Major developments set to vastly improve trademark and patent landscape

As it marks the 10th anniversary of the implementation of the national IP strategy, the Chinese government has taken a step further to restructure the offices that administer various IP rights. The China National IP Administration (CNIPA), which was renamed from the former State Intellectual Property Office (SIPO) in August 2018, is now the unified IP office responsible for the:

• registration of patents, utility models and designs – formerly administered by SIPO;
• registration of trademarks – formerly handled by the State Administration of Industry and Commerce; and
• registration of geographical indications – formerly administered by the Administration of Quality Supervision, Inspection and Quarantine.

Faster examination timeframe

According to the 2018-2020 Trademark Reform Plan, measures have been adopted to further improve the efficiency of trademark examination. The current timeframes are:

Proposed provisions to curb bad-faith filings

CNIPA released the draft Provisions on Regulating Applications for Registration of Trademark for public consultation in February 2019.

In addition to existing provisions on bad faith in the Trademark Law, the draft provisions specify that the following abnormal behaviours may serve as the basis for a refusal, opposition or invalidation:

• repeated trademark filing with obvious bad faith;
• filing numerous applications within a short period of time, exceeding reasonable limits;
• filing applications without intention to use the marks or need to obtain exclusive trademark rights for the applied-for goods or services; and
• other acts which violate the bona fide principle, infringe rights of others or disturb the market order. 

E-commerce Law to assist with online platform infringement complaints

The first E-commerce Law in China came into force in 2019. It requires that after right holders lodge complaints accompanied by prima facie evidence of infringement with platform operators, operators must immediately take necessary measures, including deleting or blocking links to infringing goods and informing infringers of the same.  Failure to do so may attract liability.

Further, the law is applicable to all e-commerce activities, regardless of the platform type. This effectively assists rights holders to clear up the online marketplace, especially on small e-commerce platforms or social media sites where an effective complaint system was not previously available.

Whether original equipment manufacturing use constitutes trademark use

The position of whether original equipment manufacturing (OEM) constitutes trademark use in the context of trademark infringement is now widely regarded as settled after the Supreme People’s Court’s Dongfeng (Shanghai Diesel Engine Co Ltd v Jiansu Chanjia Jinfeng Dynamic Machinery Co, Ltd,) decision, in which it reaffirmed its landmark ruling in Pretul (Focker Security Products International Limited v Pujiang Ya Huan Locks Co Ltd), holding that OEM products generally do not constitute infringement.

While the decision re-opens the debate over the same issue in the context of non-use cancellation (eg, the Mango case (Daya International Co, Ltd v Trademark Review and Adjudication Board (TRAB)) applying the same principle and holding that OEM was not trademark use, a recent Supreme Court case (Montfort Services SDN BHD v TRAB) has confirmed that OEM use is trademark use.

Actively fighting against trademark squatting

The Supreme People’s Court has confirmed that registering trademarks without the intention to put them into genuine commercial use is a legitimate ground for invalidation, which falls within the scope of the catch-all provision of “other illegitimate means” under Article 44 of the Trademark Law.

First sound mark court case

Sound marks have become registrable as per the 2014 amendment to the Trademark Law. While successful registrations have been seen since then, it was not until 2018 that the Beijing High Court handed down its first judgment in this area.

In this case, the court accepted that while the QQ’s (instant messaging software) notification sound (Di-Di-Di-Di-Di-Di) was a common and simple repetition, long-term use by Tencent has established its stable correspondence relationship with the company and it was therefore registrable on the products on which it was used.

The punitive damages system

The head of the Supreme People’s Court has stated that it will use the punitive damages system to resolve the problem that rights violation incurs low costs while defending IP rights brings about high legal costs. It is expected that such punitive damages with compensation will exceed the plaintiff's actual loss and act as a better deterrant against rights violations.

Registering company names as trademarks no longer allowed

The TRAB issued notices stating that the registration of full company names is not encouraged as they are not generally recognised as trademarks. Further, any change in the company name and/or transfer of trademarks may lead to confusing situations where the trademarks would not tally with the owner or assignee’s name. More rejections of trademark application for company names have been seen.

Establishment of new cyberspace courts

Following the establishment of China’s first cyberspace court in Hangzhou in 2017, two new cyberspace courts were opened in Beijing and Guangzhou in 2018.  The cyberspace courts act as basic people’s courts and have cross-regional jurisdiction over all cyberspace cases with genuine connection with Hangzhou, Beijing and Guangzhou, respectively.