How will China’s New Trademark Law Impact U.S. Brand Owners?
National People’s Congress of China has passed China’s first major reform of its Trademark Law in over a decade recently, which will be in effective on May 1st, 2014.
This Trademark reform is good news to U.S. brand owners, especially to those famous brand owners who want to break into this fast growing market and don’t like getting into trademark registration and protection troubles. As a whole, this revision rationalizes the trademark application process, provides greater protection for well-known marks and imposes harsher penalties on infringers.
From the registration perspective, trademark owners can now designate multiple classes in one application rather than filing separate applications for each class of goods. The Chinese Trademark Office (CTO) must then provide its preliminary determination within nine months. Similarly, in most cases, opposition and invalidation proceedings must be complete within 12 and nine months, respectively. Moreover, Sounds may now be registered as trademarks, as long as they distinguish the mark owner’s goods. This revision may encourage owners of sound trademarks in U.S. to seek a registration in China.
I suppose a lot people know that Apple had to settle for $60,000,000 to get the right to use “ipad” in China. The possibility of this kind of “biting” will be much smaller because the new Trademark Law will target “bad faith” in the future. It includes provisions prohibiting applications filed in bad faith and will impose fines for the “trademark agencies” that file such applications. In addition, use of a registered or well-known trademark as a business name by someone other than the owner is prohibited. A “restitution” provision affords brand owners potential remedies to cover losses previously suffered at the hands of bad-faith registrants in infringement proceedings. There are also formal protections in place for the owners of “well-known” marks, as well as those brand owners that have used a mark in China on an unregistered basis.
There are some other huge transformation that enhance the protection of trademarks, including the increasing of maximum fines for trademark infringement by six times (from about $81,000 to $486,000), mandating a likelihood of confusion test that is similar to the thorough analyses adopted by U.S. and recognizing the equivalents of contributory and vicarious infringement.
Lastly, another change worthy to be pointed out is that the CTO will officially begin using electronic filing and search systems, which helps to realize internationalization of trademark registration in China. This change will definitely reduce cost of some U.S. trademark practitioners.
Through the plain reading of this new trademark law, the future business of U.S. famous brand owners is quite promising, however the practical outcome of the amendments will not become clear until they have been interpreted and implemented.