China Amends Trademark Law: Good News for Trademark Owners

China has recently amended its Trademark Law. Effective as of May 1, 2014, the amendment brings a host of welcome changes that will increase the protection enjoyed by trademark owners. Several of the major changes in the amendment are especially important for foreign right holders, as they increase the protection against misappropriation of trademark rights – a major problem for foreign trademark owners in China.

The newly-amended law significantly strengthens the standards of trademark registration and enforcement in China. It signifies an important step by China towards providing better and more complete protection of the legitimate interests of trademark owners, the proprietors of well-known marks (whether registered or not) and the consumer public. These changes are important steps in China’s efforts to overcome its stigma of being a “counterfeit haven.”
The following are highlights of the five changes in China’s amended Trademarks Law most significant for foreign companies doing business in China:

• Protection against bad faith application and registration of trademarks. 
  This is an important legal tool for a foreign trademark owner, who may have suffered from “trademark squatting” in China in the past and had no suitable tools to deal with such an undesirable situation. The amended law provides such a tool, both by prohibiting the filing of trademark applications in bad faith1 and by enabling the filing of petitions to cancel trademarks that were registered in bad faith.
• Stronger protection against infringement of registered trademarks
  The amended law introduces two important legal concepts for infringement of trademark rights, which are important in strengthening the protection for trademark owners: the “likelihood of confusion” standard for infringement; and “contributory infringement,” which imparts responsibility for persons assisting others in infringing trademark rights. 
  
• Increased damages for infringement – including punitive damages
  The maximum amount of compensation available in cases in which damages cannot be calculated or estimated has been increased from RMB 500,000 to RMB 3,000,000 (approx. 0.5 million US Dollars). In addition, the amended law provides that, in extremely severe circumstances of bad faith by the infringer, punitive damages of – up to triple the amount normally due to the trademark owner – may be imposed by the courts. These very significant legal changes are an important measure for deterring potential trademark infringers and counterfeiters.
• Multi-class applications now available
  The amended law enables the filing of one application that covers goods and services in multiple classes (previously each class required a separate application) – a step intended to make the application process more efficient and cost-effective for applicants.
• Strict time-limits for the completion of proceedings
  

  The amended law introduces strict and explicit time-limits for the completion of various proceedings, including examination of an application for registration, decision in an opposition, decision in a petition for the cancellation of a registered trademark and decisions in various petitions for review before the Trademark Review and Adjudication Board. These time-limits are intended to increase the efficiency and integrity of the trademark registration system in China, and will undoubtedly bring welcome clarity to the proceedings.

  These and other changes greatly enhance China’s Trademark Law and – if enforced properly – would significantly strengthen China’s intellectual property protection regime and will lower some of the risks that foreign companies face doing business in China.

¹ Bad faith being, for example, misappropriation of a trademark identified with the goods or services of another.