Proposed Changes to the China Trademark Law

On January 13, 2023, the Chinese National Intellectual Property Administration, consisting of the Trademark Office, issued a notice soliciting opinions on the draft amendment of the Trademark Law of the People’s Republic of China. Although the draft amendment does not represent the final version for review, it demonstrates the current legislative and executive branches’ views and thoughts.

By reading the draft amendment, the revision of the Trademark Law increasingly draws on the relevant practices of the United States, aiming to establish a trademark registration and use order based on the principles of “apply as needed and emphasize use”. Therefore, there are significant adjustments to the existing Trademark Law in many aspects, mainly reflected in the following areas:

Opened up trademark elements

Currently, the elements of a trademark are limited to “text, graphics, letters, numbers, three-dimensional signs, color combinations, and sounds, as well as combinations of the above elements.” The new proposed amendment is expected to break through this limitation and add “other elements” to the revision.

Although the law does not specify which elements are included, this greatly increases the space for imagination. Elements that could not be registered as trademarks before, such as “smell flavor,” may also be allowed to be registered as trademarks as long as these elements “can be used as signs to identify and distinguish the source of goods or services.”

Trademark usage as a prerequisite for trademark application and renewal

The draft amendment requires applicants to “use or promise to use” their goods or services before applying for a trademark. China has always based its trademark exclusive rights on “registration” rather than “use.” This revision may make “registration plus use” a prerequisite for trademark exclusive rights, i.e. registration.

At the same time, the draft amendment requires trademark registrants to explain the use of the registered trademark on the designated goods within 12 months after every five years from the date of approval or provide a legitimate reason for non-use. If no evidence of use is provided after the deadline, the government will notify the registrant to provide evidence of use within six months. If no evidence is provided, the trademark registration will be automatically revoked.

Further, the Trademark Office shall randomly inspect the authenticity of the explanation and may require the registrant to provide relevant evidence or entrust local intellectual property management authorities to verify it. If the explanation is found to be untrue, the Trademark Office will revoke the registered trademark. This system is very similar to the registration system in the United States and is a significant amendment to the current Trademark Law, emphasizing the use of trademarks and fully reflecting the legislative purpose of the Trademark Law to promote commercial use, imposing very high requirements on the use obligations of trademark registrants.

Severe crackdown on malicious registration

Article 22, paragraph 1 of the draft amendment stipulates that applicants who apply for a large number of trademark registrations without the purpose of use and disrupt the order of trademark registration constitute malicious registration applications. This provision is a revision of the current Trademark Law, which stipulates in Article 4, paragraph 1, that “malicious trademark registration applications without the purpose of use shall be rejected.”

Here, malicious trademark registration applications mainly refer to the behavior of applying for a large number of trademarks for speculation or arbitrage, whether the registered trademark is preempted or merely registered in advance. The Trademark Office will use big data systems to automatically identify applicants who submit a large number of applications and make manual judgments. For suspected applications that do not have the purpose of use, the Trademark Office requires the applicant to explain the actual use or real intention of use of the relevant trademark and provide necessary evidence.

This type of review opinion is already very common in current practice, but after the new law is implemented, due to the addition of the requirement that trademark applications should be based on “use or promise of use,” the Trademark Office may issue fewer such review opinions.

Prohibition of repeated applications

Article 14 of the draft amendment stipulates that the same applicant should only register the same trademark on the same goods or services. This is a general principle requirement. Further, Article 21 of the draft amendment stipulates that the applied-for trademark shall not be the same as the prior trademark registered, or applied for registration, or annulled, revoked, or declared invalid within one year before the application date of the applied-for trademark of the same kind of goods by the applicant. This directly prevents the applicant from making relay applications in the future.

According to Article 49 of the current Trademark Law, if a registered trademark is not used without legitimate reasons for three consecutive years, any unit or individual may apply to the Trademark Office for cancellation of the registered trademark. To ensure that trademarks that have not been used after registration are not canceled by others, many companies choose to reapply for these trademarks every three years which is called relay applications. As this behavior leads to the waste of government resources, it will be prohibited in the future.

However, the draft amendment also optimizes the existing process. Currently, trademark applicants repeatedly apply for the same trademark while waiting for the results of related cases. For example, in a case of rejection and review, the applicant also submits a revocation application for the cited trademark. To wait for the revocation result, they often use this strategy of repeating the application for the same trademark. As the procedure is not smooth, most applicants have no choice. The draft amendment stipulates that the State Administration for Market Regulation shall wait for the results of related cases, so this strategy will no longer be necessary in the future. This provision will not have any adverse effects on applicants but will help reduce the cost of trademark registration.

Prohibition of diluting well-known trademarks

The draft amendment further improves the protection of well-known trademarks. Firstly, Article 18 of the draft amendment does not explicitly require well-known trademarks to be registered in China, which provides protection for globally well-known but unregistered trademarks in China. Currently, to use a well-known trademark on dissimilar products or services, this trademark must be registered in another class. However, the draft amendment removes this registration condition.

Secondly, Article 18 of the draft amendment also stipulates that if the use or application of a trademark copies, imitates, or translates another well-known trademark known to the public, it will weaken the significant characteristics of the well-known trademark, damage its market reputation, or improperly use its market reputation, it will be prohibited from use and will not be registered. According to this rule, even if there is no consumer confusion, it may prevent potential infringements from obtaining registration.

More attention to the social impact of trademarks

In the draft amendment, the Trademark Office has the right to refuse the acceptance or registration of a trademark application due to its significant adverse social impact at every stage.

Article 27 stipulates that if the trademark office finds that the applied-for trademark has a significant adverse impact, it will not be accepted. Article 37 stipulates that if the trademark office finds that the registered trademark application that has been preliminarily approved violates the public order and good customs principle stipulated in Article 15 of this law, it can revoke the notice and re-examine it.

Transfer of registered trademark to the rightful owner

Currently, even if the true trademark owner objects to or invalidates the trademark registered by the preemptor and succeeds, the trademark owner still needs to apply for a trademark, undergo a series of parallel procedures such as rejection and review to obtain the corresponding registration. Sometimes, if the trademark owner does not apply, the successful objection may even make a third party take advantage of the situation.

Article 45 of the draft amendment stipulates that for violations of Article 18 (well-known trademarks) and Article 19 (agent’s registration of trademarks), or violations of Article 23 by improper means, the trademark office may order the transfer of the trademark to the rightful owner.

However, the transfer must meet certain conditions. Article 46 of the draft stipulates that the administrative department for intellectual property rights of the State Council shall make a ruling on transferring a registered trademark if it deems that the reasons for the transfer are valid, no other grounds exist for declaring the trademark invalid, and the transfer will not lead to confusion or other adverse effects. If there are other grounds for invalidating the trademark or if the transfer is likely to cause confusion or other adverse effects, the ruling shall be made to declare the trademark invalid.

Overall, this revision fully draws on the internationally prevalent practices, simplifies many unnecessary procedures, and strengthens the basic logic that the purpose of trademarks is for use.