Presenting a live 90-minute webinar with interactive Q&A China's New Trademark Law: Maximizing IP Protection Navigating Key Changes in Trademark Hijacking, Expanded Scope of Registration Eligibility, Application and Opposition Procedure, and More TUESDAY, DECEMBER 16, 2014 1pm Eastern 12pm Central 11am Mountain 10am Pacific Today s faculty features: Georgia Chiu, Counsel, Hogan Lovells International, Shanghai, China Yu-An Chang, Senior Associate, Hogan Lovells International, Shanghai, China The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.
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China's New Trademark Law: Maximizing IP Protection Georgia Chiu / Yu-An Chang Hogan Lovells, Shanghai Strafford Live CLE Webinar, December 16, 2014
Agenda Application Procedure Opposition & Invalidation Trademark Use and Cancellation for Non-uses Assignment / Licenses Infringement New IP Courts Changes Expected Under the Draft SPC Opinion Best Practice 6
I. Application Procedure 7
Applicant Friendly Approach? Pro applicant features Division of application (eg, when partial refusals are issued): more cost effective and original application date is preserved. Examination process for new filings is shortened and limited to 9 months: more predictable Starting time to apply for renewal is advanced to 12 months before expiration: provide stable basis to trademark owners for enforcement given they may get renew certificate before expiration. Courier service other than EMS for submission to CTMO is allowed: provide more options and opportunity to save cost. Documentary requirements Original POA Copy of CI 8
Applicant Friendly Approach?-cont'd Multi-class application No reduction in official fee Amendment of specification Standard items of Classification Table of Similar Goods and Services Only one chance to amend or CTMO will refuse to accept application for examination Examiner's report Opportunity to clarify on specification and disclaimer in future? 9
Time limits for procedures introduced Case Type Responsible Authority Basic Time Limit for handling Extension Allowed Examination CTMO 9 months (as of receipt of filing) - Opposition CTMO 12 months (as of expiration of preliminary publication period) 6 months Review of Refusal TRAB 9 months (as of receipt of filing) 3 months Review of Opposition (only opposed party) TRAB 12 months (as of receipt of filing) 6 months 10
Time limits for procedures introduced-cont'd Case Type Non-use / generalization cancellation Invalidation for violation of prohibitive rules for registration and use Responsible Authority CTMO TRAB Basic Time Limit for handling 9 months (as of receipt of filing) 9 months (as of receipt of filing) Extension Allowed 3 months 3 months Review of CTMO cancellation/ invalidation actions TRAB 9 months (as of receipt of filing) 3 months Invalidation initiated by pre-existing right owners or interested parties TRAB 12 months (as of receipt of filing) 6 months 11
Trademark Search Trademark search utilizing multiple sources necessary at times unreliable 12
Co-existence Agreement Co-existence agreement between owners of similar marks is generally acceptable to allow co-existence on trademark register unless there is evidence indicating harm to public interests Disputed mark Cited marks Application in Class 20 covering furniture, bins, containers, pillows, etc. (2001-2014) Registered in Class 20 covering bins, containers, pillows, etc. (2002 2004, 2006, 2009, 2012-2014) 13
II. Opposition & Invalidation Proceedings 14
Opposition Proceedings Standing Any person has the right to oppose a published trademark application on absolute grounds Only prior right owner or an interested party has the right to oppose a published trademark application on relatively grounds: potentially more difficult for brand owners to file oppositions Additional documents required: 1) Certificate of identity; and 2) evidence showing an interested party, i.e. prior rights Appeal Only the trademark applicant is entitled to appeal against the CTMO's decision on opposition, but not the opponent: process shortened but potentially leaves brand owners having to seek recourse through invalidation after registration of the opposed mark. 15
Invalidation Proceedings Requirements on standing: same as opposition proceedings Effect of invalidation: renders registration invalid from the beginning without retroactively affecting prior judgment, ruling or settlement to the extent already enforced or performed Registrant with bad faith remains liable for losses caused Damages for infringement, assignment fees or royalties paid may be recuperated after invalidation if obviously unfair 16
Grounds for Opposition/Invalidation bad faith Concurrent use with knowledge of each other does not give rise to presumption of bad faith first to file principle Disputed mark Cited marks 氟 美 斯 FMS 氟 美 斯 Registrant: Fushun BOGE Environmental Protection Technology Co., Ltd. Registered in Class 24 covering air cleaning wool cloth; glass-cloth; fiberglass fabrics, for textile use; etc. Opposing party: Yingkou Fiber-Glass Co., Ltd. Prior use without registration on fiberglass filter materials including needle-felted carpets, etc. 17
Grounds for Opposition/Invalidation Bad Faith Agency relationship with media exposure, contractual provision governing ownership of IPRs, and similarity in design Agent: Shanghai Moliyo Digital Entertainment Game developer: ESTSOFT CORP. Registered in Class 28 covering toys and game device, etc. Game Registered in Class 9 covering downloadable computer programs for online game and in Class 41 covering online game service, but not in Class 28. Game 18
