Adaptation and Evolution of the Trademark Law

On January 13, 2023, China National Intellectual Property Administration (“CNIPA”) published the Draft Amendment to the Trademark Law of the People’s Republic of China (Draft for Comments) (“Draft Amendment”)[1] and solicited public opinions. This will be the Fifth Amendment to the Trademark Law of the People’s Republic of China (“Trademark Law”) since its effectiveness as of March 1, 1983. Four amendments have been made to the Trademark Law respectively in 1993, 2001, 2013 and 2019. However, with further development of the socialist market economy, market players now have a greater awareness of intellectual property protection and attach more importance to branding, which has in turn spurred huge trademark-related demands and brought about a series of issues. In this context, the Draft Amendment makes a number of significant or even game-changing adjustments to the current Trademark Law, such as the additional requirements and provisions on submission of explanations on use, prohibition of duplicate registration, prohibition of bad-faith trademark registration applications and corresponding punishment mechanism, application for invalidation on relative grounds and for trademark transfer, responsibilities and obligations of trademark agencies, new remedies for trademark infringements, protection of well-known trademarks, regulation with credit records, and measures for trademark brand building.

This article will make an analysis of the Draft Amendment from three major aspects (prohibiting duplicate trademark registration and imposing more stringent obligation to use their trademarks on trademark owners, cracking down on bad-faith trademark registration applications, and enhancing protection of well-known trademarks), and summarize the changes in the Draft Amendment as compared with the current Trademark Law, other laws and regulations and the current judicial practice.

I. Prohibiting Duplicate Registration, and Imposing More Stringent Trademark Use Obligation

The Trademark Law is one of the important laws regulating business activities of market players, and has been playing an important role in, among others, protecting the interests of consumers, producers and business operators and maintaining the market order since its effectiveness in 1983. However, under the current trademark legislation, emphasis is placed on trademark registration rather than on trademark use; emphasis on examination of intention of use before registration is insufficient, and performance of the use obligation after registration is not properly addressed. Such defective design has given rise to various issues, such as “idle” registered trademarks, which preclude market players with genuine business demands from using and registering trademarks. In response to public concerns, in light of actual needs in China and learning from foreign legislation and practical experience, the Draft Amendment put an emphasis on trademark owner’s obligation of trademark use both during the trademark application proceedings (the provision on “commitment to use” in trademark application is added in Article 5 of the Draft Amendment) and after its registration (paragraphs 1 and 2 of Article 61 of the Draft Amendment set forth the new requirement that a trademark registrant shall, “within 12 months after every five-year period from the date of approval of the registration”, submit explanations on use of such trademark; and paragraph 3 of Article 61 of the Draft Amendment sets forth the new provisions on random checks and on cancellation of registered trademark in the event that relevant explanations are found to be untrue), stressing the fundamental significance of trademark use. Although such provisions on trademark use are new in China, many countries have been enforcing similar regulations for years, such as the regulations on prohibition of duplicate registration in countries including Japan, South Korea and the Philippines[2], and the provisions on submission of statement of use/non-use at midterm declaration in countries including the U.S.[3], the Philippines, Argentina, Mexico and Cambodia[4].

These proposed amendments aim to legislatively reaffirm the foundation of trademark registration system (i.e., the intended purpose of registering a trademark is to use it), sort out “zombie” trademarks in a timely manner and clean up idle trademark resources, so as to allow market players that need to establish their brands and use trademarks to obtain trademark registrations. Moreover, these amendments are a supplement to the provision in Article 4 of the current Trademark Law that “a mala fide trademark registration application not made for the purpose of using the trademark shall be rejected”, so as to give full play to the essential function of trademarks, namely “to distinguish the source of goods and services”. Accordingly, Articles 14 and 21 of the Draft Amendment also establish the principle of prohibiting duplicate registration, that is, where a person files overlapping applications to register the same trademark for the same goods, the later application shall be rejected after the registration for the earlier application is determined. Although more theoretical support and practical experience are needed for determining what should be deemed as “identical” and “same”, sorting out exceptions and interfacing with other existing regulations, the establishment of the principle of prohibiting duplicate registration is bound to reduce, to a certain extent, duplicate applications for registration of the same trademark filed by the same applicant in respect of the same goods or services under the current trademark law system and thus improve the efficiency of trademark administration authorities.

