Protection of Trademark Rights in China An Update

Transcription

1 Protection of Trademark Rights in China An Update Author: Ms Ai-Leen Lim Partner, Head of IP Portfolio Management, Asia - Bird & Bird (Hong Kong), Bird & Bird IP (Beijing) Company Ltd (Beijing) The Chinese government has in recent months stepped up their efforts to strengthen the trademark protection and enforcement regime within mainland China. Since April 2009, we have witnessed the following significant developments:- (A) the issuance of the Interpretation by the Supreme People s Court on Several Issues Concerning the Application of Law to Civil Cases involving the Protection of Well- Known Trademarks ( the Interpretation ) on 23 April 2009; (B) the promulgation of the Rules for the Recognition of Well-Known Trademarks ( the Rules ) issued by the State Administration of Industry and Commerce on 21 April 2009; (C) the circulation of a revised draft of the third amendment to the Trademark Law of the PRC (the Revised Amendments ) on 20 June 2009; as well as (D) the issuance of the Directives on the Division of Work in the Hearing of Administrative Cases Regarding Licensing and Confirmation of Patents, Trademarks and Other Intellectual Property Rights ( the Directives ) by the Supreme People s Court on 22 June 2009 It is noteworthy that China is a civil law system, and legislation, legal interpretations, administrative rules and directives play an important role in building up China s legal and regulatory framework and environment. (A) Interpretation by the Supreme People s Court on Several Issues Concerning the Application of Law to Civil Cases involving the Protection of Well- Known Trademarks The Interpretation, primarily motivated by the need to achieve consistency in recognizing and protecting well- known trademarks in China in civil disputes relating to trademark infringement and unfair competition was promulgated on 21 April 2009 and came into force on 1 May Key Features We set out below a brief summary of the salient features of the Interpretation: Recognition of Well-Known Trademarks Basis for Recognition of Well-Known Status The relevant trademark authorities and the courts shall not recognize the well-known status of a trademark unless an interested party makes a definitive claim for such recognition in a trademark dispute case. Further, the courts should only determine the well-known status of a trademark if such recognition is necessary and if the injured party s interests cannot be protected through other legal remedies. The recognition of well-known trademarks is considered necessary in the following types of civil disputes: (i) unauthorized use of a trademark on (a) identical or similar goods/ services as the Plantiff s unregistered trademark and (b) dissimilar goods/ services of the Plaintiff s well-known trademark (registered in China), thus constituting a breach of Article 13 of the Trademark Law;

2 (ii) (iii) unauthorized use of a trade/ enterprise name that is identical with or similar to a registered trademark in China, thus constituting a breach of the Plaintiff s trademark rights or unfair competition; unauthorized use of a trademark which infringes on the Plaintiff s registered trademark, with the Defendant raising a counterargument or counterclaim that it has an earlier unregistered well-known trademark. The Interpretation also clarifies that it is not necessary to recognize the well-known status of trademarks in disputes involving the registration/ use of domain names which are identical with or similar to the registered trademark under consideration. Recognition on a Case-by-Case Basis The well-known status of a trademark is to be determined on a case-by-case basis and recognition of such well-known status is case specific and therefore not binding on subsequent similar cases. However, under Article 7 of the Interpretation, a trademark which has been previously recognized as a well-known trademark in earlier cases may be used as strong preliminary evidence in other cases, unless challenged by the counter-party. Evidence Requirements In general, the courts must take into consideration all the factors set out in Article 14 of the Trademark Law when determining whether a trademark is well-known. These include the degree of knowledge of the relevant public, the duration of use, the time, extent and geographical range of any publicity of the mark, and any records of protection of the mark as a well-known mark. Under the Interpretation, other relevant evidence that will be taken into consideration for the determination of whether a mark is well known would be: the sales volume, market share, marketing regions, profits and taxes of the products bearing the trademark, the duration of continued use of the trademark, market survey reports, market value assessment reports, and industry rankings. In addition, the Interpretation clarify that the duration of continued use of a trademark includes use prior to its registration in China. In relation to marks that are already widely known by the general public in China, the burden of proof to support the fame/ reputation of the trademark is lowered in that the Plaintiff would need to furnish only preliminary proof, and the courts are allowed to use their discretion to determine the well-known status of the trademark based on the prima facie evidence produced by the Plaintiff, unless challenged by the counter-party. Anti-Dilution The Interpretation also introduces the concept of anti-dilution pursuant to which damage to the goodwill of a well-known trademark is recognized as a form of harm to the legitimate interests of the trademark owner if the well-known trademark is diluted and the market reputation of the wellknown trademark is compromised or denigrated. Impact of the Interpretation In general, the recognition of the well-known status of a trademark is the only effective means to protect trademarks against the unauthorized use of an identical or similar mark in respect of dissimilar goods/ services. This is the reason why brand owners claim for well-known status in infringement cases, and well known status and bad faith (in cancellation actions) where the parties goods and services are dissimilar.