Grounds for Opposition/Invalidation Bad Faith Fame of prior mark, similarity in design and post registration conduct: infringement claims demanding high level compensation and assignment fee Disputed mark Cited mark Registrant: Shenzhen Wang Li Tai Industrial Co., Ltd. Registered in Class 24 covering plastic buckles and zippers, etc. Opposing party: NIFCO INC. Registered in Class 20 covering hooks, clips, etc. 19
Grounds for Opposition/Invalidation Bad Faith Use and promotion targeting Chinese consumers required to establish fame associated with bad faith Disputed mark Cited marks Applicant: Beijing Miantian Textile Co., Ltd. Opposing party: Ryohin Keikaku Co.,Ltd. Application in Class 24 covering cotton fabrics; towels; bedspreads; sheets [textile], etc. Registered in Class es16, 20, 21, 35 and 41, but not in Class 24 20
Grounds for Opposition/Invalidation Prior Right Copyright Disputed mark Cited marks Registrant: Mexon Daily Chemical (Hangzhou) Co., Ltd. Registration in Class 3 covering soap and cosmetics, etc. Opposing party: Fast Retailing English logo mark and Chinese mark registered in Classes 9, 18, 24, 25, and 35, but not in Class 3 21
Grounds for Opposition/Invalidation Well-Known Marks Fame of unregistered Chinese mark accumulated through promotional activities rather than commercial use per se Disputed mark Cited mark Applicant: Sichuan Su Fu Bi Auction Co., Ltd. Application in Class 35 covering advertising (3501), public relations (3502), auctioneering (3503), manager for performing artists (3504), etc. Opposing party: Sotheby's Auction Firm Registered in Class 35 covering auctioneering (3503) 22
III. Trademark Use and Cancellation for Non-uses 23
Trademark Use Use of the trademark on goods, packages, containers or in trading documents, advertising, exhibitions or any other business activities, which identify the source of the goods. Does OEM-Use constitute use of the mark in China? Whether OEM-Use sufficient to prevent registered trademarks from being cancelled on the basis of non-use? 24
Penalties for Improper Use Improper use Alter trademark, name or address of registrant in commerce without CTMO's approval Sale of products without mandatory registration of trademarks, for example tobacco product Use of unregistered trademark with " " logo or use of prohibited trademark under Art. 10 of Trademark Law Use of description "Well-known mark" for promotion Penalty Local AIC's order to correct; Fail to correct, CTMO s ex officio cancellation For sale volume up to RMB 50,000, local AIC s fine less than 20% of illegal business proceeds; For sale volume less than RMB 50,000, local AIC s fine less than RMB 10,000 local AIC s fine of RMB 100,000. 25
Cancellation for Non-use Timing 3 years after the registration of the trademark Defence Evidence of actual commercial use of trademark within the 3 years prior to the cancellation application, or reasonable grounds for nonuse, eg. force majeure, government regulations, bankruptcy or liquidation, etc. Appeal Review by TRAB within 15 days of CTMO's decision Administrative lawsuit within 30 days of TRAB's decision Effect Cancellation of exclusive right in the trademark as of publication of cancellation 26
IV. Assignment & license 27
Assignment and License of Trademarks Assignment Re-cap: effective upon publication of the CTMO s approval Assignment of all related marks (same goods/similar mark; similar goods/identical and similar marks) License Re-cap: effective upon signing or otherwise agreed by the parties. Recordation with the CTMO, otherwise cannot be used against third parties in good faith. Previous practice vs. current practice (SAFE foreign exchange control relaxed) 28
Registration of assignment agreement Assignment agreement must be registered with CTMO Check necessary documents from assignor before execution of agreement: copy of CI or ID and/or notarization of assignor's statement concerning agreement to assign, etc. trademark assignment case Japanese company KIRIN KYOWA FOODS COMPANY, LIMITED entered into agreement with hijacker Mr Chen for assignment of "CURDLAN" trademark No. 5210394. KIRIN had to file lawsuit for assignment of the trademark because CTMO rejected assignment under the ground that Assignor's signature on agreement is obviously different from that on other documents of Mr Chen previously registered with CTMO. 29
V. Infringement 30
Direct Infringement What constitutes direct infringement? Counterfeit Using a mark that is similar to a registered trademark on identical or similar goods/services likely to cause confusion, eg.: Hennessy VS Hanlissy Sale of infringing products Unauthorised product or sale of labels bearing a registered trademark Using a mark that is identical or similar to a registered trademark as a trade name on identical or similar goods/services to mislead Unauthorised re-sale of products after replacement of product label bearing a registered trademark 31
Indirect Infringement Trademark Law 2001 Trademark Law 2013 Intentionally facilitating trademark infringement by providing facilitating conditions such as storage, transport, mailing and concealing, etc. The definition of "providing facilitating conditions" has been expanded to include providing storage, transport, mailing, concealing, printing, business premises and Internet service, etc. 32
Burden of proof Burden on plaintiff to prove prima facie case of infringement Owner or exclusive licensee of registered trademark Infringement (sale or manufacturing etc.) Damages (time period, volume of infringing sales etc.) Shifting burden of proof Plaintiff has made every effort to obtain evidence Evidence is in possession of defendant If defendant refuses to provide evidence, court may decide compensation based on plaintiff's claim/evidence 33