1. Adding provisions requiring explanations on use of trademarks

Firstly, paragraph 1 of Article 5 of the Draft Amendment provides that “[a]ny natural person, legal person or unincorporated organization that needs to obtain the exclusive right to use a trademark for the trademark used or committed to use on its goods or services during the production and business operations shall apply for trademark registration with the intellectual property administration department of the State Council”. This provision sets the obligation of “commitment to use” as a fundamental requirement in trademark application, which goes one step further than the obligation of use stipulated in the current Trademark Law. In addition, the following provisions on “explanations on use of trademarks” are added as paragraphs 1 and 2 of Article 61 of the Draft Amendment: “A trademark registrant shall, within 12 months after every five-year period from the date of approval of the registration, explain to the intellectual property administration department of the State Council how the registered trademark is used on the approved goods, or provide justified reasons for non-use. The trademark registrant may provide a combined declaration on the use of multiple trademarks within the above period. If the trademark registrant does not provide an explanation prior to the expiration of the above period, the intellectual property administration department of the State Council shall notify the trademark registrant, and if the trademark registrant does not submit an explanation within six months upon its receipt of the notice, the registered trademark shall be deemed abandoned and the intellectual property administration department of the State Council shall cancel the registration.” The following provisions are added as paragraph 3 of Article 61 of the Draft Amendment: “The intellectual property administration department of the State Council shall conduct random checks to confirm the authenticity of such explanations, and if necessary, may require a trademark registrant to provide additional relevant evidence or entrust a local administrative department for intellectual property to verify the authenticity of such evidence. Where, upon random check, a statement is found to be untrue, the intellectual property administration department of the State Council shall cancel the registered trademark.”

Obviously, the relevant provisions in Articles 5 and 61 of the Draft Amendment are a supplement to the provision in Article 4 of the current Trademark Law that “a mala fide trademark registration application not made for the purpose of using the trademark shall be rejected”. At present, the qualifier “mala fide” in such provision allows a brand owner to conduct reasonable defensive registration to fight trademark squatting. However, as the Draft Amendment steps up the crackdown on mala fide registration and imposes more stringent requirements on the obligation to use trademarks, the strategy of “defensive trademark registration” will face new challenges accordingly. Article 5 of the Draft Amendment fundamentally stipulates that “use” or “committed to use” is the legal basis for trademark applications for registrations. Further, item (1) of Article 22 of the Draft Amendment sets forth one of the specific circumstances that constitute “mala fide registrations”, i.e., “applying for a large number of trademark registrations, not for the purpose of use, disrupting the order of trademark registration”. Under the current Trademark Law, it will not be deemed as trademark hoarding unless the registrant “apply for a large number of registrations in mala fide”, while merely “applying for a large number of registrations” may constitute mala fide trademark hoarding under the Draft Amendment. This will cause a considerable impact on various companies and their current trademark application strategies. It is still unclear whether there will be a quantitative standard for determining “a large number” and “disturbing the order of trademark registration”. If yes, it will become a new challenge to explore the greatest extent to which defensive trademark registration is legally permitted.

In addition, the new requirement on submission of explanations on trademark use by trademark owners will further supplement and improve the current practice of trademark cancellation procedures, most of which are initiated by third parties. Under the current Trademark Law, any entity or individual may apply for the cancellation of a registered trademark on the ground of its non-use for three or more consecutive years (“Non-Use Cancellation”). As the CNIPA’s examination of the evidence of use submitted by trademark registrants involved in Non-Use Cancellation is getting more stringent, quite a lot of trademarks not actually used in commerce are cancelled in whole or in part each year. Nevertheless, this does not solve the problem that a large number of unused “zombie” trademarks still occupy the public resources of registered trademarks. For those registered trademarks for which no Non-Use Cancellation is filed against, it is not practical for trademark administration authorities to take the initiative to inquire into their actual use. Thus, they cannot take effective administration measures against waste of social public resources caused by non-use trademarks or trademark hoarding in mala fide. Therefore, the new obligation of “explanation on trademark use” is added in the Draft Amendment to urge trademark owners to perform their obligations to use trademarks and avoid resource waste. Since non-normative use of a trademark will not be deemed as actual use of the trademark, it is a fair guess that Article 61 of the Draft Amendment will effectively promote the compliance of trademark use in China. If the new requirement for “explanation on trademark use” is adopted, it, together with the system of Non-Use Cancellation action, will facilitate trademark registrations made truly for the purpose of use, and “zombie” trademarks will be cancelled to clean up a great deal of idle trademark resources. It is intended to establish a trademark registration and use system on the principles of “application on as-needed basis, holding an appropriate number of trademarks, emphasis on trademark use, and timely cancellation of idle trademarks”, by examination whether trademarks are actually used in business operations both in the registration application and after the registration of trademarks.

