China trade mark law and practice update

The new Chinese trade mark law is a work in progress and the effects of the changes are just starting to be observed
The introduction of a Good Faith filing requirement reflects the anti-piracy policy of the Chinese government and is having an impact on the ability of trade mark owners to challenge trade mark applications and registrations which can be shown to have been filed in bad faith
However, China is a first to file jurisdiction and rights are granted by registration and not by use; the lack of a registration creates a hurdle for a party seeking to claim trade mark rights
For companies or individuals wishing to trade in China, the message is to file, and to file early.

New trade mark law in China

China’s new trade mark law has only been in operation since 1 May 2014. It introduces new laws and practices to improve trade mark prosecution, to streamline opposition, and to combat piracy. It is still early days, such that significant differences in processes and outcomes are yet to be seen.

Prosecution of applications

The Madrid Protocol regulations place an obligation on Chinese examiners to issue a first official action or notice of allowance within 18 months of the international filing designating China. National applications generally experience more lengthy examination periods, but these are reducing and in some cases examination occurs in just over 12 months. If objections are encountered and submissions filed with the TRAB (Trademark Review and Adjudication Board), official response to submissions can be in excess of two years.

The new trade mark law specifies time limits for completion of cases, and this, coupled with recruitment and training of extra examiners, which has been ongoing over the last twelve months, should improve the length of prosecution proceedings.

Good faith filing requirement

A significant change in the new trade mark law is the concept of good faith filing. The law provides that “an application for registration and use of a trade mark shall be based on the principal of good faith” and it also states “the trade mark application shall neither infringe upon another parties prior existing rights, nor be in an improper means to register a trade mark that is already in use by another party and enjoys substantial influence.” There is a corresponding provision that prohibits trade mark agents from assisting their clients in engaging in trade mark piracy.

The good faith filing requirement has, in practice, expanded the grounds of bad faith which may be used in opposition proceedings. In the past it has been difficult for companies without a relevant trade mark registration in China, to challenge a bad faith filing. Matters which now may be taken into consideration by the TRAB when assessing bad faith include the nature of any pre-existing relationship by the parties claiming trade mark ownership, for example, as distributor or manufacturer or other contractual or business relationship.

First to file

However, China is a ‘first to file’ jurisdiction, such that an owner of a trade mark, (other than a well-known trade mark) is determined by the existence of a registration, irrespective of prior use by any other party. It remains difficult to establish bad faith filing merely on the basis that the bad faith filer had knowledge of the presence of another trader’s mark in the Chinese marketplace, in the absence of some closer contractual or business relationship between the parties.

Well-known trade mark

A further change has been the introduction of the ‘well-known trade mark’ concept into the law. This is a response to misuses of well-known trade mark, and prohibits use of well-known trade marks for products, in advertising or for other commercial activities. However, a determination as to whether a trade mark is well-known will be in the ambit of the new IP Court which commenced in November 2014, and just how this law will be applied is still an unknown. It is expected that the bar to prove that a mark is well-known will be very high.

Still to come

In the coming weeks information will be provided about the court system changes, the new IP Court, increases in penalties for infringement under the new trade law, and the expected impact on trade mark enforcement in China.