Defence and Exemption Prior use Prior use without registration may continue within the original scope subject to requirement of fame; registrant may require use of appropriate additional signs to differentiate Legitimate source Exemption from liability to pay administrative fine or civil damages for sale of goods obtained from a legitimate and identifiable source without knowledge of the goods being infringing 34
Exemption from Civil Damages Non-use within 3-year period before action Right holder claims compensation Defendant argues registered trademark was not used Right holder may be ordered to prove actual use during last three years Right holder fails to provide evidence of use and amount of loss Defendant will not be liable to compensate Highly debated clause Potential arguments for brand owners to defend claims lawsuit brought by trademark hijackers Potentially affect filing and enforcement strategy Highlights the debated issue of what constitutes trademark use in China 35
Administrative Fines and Civil Damages Trademark Law 2001 Trademark law 2013 No more than three times the illegal turnover No more than RMB 100,000 if the illegal turnover is uncertain - Actual losses to registrant - Benefits acquired by infringer Administrative Fine No more than five times of the illegal turnover if the illegal turnover is more than RMB 50,000 No more than RMB 250,000 if the illegal turnover is less than RMB 50,000 Civil Damages - Actual losses to registrant - Benefits acquired by infringer - Reasonable multiple of royalties - Punitive damages: up to 3 times the actual damages in cases of bad faith infringement of a serious nature (eg. repeat infringer) - Statutory damages: up to 500,000 - Statutory damages: up to 3,000,000 36
Case Study on Infringement I Schroeder KG - German based producer of tinned food. - Owner of the mark Merry Food Co Ltd - Was the OEM manufacturer of the German company - Registered owner in China Merry Food sued the German company for trademark infringement. Court ruled: OEM-use constitute use of the registered mark, but no infringement as Merry Food obtained the trademark registration by bad faith, thus should not be protected by law. 37
VI. Specialized IP Courts 38
Specialized IP courts in Beijing, Shanghai & Guangzhou 39
Specialized IP courts in Beijing, Shanghai & Guangzhou cont'd To be clarified by further implementation rules "High profile" first instance cases (e.g. disputes involving foreign parties or claims that pass a certain monetary threshold Antitrust or abuse of IP cases Criminal cases concerning infringement of IP rights 40
VII. Draft SPC Interpretation 41
Draft SPC Interpretations Changes under Current Draft Absolute ground of "adverse impact" clarified Application for names of celebrities or names of deceased persons without permission and likely to mislead Scope of protectable prior rights expanded Images or names of fictional characters (merchandising rights) expressly recognised, eg.: James Bond, Donald Duck, etc. Bad faith as a ground for rejection/invalidation clarified Filing a large number of applications to hijack trademarks without intention to use is expressly recognized as a ground for rejection/invalidation Constructive knowledge of prior unregistered trademark can be established by circumstantial evidence such as that on distinctiveness and fame of prior trademark, geographical proximity and industry of the parties, prior business negotiation, application for multiple trademarks of the same owner, etc. 42
VIII. Best Practice 43
Best practice Draw up comprehensive filing strategy before launching products Take note of the Chinese circumstances, eg, file early and broadly; covering sub-classes; select a Chinese character trademark Maintain trademarks, eg, prevent trademarks from being generic; documentation of records of trademark use Regulate trademark use in agreement with business partner Monitor trademark register for similar marks, especially by business partners or competitors Budget for enforcement actions, eg, warning letters; takedown notices; raid actions; civil or criminal actions Training to local staff to enhance awareness of IP/trademark protection 44
Georgia Chiu Georgia.Chiu@hoganlovells.com Yu-An Chang Yu-An.Chang@hoganlovells.com Hogan Lovells has offices in: Alicante Amsterdam Baltimore Beijing Berlin Brussels Budapest* Caracas Colorado Springs Denver Dubai Dusseldorf Frankfurt Hamburg Hanoi Ho Chi Minh City Hong Kong Houston Jakarta* Jeddah* London Los Angeles Luxembourg Madrid Miami Milan Moscow Munich New York Northern Virginia Paris Philadelphia Prague Rio de Janeiro Riyadh* Rome San Francisco Shanghai Silicon Valley Singapore Tokyo Ulaanbaatar Warsaw Washington DC Zagreb* "Hogan Lovells" or the "firm" is an international legal practice that includes Hogan Lovells International LLP, Hogan Lovells US LLP and their affiliated businesses. The word "partner" is used to describe a partner or member of Hogan Lovells International LLP, Hogan Lovells US LLP or any of their affiliated entities or any employee or consultant with equivalent standing. Certain individuals, who are designated as partners, but who are not members of Hogan Lovells International LLP, do not hold qualifications equivalent to members. For more information about Hogan Lovells, the partners and their qualifications, see. Where case studies are included, results achieved do not guarantee similar outcomes for other clients. Attorney Advertising. Hogan Lovells 2013. All rights reserved. *Associated offices 45