In practice, the new obligation of explanation on trademark use will bring about great changes to and impacts on trademark registrants and trademark agencies, and will impose higher and stricter requirements for trademark registrants to use and maintain their trademarks. At present, many enterprises adopt the strategy of “turf war”. They register a large number of defensive trademarks to avoid free ride on their brands’ reputation, or for potential use in the future. For those trademarks that are rarely used or even not used at all, they will usually file the same applications repeatedly every three years to avoid being cancelled in Non-Use Cancellation Applications, or re-register them immediately after they are invalidated or cancelled in Non-Use Cancellation, to ensure their rights and prevent others from registering or using same or similar trademarks. However, once the new requirement on submission of explanations on trademark use and the provisions prohibiting duplicate registration (as further discussed below) take effect, they will substantially change the application strategies of many enterprises, whose current mindset in trademark protection is in conflict with such new provisions. The new requirement will increase trademark owners’ costs for maintaining the validity of their registered trademarks. In order to fulfill the obligation of explanation on trademark use, trademark owners must pay more attention to the compliance in use of trademarks and preserve the evidence of trademark use in the ordinary course of business, which sets higher requirements for trademark management.

Currently, the Draft Amendment does not explicitly provide for the criteria or specific implementation procedures for inspecting the authenticity of explanations on trademark use, or for further remedies available to trademark registrants in respect of the inspection results, such as the right to apply for review or reconsideration. Detailed provisions are expected to be provided in the relevant implementing regulations or other normative documents. According to the CNIPA’s explanations, we trust that the implementation of the new requirement will not impose onerous burden on trademark registrants, and that the submissions required, such as letters of commitment of use and explanations on use of trademarks, will be relatively simple and easy to prepare.

2. Prohibiting duplicate registration

Paragraph 2 of Article 14 of the Draft Amendment fundamentally stipulates that “[u]nless otherwise specified, an applicant shall register only one identical trademark covering the same goods or services”. In addition, paragraph 1 of Article 21 of the Draft Amendment further specifies the prohibition on duplicate applications, that is, “[t]he trademark applied for registration shall not be identical with any prior trademarks of the applicant that have been applied for or registered upon the same goods, or such prior trademarks that have been announced for deregistration, cancellation, or invalidation within one year before the date of application”. Paragraph 2 of Article 21 of the Draft Amendment sets out exceptions to the preceding provision as follows:

“(1) where minor improvements have been made on the basis of the prior trademark that has been put into actual use, for the needs of production and business operations, and the applicant can explain the differences;

(2) where the prior trademark failed to renew due to reasons not attributable to the applicant;

(3) where the prior trademark was removed due to the failure to submit explanation on use in time, but the prior trademark has been actually used;

(4) where the prior trademark was cancelled due to the failure to provide evidence of use in the cancellation procedure of non-use in three consecutive years, the reasons of which are not attributable to the applicant, but the prior trademark has been actually used;

(5) where the prior trademark was declared invalid due to the conflict with any prior rights or interests of others, but such rights or interests have no longer existed; or

(6) where there are other justified reasons for the duplicate or renewed application for registration of the mark.”

In fact, China is not the first country to prohibit duplicate registration or to set the principle that an applicant may only own one single registered trademark for the same goods. Taking South Korea as an example, according to the “a single application for a single trademark” rule specified in Article 38 of the Korean Trademark Law[5], an applicant may only file one single application for one trademark in respect of the same goods. If an applicant has obtained the registration of a trademark for certain goods before filing the application for registering the same trademark for the same goods, the Korean Intellectual Property Office will issue an Office Action, requiring the applicant to delete all overlapping goods in such application, so as to comply with the “a single application for a single trademark” rule. The Trademark Law has not yet addressed “duplicate application” or “duplicate registration” since its promulgation in 1982. In recent years, the number of duplicate trademark registration applications has been increasing in China, and it has become commonplace to make “duplicate application” in parallel with the review proceedings of a rejected application so as to register same or similar trademark, or to conduct “applications in relays” to maintain hoarded or squatted registered trademarks.

According to the CNIPA’s explanations, the principle of “prohibiting duplicate registration” in Article 21 of the Draft Amendment refers to the “one thing one right” principle in Property Laws, and to the provision in Article 9 of the Patent Law of the People’s Republic of China that “[o]ne patent shall only be granted to one single invention”, emphasizing the value orientation of “one single registration for one trademark” in trademark registration. The principle of “prohibiting duplicate registrations” is established to curb illegitimate acts, such as duplicately applying in mala fide for registering the same trademark for the same goods or services, or reapplying for registering a trademark immediately after its invalidation. However, it should be noted that trademark registration applications made by companies for brand upgrading or optimization or for other legitimate purposes are not subject to the prohibition. Currently, trademark administration authorities are conducting further research and analysis of relevant examination criteria and implementing rules.

