By 2018 China had been ranked first in the world for the number of new trademark applications for 16 consecutive years. In the meantime, the Chinese trademark law and the practice at the China trademark office (CTMO) have also gone through various changes of which the following are perhaps the most notable.
l Practice changes at the China office
On April 10, 2018, the new State Market Supervision and Administration Bureau was officially established. It governs the National Intellectual Property Administration, PRC (CNIPA), which has both patent management functions and trademark management functions. In the past decades, trademark matters were managed by the CTMO under the Statement Administration for Industry and Commerce (SAIC) and patent matters were managed by State Intellectual Property Office (SIPO).
In 2018, the examination speed on all kinds of cases, especially new national trademark applications, e-correspondence between the office and trademark agents as well as some other trademark matters, has significantly improved.
l Crack down on bad-faith applications
According to the CNIPA, more than 7.3 million new national trademark applications were filed in China in 2018. The large number not only shows the importance of the Chinese market but also reflects problem of bad faith applications.
According to a CNIPA release, more than 100,000 abnormal new trademark applications were rejected in 2018. The rejections of 24 bad faith applications for marks that are identical to BENTLEY and the B device of the famous car manufacture Bentley Motors Ltd, and an invalidation case of a mark similar to BOSCH, are good examples showing the CNIPA’s efforts.
As bad faith is a subjective matter, it has been a big challenge to prove it in the past unless the applicant squatted hundreds or even thousands of marks. However, recent experience on opposition cases showed that the threshold to prove bad faith seemed to have been significantly lowered.
l Changes to trademark law
In February 2019, CNIPA published Draft Regulations against abnormal applications for comments. The Draft Regulations contain 8 articles and clearly state the forms of abnormal applications, how to deal with such applications according to the Trademark Law and Regulations for the Implementation of the Trademark Law and other methods that can be taken against them.
In addition, the fourth amendment to the Chinese Trademark Law will take effect on November 1, 2019. According to the amendment, trademarks applied for but not intended for use purpose and in bad faith should be rejected. It also becomes a ground that can be relied on in opposition and invalidation cases. The maximum amount of damages on trademark infringement has been increased from RMB 3 million to 5 million yuan.
l Administration action
As the government pays more and more attention to IP protection in China, authorities at different levels are also working in this direction.
When a trademark owner becomes aware of infringement on its mark, it can bring a lawsuit to people’s court, as in many other countries. In addition, China has a unique administrative organ to enforce registered trademarks, the Administration for Market Regulation (AMR), which has the functions of the former Administration for Industry and Commerce (AIC). The trademark right holder or an interested party may request that the AMR addresses the dispute.
Late last year, the former Beijing AIC (BAIC) announced some of the typical trademark violation cases it handled. One case related to the running shoes of the Japanese company ASICS Corporation is one of the largest in the past 20 years. According to the related articles of the Trademark Law, the BAIC Fengtai Branch has ordered the infringer, a Beijing company, to immediately cease the infringing acts, has confiscated the infringing running shoes, and has imposed a fine of over 6 million pounds which is five times the company’s illegal business revenue. The fine will go to the government.
l OEM dispute
During recent years there has been argument over whether use of trademark in original equipment manufacturer (OEM) production should be deemed as infringement and different courts hold different opinions.
Last year the Supreme People’s court published a retrial judgement in a trademark dispute in OEM production. The plaintiff, Shanghai Diesel Engine Co., Ltd. owns three marks registered last century. Two of them are live marks and were recognized as well-known marks in 2000.
The Defendant is a company from Jiangsu province, which is quite near to the Plaintiff geographically. It is engaged in OEM production of diesel engines exported to Indonesia. The mark used on the diesel engines is identical with the Plaintiff’s registered trademarks in China. The consigner of the OEM production is an Indonesian company that holds the registered trademark right for the same mark in Indonesia.
In the first instance, Changzhou Intermediate People’s Court considered that OEM production doesn’t constitute use of trademark as stipulated in the Trademark Law, and thus doesn’t constitute infringement on the Plaintiff’s trademark right in China. In the second instance, the Jiangsu Higher People’s Court considered it constituted trademark infringement.
In the retrial procedure, the Supreme People’s Court considered trademark used in OEM production by the Defendant didn’t infringe the Chinese trademark right owned by the Plaintiff. Thus, the judgement of the second instance was revoked and the judgement of the first instance was maintained. Since this judgment was made by the Supreme People’s Court, it has directive meaning for later similar cases. However, for non-use cancellation cases, according to current practice, trademark use in OEM production can be considered as actual use.
l Further progress expected
Although the trademark protection system in China is far from being prefect, it continues to progress in a positive direction. It is reasonable to believe that more improvement is on the way.