3 Due to the strict requirements of the well-known trademark regime, it has generally been difficult for brand owners to claim well-known status given that substantial evidence has to be provided to support the same and examination proceedings are time- consuming. The Interpretation aims to facilitate the enforcement of trademarks by well known mark owners by lowering the burden of proof for Plaintiffs in respect of trademarks which already have a high degree of recognition nationwide. However, it appears that the Interpretation will generally only protect those brand owners who have trademarks which are widely known in China. Accordingly, brands which are well-known overseas, but have only recently entered the Chinese market, may still face difficulties in going against infringers, and it would be beneficial to these brand owners to ensure that they seek to secure trademark registrations at the earliest opportunity since the Chinese trademark registration system operates on a first to file basis, generally. (B) Rules for the Recognition of Well-Known Trademarks The Rules for the Recognition of Well-Known Trademarks ( the Rules ), which were issued in April 2009, assist in supplementing the Interpretation, in dealing with the non- judicial treatment of well- known marks. Recognition of Well-Known Status Under the Rules, in addition to the Chinese courts, administrative bodies such as the China Trade Mark Office (CTMO), the Trademark Review and Adjudication Board (TRAB) and the Administration for Industry and Commerce (AIC) are able to grant a mark well-known status. Further, the Rules clarify that although the determining factors set out in Article 14 of the Trademark Law, namely the reputation of the mark amongst the relevant public, duration of use of the mark (including advertising), the time, extent and geographical range of any publicity of the mark, and any records of protection of the mark as a well-known mark, should be applied when assessing whether a mark is well-known, not all of the above- mentioned factors need to be fulfilled in order for the mark to be considered well-known. The Interpretation imposes strict restrictions (especially in respect of the requirement for use within China) on whether the Chinese courts may grant well-known status, whereas the Rules provide greater latitude for foreign trademark owners to protect their marks, by allowing them to introduce evidence of use outside China to prove well-known status. Supervisory Checks The Rules also set the stage for political supervisory checks on the current system of granting well-known status by stipulating that all meetings in relation to the identification of well-known marks shall be attending by members of the China Trade Mark Office, the Trademark Review and Adjudication Board, as well as members stationed in the State Administration for Industry and Commerce (as sent by the Central Commission for Discipline Inspection of the Communist Party of China and Ministry of Supervision). Impact of the Rules The Rules appear to provide more latitude for foreign trademark owners by alleviating the evidential burden by clarifying that not all the factors set out in Article 14 of the Trademark Law need to be fulfilled for a finding of well-known status.