It is worth noting that the provision prohibiting duplicate registration not only prohibits any application for registering a trademark same as any prior trademark of the applicant for which a valid application has been filed or which has been registered, but also prohibits any application for registering a trademark same as any prior trademark of the applicant that has been deregistered, cancelled or invalidated within one year before the date of application, unless under exceptional circumstances provided by laws. In principle, whether an application falls under an exceptional circumstance is determined based on the legitimacy of the purpose for which the trademark concerned is used. In most exceptional circumstances under which duplicate registration may be permitted, a registered trademark that has been in use became invalid due to the applicant’s failure to respond to the relevant trademark proceedings in a timely manner for reasons not attributable to the applicant itself.

Trademarks function as marks to identify and distinguish the source of goods or services, and play an important role in maintaining the order of commodity transactions and market activities. As of November 2022, the number of valid trademark registrations in China has reached 42.337 million, ranking first in the world. However, a large number of registered trademarks are “sitting idle”, which not only causes waste of public resources, but also makes it more difficult for startups to obtain trademark registrations. The principle of “prohibiting duplicate registration” is expected to improve the trademark registration procedures, and give a shot in the arm for solving issues such as “idle” registered trademarks. Nevertheless, in practice, when the prior trademark owner raises an objection to, or files invalidation petition or cancellation action against, the squatted trademark, the squatter often re-files the mark as a countermeasure, so that the prior trademark owner would be trapped in a vicious circle of duplicately raising objections and invalidations, and even submitting its own duplicate applications for the trademark. Moreover, the examination procedures in the trademark application for registration and rejection review are less time-consuming than those in respect of objection, invalidation or non-use cancellation. According to the provisions in Article 42 of the Draft Amendment that the relevant examination or review “may suspend” and that “[w]here the status of the relevant trademark has changed after the decision or ruling has been made, it shall not affect the trial by the people's court”, it is likely that during the objection, invalidation or non-use cancellation proceedings, a third party applies for a same or similar to the disputed trademark which prevents the true owner from obtaining the disputed trademark and making its efforts in vain.

“When carrying out trademark review and examination, the intellectual property administration department of the State Council may suspend the review or examination if the prior rights involved can only be ascertained based on the outcomes of another case currently under the hearing by a people's court or under the handling by an administrative organ. The intellectual property administration department of the State Council shall timely resume the review or examination procedure once the circumstances for suspension are eliminated. When the people's court hears a decision on rejection review or a decision on denial of registration, or a ruling on declaration of invalidation made by the intellectual property administration department of the State Council in accordance with Articles 24 and 25 of this Law, it shall be based on the facts at the time when the decision or ruling is made. Where the status of the relevant trademark has changed after the decision or ruling has been made, it shall not affect the trial by the people's court, except that the principle of fairness is obviously violated.”

Relevant provisions in Article 42 (Suspension of Proceedings) of the Draft Amendment

Once the principle of “prohibiting duplicate registration” takes effect, it will definitely have a significant impact on trademark registrants that file a new application every three years to avoid invalidation in Non-Use Cancellation Applications. In addition, an application re-submitted by the trademark applicant when the case is pending before a court will be restricted and affected. Further clarification is needed for issues such as how to determine what should be deemed as “identical” trademark or “same” goods, how to determine if an applicant should be exempted from the principle of “prohibiting duplicate registration” and how the provision will interface with other existing regulations.

II. Stepping up the Crackdown on Mala Fide Trademark Registration Applications

Article 4 of the current Trademark Law provides that “[a] mala fide trademark registration application not made for the purpose of using the trademark shall be rejected”, and the Provisions on Regulating Trademark Application and Registration effective as of December 1, 2019 (“Regulating Provisions”) give a specific definition to “mala fide trademark registration application” under Article 4 of the current Trademark Law. In practice, the CNIPA conducted special enforcement actions to severely crack down on mala fide trademark registration in both 2021 and 2022. Now, the Draft Amendment further details the circumstances of “mala fide applications” and sets out the corresponding punishment mechanism for the first time:

1. What are mala fide applications?

Article 22 of the Draft Amendment lists five specific circumstances of mala fide trademark registration applications as follows:

(1) Applying for a large number of trademark registrations, not for the purpose of use, disrupting the order of trademark registration;

Under the current Trademark Law and the Regulating Provisions, “trademark registration application not made for the purpose of use” must also be made in mala fide for it to be rejected directly. Furthermore, the Guidelines of Beijing Higher People’s Court for Trial of Administrative Cases Involving Trademark Registration Granting and Review specify one of the circumstances which will be deemed as a violation of Article 4 of the current Trademark Law, namely, the trademark applicant obviously has no true intention of use, and applies for registration of a large number of trademarks without justified reasons.

