China’s Latest Trademark Law Strengthens Trademark Enforcement

It has been more than two years since China’s new Trademark Law was promulgated and implemented in 2019. How have the revisions to the new Trademark Law been applied throughout this time? What result has been acquired? What rules or interpretations have the China Intellectual Property Administration (CNIPA) or the Court issued, and what steps have been made to promote and ensure the efficient application of the new Trademark Law? In conjunction with the main amendments to the new Trademark Law, the following will be explained:

Article 4 of the new Trademark Law

Article 4 of the new Trademark Law states that “malicious trademark applications not intended for use must be rejected,” which further restricts malicious trademark filings.

The State Administration for Market Regulation (hereafter referred to as SAMR) issued the “Several Provisions on Regulating the Behavior of Trademark Application and Registration” (Order No. 17) in October 2019 to enact the revision of the “Trademark Law” and standardize the actions of trademark application and registration. It specifies the criteria for determining whether a trademark application is a “bad faith application not intended for use.”

The China Trademark Office voluntarily rejected 15,600 bad faith petitions that were not intended for use during the trademark assessment process in 2020.

The CNIPA issued the “Special Action Plans for Combating Malicious Trademark Squatting” at the beginning of 2021, severely clamping down on ten typical types of bad faith trademark applications, such as copies of the names of public figures, well-known works, or celebrity names with reputation.

In a press conference on January 12, 2022, the CNIPA announced that a number of 482,000 malicious trademark registration applications were clamped down in 2021, with 1111 squatting trademarks such as “Changjin Lake” (famous movie name) and “Quan Hongchan” (gold medal winner in women’s single 10-meter platform diving at the 2020 Tokyo Olympics) quickly refused. Ex officio, 1,635 registered trademarks were ruled invalid, and 1,062 clues of suspected malicious trademark registration cases or instances involving serious unfavorable attempts were reported to the local government.

According to a notice issued by the CNIPA on February 14, 2022, the CNIPA rejected a total of 429 malicious trademark applications for “Bing Dwen Dwen” (name of one of the mascots for the 2022 Beijing Winter Olympics) and “Gu Ailing” (Gold medalist in women’s freestyle skiing at the 2022 Beijing Winter Olympics), among other things. Furthermore, the CNIPA ex officio found 43 trademark registrations illegal, including “Bing Dwen Dwen” and “Gu Ailing.”

To adapt to the revision and improvement of the “Trademark Law,” and to firmly clamp down on bad faith trademark applications not intended for use, the CNIPA has summarized the practical experience in the two years since the promulgation and implementation of the new “Trademark Law,” and published the “Guidelines for Trademark Examination and Review” (hereinafter referred to as “Guidelines”). The “Guidelines” establish unified and uniform principles in finding “bad faith trademark applications not intended for use” in trademark examination, opposition, disapproval, and review procedures.

The Guidelines describe “not intended for use” as instances in which the applicant does not have a real purpose of use or activity for preparation of use, or there is no reasonable inference that the applicant may use the mark. In the implementation of Article 4, the Guidelines expressly exclude the following two scenarios:

1. The applicant files mark identical with or similar to its major mark in different classes for the defensive purpose;
2. The applicant files a moderate number of marks for its future business.

The Guidelines expressly state that the following 10 scenarios constitute bad faith submissions without intent to use, and therefore Article 4 of the Trademark Law shall be applied:

1. The number of trademarks is large and is evidently exceeding the business scope of the applicant, the marks are filed without intent to use and disturb the administration order of trademark application;
2. The applicant copies imitate, plagiarizes other parties’ prior marks with high reputation or strong distinctiveness, and disturbs the administration order of trademark application;
3. The applicant repeatedly copies, imitates, plagiarizes one entity’s prior marks with a high reputation or strong distinctiveness, and disturbs the administration order of trademark application;
4. The applicant files a large number of trademarks similar to other parties’ trade names, an abbreviation of trade names, domain names, packaging, logos, advertisements, design works, and logos;
5. The applicant files a large number of trademarks similar to names of famous persons, trade names of famous companies, or other parties’ advertisements, art pieces, design works, or logos that have obtained a high reputation.
6. The applicant files a large number of trademarks similar to famous geographical names, tourist attractions, famous landscapes, names of buildings;
7. The applicant files a large number of trademarks similar to generic terms, industry glossaries, or files a large number of marks directly referring to quality, raw material, function, weight, quantity, and any other features of the designated goods/services;
8. The applicant files a large number of trademarks and transfers a large number of marks to different parties;
9. The applicant sells a large number of trademarks to other parties or forces other parties to collaborate or there are any other behaviors to obtain improper benefits.
10. Any other situations that can be acknowledged as bad faith filings.

Article 4 of the China Trademark Law may be utilized ex officio by the CNIPA in trademark applications, as well as in trademark opposition/invalidation processes. In general, scenarios iii) and ix) stated above are mostly employed in opposition/invalidation proceedings, whereas the remaining instances can be used in both trademark examination and opposition/invalidation procedures.

 Article 19 of the new China Trademark Law

Article 19 of the new China Trademark Law regulates “if a trademark agency knows or should know that the trademark applied for by the client falls under the circumstances specified in Articles 4, 15, and 32 of this Law, it shall not accept to represent the application,” which further clamp down malicious trademark applications that are not planned for use by regulating the agency’s actions.

The CNIPA initiated the “Blue Sky Action” for the IP agency sector in 2019 to fully remedy the industry’s instability, such as unregistered agencies. The CNIPA proposed the “Blue Sky Action” to clamp down on illicit agency activities in 2021. The CNIPA has swiftly clamped down on malicious trademark agency activities, receiving and investigating over 130 cases of representing harmful trademark infringement.

The CNIPA issued the “Measures for the Collaborative Governance of Illegal Behaviors in the Patent and Trademark Agency Sector” (hereinafter referred to as the “Measures”) on August 12, 2021, to reduce violations of laws and regulations in the patent and trademark agency sector, with the goal of creating a clean and upright development environment for the agency sector. According to the “Actions,” patent and trademark agencies and agents that meet one of the following criteria will be blacklisted and publicly disclosed within a particular time frame, subject to social supervision and collaborative restraining measures.

 Article 63 of the new Trademark Law

Article 63 of the new Trademark Law increases punitive damages from three to five times. It states that the amount of compensation for infringement of the exclusive trademark right shall be determined according to the actual loss suffered by the right holder as a result of the infringement; if the actual loss is difficult to determine, it may be determined according to the profit obtained by the infringer as a result of the infringement; If determining the right holder’s loss or the advantage acquired by the infringement is problematic, it can be adequately estimated using the multiple of the trademark license price.

If the circumstances are significant, the amount of compensation for deliberate infringement of the exclusive right to a trademark may be decided more than once but no more than five times the amount calculated in line with the above approach. The amount of compensation must include reasonable expenditures incurred by the right holder in order to cease the infringement. The legislation establishes more strong consequences for willful violation of the exclusive right to a trademark, increasing punitive damages from three to five times, thereby giving a more robust assurance for rights holders to preserve their trademark rights.

Finally, the most recent Trademark Law in China revision in 2019 gives a clearer and more direct legal foundation for cracking down on bad faith trademark registration. The collaborative efforts of the trademark examination department and the law enforcement department have effectively curtailed bad faith trademark applications not intended for use and unlawful trademark agency practices. The Supreme People’s Court’s Interpretation and Typical Cases promoted the improvement of the punitive damages system in the field of intellectual property rights, as well as the adoption of punitive damages in Chinese judicial practice, which fully reflected China’s determination to enhance judicial protection of intellectual property rights.