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Interpretation of the Key Points of the 2023 China Trademark Law Amendment Draft
Jan 26,2023 | Categorised in: Trademark

1. Malicious squatting that causes losses to others shall bear civil liability for compensation (Article 83)

The root cause of China's malicious squatting of trademarks has not been effectively curbed for a long time is that the illegal cost of squatting is too small. Under the existing legal framework, squatters are not worried about being liable for compensation even if they cause heavy losses to the right holders, so it is impossible to guard against unscrupulousness. Driven by strong appeals from all parties and some court cases in recent years, civil compensation for malicious cybersquatting has finally been included in the draft for comments, which will provide an important legal weapon for trademark owners and hopefully fundamentally change Chinese trademarks. The current situation of the proliferation of malicious cybersquatting. It should be noted that the current revised clauses do not specify whether the local court should wait for the administrative rights confirmation procedure to finally determine that the "malicious registration" constitutes a "malicious registration" before awarding compensation, or whether it can directly determine "malicious registration" in the civil procedure regardless of the results of the administrative rights confirmation procedure. Malicious registration” and award compensation. It is believed that this important issue will be clarified through future implementing regulations or judicial interpretations.

2. Increase the administrative penalty for malicious registration applicants to a maximum of 250,000 yuan, and confiscate illegal income (Article 67)

One of the important achievements of the law reform in 2019 is that for the first time in the Trademark Law, administrative penalties for malicious registration applicants are stipulated, but subsequent departmental regulations are limited by the level of regulations, and the maximum penalty for malicious registration applicants can only be 10,000 yuan , From the implementation effect, it failed to form an effective deterrent to malicious registrants. The Draft for Comment increases the upper limit of fines for serious malicious registration applicants to RMB 250,000, and confiscates illegal gains, which will more effectively deter malicious registration applicants.

3. The prior right holder can apply to transfer the maliciously registered trademark to his own name (Article 45-47)

For well-known trademarks that have been preempted by others, unregistered trademarks that have been used earlier, and trademarks that have been preempted by agents, representatives or specific related parties, the prior obligee has an additional "request for transfer" in addition to filing an invalidation request. "s Choice. If the reason for the transfer is justified and it is not likely to cause confusion or other adverse effects, the State Intellectual Property Office can rule on the transfer. This new regulation is beneficial to help the prior right holder reduce unnecessary repeated applications and obtain an earlier filing date.

4. Unregistered well-known trademarks can obtain anti-dilution (cross-class) protection, but require higher popularity (Article 18)

At present, the scope of protection for unregistered well-known trademarks in China is limited to goods and services that are identical or similar to the well-known trademark, and anti-dilution protection is only for well-known trademarks that have been registered in China. The draft for comments also allows unregistered well-known trademarks to obtain anti-dilution protection. On the one hand, this is a system for China’s future accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) On the other hand, it is also the need to further strengthen the protection of Chinese and foreign well-known trademarks. It is worth noting that obtaining anti-dilution protection requires higher visibility, that is, the mark is known among the "general public" and not only among the "relevant public".

5. Submitting a new application requires "use" or "intent to use", and the space for defense registration is compressed (Article 5, 22)

The addition of the "malicious" element in Article 4 of the 2019 Amended Law "Malicious registration not for the purpose of use" is to reserve a certain living space for enterprises to reasonably defend against registration in an environment where malicious squatting is serious. However, the Draft for Comments has significantly upgraded the means of combating malicious registration, and the drafters' tolerance for defensive registration has dropped significantly. Article 5 stipulates that "use" and "intent to use" constitute the basis for the legitimacy of a trademark application, while Article 22 It is stipulated that "a large number of applications for trademark registration without the purpose of use and disrupting the order of trademark registration" constitutes "malicious registration". That is to say, the National Intellectual Property Administration has a tendency to change from "a large number of registrations + malicious" in 2019 to constitute hoarding in Article 4 to "a large number of registrations constitute hoarding". In the future, the identification standards for "mass" and "disrupting the order of trademark registration" will determine the legality boundary of defensive registration, and the space for enterprises to apply for defensive registration in the future will be greatly reduced, which needs to be highly concerned.

