Amendments to Trademark Law and new provisions for regulating trademark registration applications could alter China's filing landscape

The fourth amendment of the Trademark Law came into effect on 1November 2019. It now provides that:

Applications for trademark registrations in bad faith and which are not intended for use shall be refused (Article 4). This also forms new grounds for opposition actions and invalidation actions, which can be brought by any person (Articles 33 and 44); 

Trademark agencies are prohibited from representing clients who file trademark applications in bad faith. Further, administrative penalties and criminal liabilities can be imposed for any violation of this (Articles 19 and 68); 

Statutory damages in trademark infringement lawsuits have increased to Rmb5 million (around $720,000), and where the infringement is considered malicious and the circumstances are considered serious, the maximum level of damages are increased to five times the relevant base amount (Article 63);

Upon request by the rights holders, the court may order the destruction of counterfeit goods and their production tools and materials (Article 63). 

To ensure the smooth implementation of the amended Trademark Law and effective control of bad-faith filings, following the Several Provisions on Regulating the Applications for Registration of Trademarks (Draft for Comments) on 12February 2019, the State Administration for Market Regulation announced the implementation of Several Provisions on Regulating the Applications for Registration of Trademarks on 11October 2019, which will come into effect on 1December 2019. The provisions aim to regulate and combat abnormal trademark registration activities in China.

Factors for consideration when applying Article 4 of the Amended Trademark Law

One of the most important aspects of the provisions is that that it provides the factors to be considered when deciding whether a trademark application contravenes Article 4 of the amended Trademark Law, namely:

• the number of trademark applications filed by the applicant and related natural person, entities or other organisations, the number of designated classes and statuses of trademark transactions;
• the industry in which the applicant operates and the status of its business;
• any administrative decision or judgment against the applicant on grounds of bad-faith filings or trademark infringement;
• whether the marks applied for are similar or identical to marks of others which enjoy a certain level of reputation;
• whether the marks applied for are similar or identical to names of famous persons, trade names or company names, or any identification of trade origin; and
• any other factors that the China National IP Administration (CNIPA) considers relevant.

CNIPA’s power to refuse trademark applications based on Article 4

The provisions further provide that CNIPA should reject the application if it violates Article 4. While the office had rejected applications on similar grounds before, the provisions now confirm this. 

Administrative penalties on bad-faith applicants

The provisions also clarify that the amended Article 68, which concerns administrative penalties imposed on trademark agencies assisting in bad-faith filings, is also applicable to trademark applicants involved in bad-faith filings. It specifies the types of penalties that can be imposed on them, including warnings, fines up to three times their illegal gains (but no more than Rmb30,000 (around $4,300) or a maximum fine of Rmb10,000 (around $1,430) if there is no illegal gain.

The amended Trademark Law and the provisions can be seen as CNIPA’s determination to tackle bad-faith filings. The office is getting sophisticated when examining opposition and invalidation actions. Brand owners are therefore advised to conduct in-depth background searches against bad-faith applications to collect as much evidence of bad faith as possible. Regular monitoring of new trademark filings of the bad-faith applicants and checking of unfavourable administrative and court decisions issued against the applicant are also recommended as this may help provide further evidence of bad-faith filings.