Update on amendments to China’s Trademark Law

 

Readers of China Direct should be aware that amendments have been made to China’s Trademark Law, and will come into effect November 1^st, 2019.

The 4^th Amendment to the Trademark Law increases statutory damages to RMB 5 million and aims to manage bad faith registration and the hoarding of trademarks for sale.

After November 1^st, Article 4 of China’s Trademark Law will read: “Applications for trademark registrations that have been made in bad faith, and are not intended for use, shall be refused.”

The amendment to Article 4 is significant to foreign businesses with interests in China because it codifies a shift towards vetting trademark applicants to ensure that they are not ‘trademark squatting.’ China operates a ‘first-to-file’ trademark registration system which is based on the ‘good faith principle’ that the applicant intends to use said trademark. However, as a result, under China’s current trademark law there is no deterrent in law to manage trademark squatting. The codification of the refusal of suspect bad faith trademark applications is good news for foreign business because it pushes the onus onto the applicant to prove that they intend to use the trademark, whereas previously intention to use was assumed.

Crucially, Article 4 can be applied in examination of a trademark application, in opposition, or as part of an invalidation of a trademark action as absolute grounds for refusal. As a result, foreign companies who find that their trademark is being used in China illegally have a wider set of tools at their disposal to seek punitive damages.

In addition to the amendment to Article 4, China’s new trademark law raises the limit on statutory damages to RMB 5 million. Moreover, where infringement has been committed in bad faith and the circumstances are deemed to be a ‘serious infringement’, the infringer shall be subject to punitive damages of up to five times the value of that inflicted on the plaintiff. Furthermore, any counterfeit goods, and the materials and tools mainly used to manufacture the counterfeit goods shall be destroyed, while counterfeit goods should be prohibited from entering commercial channels, even if the counterfeit trademark is removed.

For more information on amendments to the Trademark Law, please contact: [email protected]