The Draft Amendment has removed the qualifier “mala fide” from relevant provisions. In other words, merely “applying for a large number of trademark registrations” may be deemed as “mala fide trademark registration application” as long as it is “not for the purpose of use” and “disrupts the order of trademark registration”. However, the Draft Amendment still does not define how many is “a large number”. Therefore, the determination will have to be made on a case-by-case basis, after taking into consideration situation of the applicant, trademarks to be registered and other relevant factors, rather than simply judging by the number of trademarks. In practice, there were cases in which the CNIPA determined after a comprehensive review of the applicant that dozens of trademark registration applications made by the applicant, though not of a particularly large number, constituted “mala fide application”.

(2) Applying for trademark registration by fraud or any other improper means;

Such circumstance is also listed in paragraph 1 of Article 44 of the current Trademark Law, and in item (5) of Article 3 of the current Regulating Provisions, which states that “[a]pplications for trademark registration shall comply with the principle of good faith. The following acts are not permitted: ... (5) applying for trademark registrations by fraud or any other improper means”.

It is worth noting that Article 32 of the Draft Amendment prohibits “[f]or the purpose of applying for trademark registration or handling other trademark-related matters... fabricates, or conceals important facts or intentionally submits false materials”, which in fact overlaps with “applying for trademark registrations by fraud or any other improper means”. But there seems to be some difference between the corresponding punishments, which we will discuss in detail below.

(3) Applying for trademark registration of which the trademark is detrimental to the state interests, public interests, or has other significant unfavorable effects;

Such provision is substantially same as that on “other unfavorable effects” in the Provisions of the Supreme People’s Court on Issues Relating to the Trial of Administrative Cases Involving Trademark Registration Granting and Review, which states that “[w]here a trademark or any of its components may have a negative or adverse impact on public interests or order in China, the competent people’s court may deem it as having ‘other unfavorable effects’ as provided in item (8) in paragraph 1 of Article 10 of the Trademark Law.”

The provision also overlaps with other new provisions in the Draft Amendment concerning the compliant use of trademarks, such as item (9) of Article 15 of the Draft Amendment, which states that “(9) those contrary to core socialist values, detrimental to socialist ethics or customs or fine traditional Chinese culture, or having other unwholesome influences ”.

In practice, the CNIPA has conducted special enforcement actions to severely crack down on such bad-faith trademark registration applications. For example, in 2021, the CNIPA rejected the mala fide trademark application for “清澈的爱 (Clear Love)” (a famous quote from Chinse martyr/deceased soldier , who died at 19 for defending the borders of China)[6], holding in its rejection opinions that since February 20, 2021, certain enterprises and individuals had filed applications for registering the trademark “清澈的爱 (Clear Love)” to the CNIPA in an attempt to seek illegitimate benefits, and the relevant agencies had provided services therefor in violation with laws, which desecrated the spirit of martyrs, contravened core socialist values, and was very likely to cause adverse social impacts.

(4) Violating Article 18, 19 or 23 of this Law, intentionally damaging the legitimate rights or interests of others, or seeking illegitimate benefits;

The current Trademark Law has explicitly provided for the protection of well-known trademarks, trademark squatting by agents, representatives or interested parties, and the protection of prior rights of others. On such basis, the Draft Amendment directly defines the circumstance above as “mala fide trademark registration application”, which shows the CNIPA’s determination to crack down on mala fide trademark registration.

(5) Where there are other behaviors with mala fide for applying for registration application.

This is a “catch-all provision” to be further specified or interpreted.

2. How to crack down on mala-fide application for trademark registration?

(1) Trademark transfer

• According to Article 45 of the Draft Amendment, a prior right owner or interested party requesting invalidation of a trademark may concurrently request the trademark transfer thereto if the trademark is registered in violation of provisions on protecting well-known trademarks, prohibiting trademark squatting by agents, representatives or interested parties, or protecting prior rights of others.

In the current Trademark Law, the request for invalidation and the request for transfer are two different procedures, and should be filed separately. If this provision of the Draft Amendment is adopted, it will greatly save the costs of prior right owners or interested parties and the state’s administrative resources.

