China: New Trade Mark Law in China

The National People’s Congress of the People’s Republic of China finally approved long-awaited amendments to China’s Trade Mark Law on 27 October 2001. The amendments (which constitute a fundamental revision of China’s Trade Mark Law), came into force on 1 December 2001. Although the previous law was less than 20 years old and had been kept broadly up-to-date with international developments by amendments such as those allowing for the registration of service marks, China’s obligations under the GATT/TRIPS Agreement as well as international criticism of China’s record in protection of the rights of foreign trade mark proprietors meant that a fundamental review had to be undertaken.

Broadly speaking, the new law brings China right up-to-date with the latest international developments and in conjunction with the recent amendments to the patent and copyright laws it will establish a robust intellectual property legislative structure which will assist China’s economic development by encouraging investment by foreign companies. Coupled with improvements to China’s administrative trade mark enforcement procedures and amendments to the rules of evidence, the new Chinese Trade Mark Law should provide investors with a greater sense of security that their intellectual property rights can be adequately enforced both through existing administrative means and more readily through the courts.

Under the new law, three dimensional trade marks and colors will be eligible for protection as trade marks. Although in the past some proprietors have managed to secure protection for two dimensional representations of three dimensional marks, the enforceability of such registrations was always in doubt and the formal introduction of three dimensional marks will no doubt be welcomed by potential applicants such as watch and jewellery companies wishing to protect their product designs, alcohol, perfume and cleaning products manufacturers wishing to protect the shapes of their product containers, as well as any other manufacturers who rely upon the distinctive shape of their products to increase their sales. The increasing predictability and efficiency of enforcement action against infringement of trade marks consisting of words alone has recently forced infringers towards the manufacture and sale of "look-a-like" products using different verbal trade marks and although China had been taken some steps towards improving enforcement procedures against such activity, a registration of a three dimensional trade mark will undoubtedly broaden the scope for enforcement of rights in such marks.

The definition of a registrable trade mark in China’s new Trade Mark Law is consistent with the definition used in European jurisdictions and for the first time foreign proprietors will be able to plan their trade mark protection strategies for China in a manner consistent with strategies adopted in other countries. However, China has retained prohibitions on registration of certain marks, including those which are identical or similar to official emblems, flags, or other symbols of both China and foreign countries, symbols which indicate official verification or endorsement (unless authorized by their international proprietor), generic or discriminatory trade marks, misleading trade marks or any other marks which may be detrimental to socialist morals or customs.

Although it has been possible to register collective and certification marks in China for several years, potential applicants have been discouraged by the uncertain status of these marks since formal revisions to the Trade Mark Law itself had not been made to cater for them. Under the new law, collective and certification marks are expressly registrable, including for both Chinese and foreign geographical names.

Specific protection for well-known trade marks has been incorporated into the new law. Helpfully, a list of principles to be taken into account when determining whether or not a trade mark is well-known has actually been incorporated into the law for the first time. Some of the factors which will be taken into account when assessing whether or not a trade mark is well-known include:-

1. The level of knowledge of the trade mark by relevant consumers;

2. The length of use of the trade mark;

3. The amount of publicity given to the trade mark (in China);

4. The history of the trade mark being protected as a well-known mark.

Although China has officially been accepting formal applications for recognition of trade marks as well-known since 1996, no foreign trade marks have as yet been officially recognized as "well-known". The incorporation of specific provisions concerning well-known marks in the Trade Mark Law is likely to provide weight to the arguments of foreign proprietors seeking protection of their trade marks as well-known. China’s entry to the WTO and its consequent obligations to fully comply with the GATT/TRIPS Agreement will place additional pressure on the authorities to begin formally recognizing certain foreign trade marks as well-known in China (and therefore eligible for special enforcement protection).

It is stipulated in the new law that it is not possible to amend a registered trade mark under any circumstances. This clarifies the rather unclear provisions of the old law. In future, it will definitely be necessary to file a new trade mark application if the form in which a trade mark is used varies from the form in which it has been registered.

Under the old law protection was only afforded to registered trade marks (although certain protection for unregistered marks could be obtained under the Anti-Unfair Competition Law). Under the new law, protection will be given for trade marks which are the subject of a pending application and which are already in use. In addition, evidence of use will now be formally taken into account when determining registrability of trade marks.

Under the new law, decisions of the Trade Marks Office Appeal Authority (the Trademark Review and Adjudication Board) will be subject to appeal to the courts. China is beginning to develop a network of specialist intellectual property courts and although this is not clear from the legislation, it seems likely that responsibility for deciding such reviews will be the responsibility of these specialist courts. The introduction of judicial review is a very welcome move which will increase transparency and improve confidence in the overall system on the part of foreign proprietors.

Under the old law trade mark assignments were recorded on the basis of an assignment application form executed by the proprietor and the assignee without the need to produce any underlying deed or contract of assignment. Under the new law, the underlying contract must be disclosed and although this is not clear, it appears that it will in future become possible to apply for registration of assignments while the subject marks are still pending.

Under the new law it will become possible to apply for interlocutory relief, such as orders against infringement and for preservation of evidence. Strict time limits will be imposed in this situation and as has already occurred following the introduction of such relief for patent matters, it can be expected that foreign companies will be quick to pick up the opportunity to obtain prompt legal relief through the courts as an alternative to relying upon administrative enforcement in all situations.

Although the new law does not mention certain issues such as co-existence of trade marks based upon the consent of their respective proprietors and the procedures concerning disclaimers, the amendments embodied in the new law are generally extremely positive and they will over the course of time provide a significant boost to foreign investor confidence in China.