6. Prohibition of repeated registration of the same trademark for the same goods and services (Article 21)

In the past practice, malicious registrants often confronted by submitting a large number of repeated applications when encountering the objection, invalidation or revocation of the prior right holders, forcing the previous right holders to repeatedly submit objections, invalidations or even their own repeated applications, and fell into a An inescapable vicious circle. Article 21 of the Draft for Comments prohibits anyone from re-registering the same trademark for the same goods and services in principle, except for cases where the prior right holder agrees to cancel the original registration or has legally justified reasons. In addition, this provision will also have a significant impact on those registrants who file a new application every three years to fight the cancellation of the trademark that has not been used for three consecutive years. At the same time, the resubmission of registration applications by trademark applicants in order to wait for the results of cited trademarks will also be restricted and affected.

7. After five years of trademark registration, it is necessary to take the initiative to explain the use of the trademark to the State Intellectual Property Bureau (Article 61)

In order to strengthen the use obligations of trademark registrants and clean up "zombie trademarks (the subject of the trademark has been cancelled, but the trademark has not been revoked)" in a timely manner, the draft for comments has increased the number of trademark registrants who have registered for more than 5 years on the basis of not using the cancellation system for three consecutive years. The new requirement to explain the use of trademarks in 2019 on "approved goods or legitimate reasons for non-use". If the explanation is not made as required, or the explanation is untrue after random inspection, the National Intellectual Property Office may revoke the registration. This new rule will increase the trademark management costs of trademark owners to a certain extent, but it will have a positive effect on promoting the use of registered trademarks and greatly reducing zombie trademarks.

8. Open trademark constituent elements (Article 4)

The draft for comments clearly adds an open "other elements" in addition to the elements of "words, graphics, letters, numbers, three-dimensional marks, color combinations, and sounds" stipulated in Article 8 of the 2019 "Trademark Law" that can be registered as trademarks In the future, single color trademarks, scent trademarks and position trademarks may all be approved for registration in China on the premise of meeting the distinctiveness requirements.

9. The opposition period is shortened to 2 months, and the re-examination procedure for non-registration is canceled (Articles 36 and 39)

The opposition period after the announcement of preliminary trademark approval has been shortened from the current 3 months to 2 months. After the 2013 "Trademark Law" abolished the opponent's opposition review opportunity, the draft for comments also canceled the opposition's non-registration review Instead, the person opposed directly initiates an administrative lawsuit against the decision of non-registration, so as to improve the efficiency of examination and reduce the internal procedural links of the State Intellectual Property Office.

10. Clarify that administrative litigation does not apply to changes in circumstances in principle, unless it is obviously unfair (Article 42)

In recent years, more than half of the unsuccessful trademark administrative litigation cases of the State Intellectual Property Bureau are due to changes in circumstances. The main reason for the change of circumstances is that the status of the prior rights involved in the case when the refusal review decision is made is based on the results of other opposition, invalidation or revocation cases. The National Intellectual Property Office should suspend the waiting, which is not stipulated in the current law. The draft for comments clarifies that in the trademark examination and examination procedures of the State Intellectual Property Office, it is possible to wait for the determination of the prior right status before reviewing the registrability of the disputed trademark, so that in principle, the court’s trademark administrative litigation can be resolved by an administrative ruling. The factual state at the time of making the review shall prevail, and the change of circumstances shall no longer be applicable, except when it is obviously unfair. However, it should be noted that if the administrative agency does not change the current practice of suspending or not suspending after the implementation of the new law, and the court strictly grasps the principle of "obvious unfairness", it will spend a lot of time and resources to clear the previous obstacles and use the Rights holders gaining additional time in administrative proceedings will have a significant adverse effect.

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