• Article 46 of the Draft Amendment stipulates the preconditions for such transfer, i.e., the CNIPA determines that the request for transfer is justified, that there is no other reason to declare the registered trademark invalid, and that the transfer is not likely to lead to confusion or other unfavorable effects.
• Article 47 of the Draft Amendment stipulates that, as from the date when the ruling on transfer of the registered trademark comes into force and is announced, the party requesting transfer shall have the exclusive right to the registered trademark.

(2) Bearing legal liabilities (administrative liabilities) for infringement

According to Article 48 of the Draft Amendment, after a trademark is approved for registration and before its invalidation, the trademark registrant or a licensee that uses the trademark in mala fide and infringes upon any registered trademark of others shall bear the legal liabilities under paragraph 2 of Article 74 of the Draft Amendment, i.e., the department in charge of trademark law enforcement may, amongst others, require the trademark registrant or licensee to cease its infringement, confiscate illegal gains and impose a fine.

(3) Increased amount of fine

According to Article 67 of the Draft Amendment, if a person applies for trademark registration in mala fide, the department in charge of trademark law enforcement may give a warning or impose a fine (up to RMB 250,000), and confiscate illegal gains.

In addition, we note that “for the purpose of applying for trademark registration or handling other trademark-related matters…fabricates, or conceals important facts or intentionally submits false materials” in Article 32 of the Draft Amendment somehow overlaps with “applying for trademark registration by fraud or any other improper means” in item (2) of Article 22 thereof. Nevertheless, their punishments are different. In the case of a violation of the former provision, “the department in charge of trademark law enforcement may give a warning and impose a fine of up to RMB 100,000 yuan based on the circumstances; [i]f any damages is caused to others, compensation shall be made to such party”. As to the circumstances where a person in violation of the former provision also violates the latter provision, it is still subject to further interpretations whether heavier punishment may be imposed in accordance with Article 67 of the Draft Amendment.

(4) Civil compensation

According to Article 83 of the Draft Amendment, a person suffering losses resulting from the malicious application for trademark registration may file a lawsuit with the competent people’s court and claim for compensation. Furthermore, the law specifies that “the reasonable expenses paid by the said party to restrain the malicious application for trademark registration” shall be covered in the compensation for the first time.

(5) Establishing an IPR litigation system for public interests (intervention by procuratorates)

Article 83 of the Draft Amendment also stipulates that, if a malicious application for trademark registration damages state interests, public interests of the society, or causes significant unfavorable effects, the procuratorate shall file a suit in accordance with the law.

(6) Administrative procedures related to rejection or objection

Article 35 of the Draft Amendment stipulates that the intellectual property administration department of the State Council may reject any trademark application that is filed in mala fide. Article 36 of the Draft Amendment stipulates that anyone who believes that a trademark application is filed in mala fide may raise an objection to the intellectual property administration department of the State Council.

In fact, in recent years, there have been many cases where the CNIPA voluntarily rejects the mala fide application for trademark registration or invalidates the mala fide trademark registration ex officio. For example, in 2021, the CNIPA rejected a total of 91 applications for trademark registration of “丁真 (Ding Zhen)”[7] and 17 applications for trademark registration of “清澈的爱 (Clear Love)”; during the Beijing 2022 Winter Olympic Games, the CNIPA rejected 1,699 applications for trademark registration in relation to the Games, such as “冰墩墩 (Bing Dwen Dwen)”, “盼盼冰墩墩 (Panpan Bing Dwen Dwen)” and “谷爱凌 (Eileen Gu)”[8], and invalidated 43 trademarks including “谷爱凌 (Eileen Gu)” and “红婵美 (Hong Chan Mei)” ex officio[9]; during the 2022 FIFA World Cup, the CNIPA rejected 26 bad-faith applications for trademark registration, including the applications no. 66999855 “世界杯 (World Cup)” and no. 63803887 “LAEEB”, and invalidated the registered trademark no. 63767652 “LAEEBS” ex officio[10].

(7) Punishments for and regulation of mala fide acts with credit records

It has been provided in the Regulating Provisions (implemented as of December 1, 2019) that “[t]he government department making an administrative punishment decision shall disclose the punishment information to the public through the National Enterprise Credit Information Publicity System in accordance with the law”, but there has been no mandatory requirement for corresponding “credit records”.

