark challenger can still obtain knowledge of the trademark owner’s prior right in a trademark opposition case. In practice, the relevant trademark administrative or judicial authorities will deem the trademark challenger’s acts a “pre-emptive trademark application by unfair means” as provided in Article 31 of the prevailing Trademark Law, and the trademark owner needs not prove the trademark challenger has filed the pre-emptive trademark application “by unfair means” or “in bad faith”.

It remains unclear whether pre-emptive trademark registration acts that, though showing evident bad faith, are not specified in the Draft Amendments, should be prohibited. Regarding trademarks with high reputation that are not used in China, the Draft Amendments are also silent on the issue whether the trademarks should be protected if they have gained certain influence in China. To cope with such loopholes, it is feasible to add a “catch-all” provision to the Draft Amendments, providing that, if a trademark registration is not in line with the Principle of Good Faith, the registration should not be granted.

3. The Draft Amendments provide that if the rightful owner’s trademark is strongly distinct and has gained a certain level of influence, the bad faith filing of a confusingly similar trademark may be refused for registration even on dissimilar goods.

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China Marches Toward Third Revision of Trademark Law


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