4 In addition, it imposes less stringent restrictions than the Interpretation when assessing wellknown status by allowing brand owners with brands which are well-known overseas to introduce evidence of use from outside China to prove well-known status. (C) Revised Draft to the Third Amendment to the PRC Trademark Law A revised draft of the third amendment to the Trademark Law of the PRC (the Revised Amendments ) was released to selected agencies and bodies which will be affected by such changes, including trademark owners, for comments and feedback on 20 June Compared with the last draft of the amendment which was circulated for comment in August 2007, the Revised Amendments incorporate the following significant proposals: Key Proposals Broadened scope of registrable trademarks The Revised Amendments maintained the expanded scope of registrable trademarks (compared with the 2007 draft amendments) to include non-visual signs such as sounds and scents as well as marks such as hologram marks, motion marks and single colour marks (Article 8). The examination and registration procedures for such marks will be dealt with in regulations to be separately promulgated by the State Administration for Industry and Commerce (SAIC) (Article 78); Multi-class applications The Revised Amendments maintained the proposal in the 2007 draft amendments to allow multiclass applications as this would assist in reducing the administrative workload currently faced by the examiners of the Chinese Trade Mark Office ( CTMO ). Timeframe for examination of applications The Revised Amendments maintain the reduction in the timeframe from examination of any trademark application to the completion of the same by the CTMO to within 12 months of the filing date of the application. Re-intstatement of relative grounds for refusing trademark applications The last draft of the amendments proposed to remove the requirement on the part of the CTMO to consider relative grounds in order to improve efficiency. However, the Revised Amendments have retained the need for the CTMO to substantively examine a trademark application for refusal on the basis of relative grounds (Article 9). Measures to prevent the abuse of opposition and invalidation procedures The Revised Amendments restrict the entitlement of parties to file oppositions and invalidation actions and stipulate that only parties holding prior rights in respect of earlier trademarks or geographical indications may file trademark oppositions/ invalidations. Damages for trademark infringement The Revised Amendments maintain that the maximum fines for trademark infringement at both statutory and administrative levels will be increased. The quantum of statutory damages for infringement is proposed to be raised from a maximum of RMB500,000 (approximately US$70,000) to a maximum of RMB1,000,000 (approximately US$140,000).

5 Impact of the Revised Amendments These Revised Amendments are still in the consultation phase, and the trademark community is anxiously awaiting the finalization of the same given that this would significantly impact on their brand protection (including filing) strategies, moving forward. Further, it is important to note that in terms of the legislative process, after the Revised Amendments have been finalized by the Trademark Office, these will still need to be submitted to the State Council for further examination and approval and thereafter, be subject to the examination and approval of the Standing Committee of the National People's Congress. (D) Provisions on the Division of Work in the Hearing of Administrative Cases Regarding Licensing and Confirmation of Patents, Trademarks and Other Intellectual Property Rights The Supreme People s Court of the PRC promulgated the Provisions on the Division of Work in the Hearing of Administrative Cases Regarding Licensing and Confirmation of Patents, Trademarks and Other Intellectual Property Rights ( the Provisions ) on 22 June 2009, and came into force on 1 July The Provisions set out the types of cases which fall within the jurisdiction of the Intellectual Property Rights tribunals ( IPR tribunals ) of the Chinese courts. Hearing of Administrative Cases Pursuant to the Provisions, seven types of first-instance and second-instance cases relating to four types of intellectual property rights ( IPRs ) shall be heard by the IPR tribunals of the relevant Beijing Intermediate People s Court, Beijing High People s Court and the Supreme People s Court. The four types of IPRs in question are patents, trademarks, integrated circuit layout designs and new plant varieties. Under the Provisions, the types of cases to be handled by the IPR tribunals include appeals against review decisions and rulings made by the Trademark Review and Adjudication Board (which deals with cases that are elevated from the Chinese Trade Mark Office involving trademark oppositions and cancellations). The Provisions also provide that in the event that a litigant refuses to accept a legally effective judgment or ruling of a case that falls within any one of the seven categories set out in the Provisions and applies for retrial before the People s Court of higher level, such cases shall be reviewed and heard by the IPR tribunal of the People s Court of higher level. Concluding Remarks It is without doubt that the international trademark and brand owning community will be following the actual implementation of the Interpretation and Rules by the judiciary and administrative bodies in China respectively with much interest, in respect of the treatment and recognition of well- known trademarks in China. China being a first to file country makes this area of trademark law particularly important. As to the Revised Amendments, these are generally viewed as a step in the right direction in streamlining the trademark examination and grant process, without compromising on the quality of the Office Actions, as applications will continue to be examined for both absolute and relative grounds, if the proposed provisions are indeed adopted. Turning to the impact of the Provisions (through the demarcation of administrative cases to be heard by various IPR Tribunals) on the enforcement of intellectual property including trademark rights in China, it remains to be seen whether these are beneficial or provide clarity to future claimants in practice. What is clear is that much has gone into the improvement of legal

6 structures and systems, and the Chinese government is demonstrating to the outside world that they are serious about improving the intellectual property protection and enforcement regime in China. Brand owners are however looking for much more. China has always been a challenging jurisdiction for brand owners on the trademarks front, and it will be interesting to follow its progress in this space as it continues to assert its presence on the world stage as a major economic and political player.