The documents subsequently issued by the CNIPA, i.e., the Special Enforcement Action Plan for Striking Trademark Squatting in 2021, and the Circular of the China National Intellectual Property Administration on Continuously Striking Bad-Faith Trademark Registration in 2022, have imposed stricter credit-related punitive measures, such as “including the acts in credit records”, and “sharing the list of subjects committing serious illegal or dishonest acts and taking punitive measures against them jointly with other authorities in accordance with laws and regulations”.

This Draft Amendment has incorporated the “credit-related punitive measures” referred to in the documents above into legislation – Article 87 provides that, where administrative penalties are imposed in violation of this law, the department that imposed the penalties shall report them in the credit record for file and publish the record in accordance with the law.

(8) Strengthening the supervision obligations of trademark agencies; striking agency business on mala-fide trademark application

In recent years, the CNIPA has been implementing the “Lan Tian (蓝天)” special rectification actions[11], actively responding to public concerns, focusing on illegal agency business such as filing mala-fide trademark application, and adopting a tough stance against such illegality. The rectification witnesses intensifying crackdown on major illegal agency business, strengthens overall regulation of intellectual property agency platforms, and regulates online trademark agency business and trading on IPR service websites.

Against this background, Article 69 of the Draft Amendment specifies that, if a trademark agency knows or should have known that the trademark application to be filed on behalf of a principal will constitute mala fide registration (defined in Article 22 of the Draft Amendment), the agency shall not accept the principal’s entrustment. Compared with paragraph 3 of Article 19 of the current Trademark Law and the Provisions on the Supervision and Administration of Trademark Agencies, the provision imposes further obligations on trademark agencies, regulates the trademark agency business, and curbs mala fide application of trademark registrations by cracking down on illegal trademark agency business.

III. Changes in Protection of Well-Known Trademarks and Additional Considerations

The protection of well-known trademarks remains a hot topic in IPR protection.

1. Principles for well-known trademark protection

Paragraph 2 of Article 10 of the Draft Amendment stipulates that “[t]he protection of a well-known trademark follows the principles of case-by-case examination, passive protection, and confirmation upon application”. Even though the provision is new, its spirit has been embodied in the current Trademark Law – according to paragraphs 2, 3 and 4 of Article 14, the Trademark Office of CNIPA, the Trademark Review and Adjudication Board, and the people’s court designated by the Supreme People’s Court may, upon application of the relevant party, make determinations on well-known trademarks if necessary. In practice, these three principles have been generally accepted in making determinations on well-known trademarks, whether in any administrative granting or review of trademark, or in the hearing of trademark cases by courts.

2. Considerations in confirming well-known status of a trademark

In addition to the five considerations in confirming well-known status of a trademark provided in paragraph 1 of Article 14 of the current Trademark Law, the following items are added to Article 10 of the Draft Amendment: (2) the duration, manner and geographical scope in which the trademark has been in use; (4) the status of the trademark’s domestic and foreign applications and registrations; (5) the record of protection of the trademark, especially its protection as a well-known trademark; (6) the value of the trademark.

These additional considerations covering the registration, the use and the value accumulated from considerable use of a trademark have increased the content and methods of evidence production by right owners, so that the competent administrative authorities and courts may make their determinations on well-known trademarks in a more comprehensive manner.

In fact, the additional considerations above are already reflected in the interpretations of the Supreme People’s Court, the guidelines of the Beijing Higher People’s Court and the hearing guidance for trademark granting and review. Specifically:

(1) Article 5 of the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in Trial of Civil Dispute Cases Involving Protection of Well-Known Trademarks includes the following language: “(1) the market share, sales territory, profits, taxes, etc. of the commodities bearing the trademark... (3) the method, duration, extent, capital input and geographical scope of the advertising or sales promotion activities of the trademark; (4) the record that the trademark has been protected as a well-known trademark; ... The duration, scope, method, etc. of the use of trademark as mentioned above shall include the continuous use of the trademark before the registration thereof is approved. With regard to the evidence showing, amongst others, the duration of use, industry ranking, market research report, market value evaluation report and whether the trademark has been recognized as a well-known trademark, the people’s court should examine such evidence in an objective and comprehensive manner in combination with other evidence in making its determination on well-known trademark”;

(2) Article 4.11 of the Guidelines of the Beijing Higher People’s Court on Evidence Rules for Civil Litigation of Intellectual Property Rights includes the following language: “Where the plaintiff alleges that its trademark is well-known, it shall, in accordance with Article 14 of the Trademark Law of the People’s Republic of China, provide evidence demonstrating the following: ... (2) the duration and geographical scope of the trademark use; ... (4) industry ranking, market value evaluation report, market analysis, market research report and honorary certificates of the commodities bearing the trademark...”;

