Highlights of newly amended TM Law in China

In January 2020, Nikita Xue, partner, and Roger Huang, attorney at law, at HongFangLaw published a new article for the Trademark Lawyer Magazine annual issue, discussing the highlights of the newly amended trademark Law in China.

As an innovative and fast-growing economy with the most trademark application statistic for the past 16 years, China has contributed a surprisingly large number to the global trademark applications. However, behind the impressive figure, there might come some worrying situation as some trademarks could be maliciously applied for future deals, without any purpose of actual use.

On April 23, 2019, the Standing Committee of National People’s Congress has issued the Decision on Revision of Eight Laws, including the fourth amendment of Trademark Law. It has been six years since the last amendment of the Trademark Law in 2013. In view of this newly amendment of trademark Law, taking into effect on Nov 1, 2019, the highlights lie in both trademark acquisition and anti-trademark infringement, and as for the trademark acquisition, “purpose of use” has been officially written into law, for the first time, to prevent any bad faith application, and more severe compensation has also been written into law against any trademark infringement activity.

– TRADEMARK ACQUISITION: PURPOSE OF USE IS A PREREQUISITE

“Purpose of use”, the core element in a trademark application, is now listed as a fundamental principle for the entire Trademark Law in China. As we may observe from the amended trademark law, the first and crucial change would be in Clause 4th. The lawmakers added an important clause, “Any application for trademark registration that is malicious and is not filed for the purpose of use shall be rejected.” As a matter of fact, Clause 4th is the basic regulation for legal acts concerning trademarks.

The added provisions clearly provide that the bad faith applications without the purpose of use shall be rejected. Clause 33rd and 44.1 of the amended Trademark Law procedurally provided bad faith application without the purpose of use as a ground for opposition and invalidation. By these revisions, Clause 4th and Clause 19.4 became the absolute ground for trademark opposition and invalidation, which means any person, without restriction to the relevant parties, are entitled to file the opposition and invalidation pursuant to these clauses.

– TRADEMARK INFRINGEMENT: SEVERE CONSEQUENCES FOR TRADEMARK INFRINGEMENT

Apart from the purpose of use when filing the trademark registration, either substantially or intentionally, the newly amended Trademark Law also delivers an obvious determination to stop the trademark infringement, as a purpose of brand protection, by increasing the upper limit of statutory compensation from 3 million to 5 million yuan and raising the punitive damages to a maximum of five times. In most cases of trademark infringement, a statutory compensation clause would be referred to the court, when lacking evidence to prove the actual loss from the brand being damaged, or the actual profit from the infringement, or even the trademark license fee.

Every pace on the road of law development matters, even though it is a tough way. Trademark practitioners predict that in the coming period of time, the trademark registration applications would be influenced along with the effectiveness of the amended Trademark Law in China, while for the benefit of the whole society and the brand owners in good faith, high-quality trademark applications are deemed to achieve.

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