(3) In Chapter 10 (Review and Adjudication of Reproduction, Imitation or Translation of Others’ Well-Known Trademarks) of the Guidelines for Review and Adjudication of Trademarks, the CNIPA has expressly admitted “evidence of registration of the trademark in China or other countries or regions” as evidence in making determination on well-known trademark under Article 5.3 (Relevant Evidence), and has required that “(4) the overseas evidence provided by the relevant party shall be able to prove that the trademark is known to the relevant public in China” under Article 5.4 (Other Evidence in Making Determination on Well-Known Trademark); and

(4) Article 9 of the Provisions on Recognition and Protection of Well-Known Trademarks includes the following language: “(4) evidence that the trademark has been well-known in China or protected as a well-known trademark in any other country or region”.

In addition, although “use of the trademark in foreign countries” is not explicitly provided for in the Draft Amendment, we understand that, according to Article 5.4 in Chapter 10 of the Guidelines for Review and Adjudication of Trademarks above, if such overseas evidence can prove that the trademark is known to the relevant public in China, it should also be taken into consideration in confirming well-known status of a trademark.

3. Expanded protection scope of well-known trademarks

(1) Adding prohibitions on “use” of disputed trademark

Article 18 of the Draft Amendment adds prohibitions on the “use” of any reproduction, imitation or translation of a well-known trademark not registered in China in respect of identical or similar kind of goods, and on the “use” of any reproduction, imitation or translation of a well-known trademark in respect of on dissimilar goods.

With respect to the “well-known trademark” in paragraph 2, this Draft Amendment has removed its modifier “registered in China” in the corresponding article of the current Trademark Law. That is, the protection scope provided in the paragraph has been extended to “well-known trademarks not registered in China”.

(2) Anti-dilution protection

The following provision is added in paragraph 3 of Article 18 of the Draft Amendment: “Where the trademark being used or applied for registration is a reproduction, imitation, or translation of another well-known trademark known to the general public, and is sufficient to cause the relevant public to believe that the trademark is closely connected with the well-known trademark, thus diminishing the distinctive characters of the well-known trademark, damaging the reputation of the well-known trademark, or unfairly exploiting the reputation of the well-known trademark, its use shall be prohibited and no application for its registration may be granted.”

In fact, this paragraph is a revision of paragraph 2 of Article 9 of the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in Trial of Civil Dispute Cases Involving Protection of Well-Known Trademarks, which specifies that “[t]he disputed trademark that is sufficient to cause the relevant public to believe that it is closely connected with the well-known trademark, thus diminishing the distinctive features of the well-known trademark, or damaging the reputation of the well-known trademark, or unfairly exploiting the reputation of the well-known trademark shall be deemed as ‘misleading to the public and may cause harm to the interests of the well-known trademark registrant’ as provided in paragraph 3 of Article 13 of the Trademark Law”, and a revision of Article 13 of the Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Administrative Cases Involving Trademark Granting and Review, which specified that “[t]he people’s court should consider, amongst others, the distinctiveness and popularity of the reference trademark, and the degrees of overlap and attention of the relevant public”.

While this Draft Amendment strengthens the anti-dilution protection of unregistered well-known trademarks, it seems to have imposed a more strict requirement on well-known trademarks, namely being “known to the general public”, instead of being “known to the relevant public” as specified in Article 10 thereof. Yet, in terms of the consequence element, the Draft Amendment only requires that it is sufficient to cause “the ‘relevant public’ to believe that the trademark is closely connected with the well-known trademark, thus diminishing the distinctive characters of the well-known trademark, damaging the reputation of the well-known trademark...” If such paragraph is included in the final version, the legislative authority will have to make further interpretations of the definitions of “the general public” and “the relevant public”.

Conclusion

The importance of the Trademark Law is witnessed not only in the field of intellectual property rights as it is a specific law, but also in the market since it regulates the business activities of market players. Although a few amendments were made to the Trademark Law in 2019, which exerted positive influence on cracking down on trademark hoarding and strengthening the protection of trademark rights, due to the limited scope of such amendments, a lot of the problems in the trademark area remain. The adjustments in this Draft Amendment are sending positive signals in terms of the protection of the legitimate rights and interests of trademark owners, consumers and the public. Based on our experience and observations, this article is intended to analyze and interpret some of the key issues in the Draft Amendment, so as to provide a useful reference for enterprises to keep abreast of the legislation and duly adjust their trademark and branding strategies.

Thanks to Xu Yixin for her contribution to this article.

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