On April 23, 2019, the following amendments to the Trademark Law of the People’s Republic of China (PRC) were approved that should significantly help trademark owners defend their rights:
- Trademark applications filed in bad faith without an intention to use shall be rejected. Bad faith applicants may be subject to administrative penalties such as warnings or fines;
- Bad faith without an intention to use has become a legal basis for opposition and invalidation proceedings against trademark applications;
- Trademark agents shall not represent a client when they know or should know that the client intends to file a trademark application without an intent to use or in bad faith, otherwise the agents may be subject to administrative penalties;
- The China National Intellectual Property Administration (CNIPA) has the authority to impose penalties on bad faith trademark applicants;
- If a trademark lawsuit is filed in bad faith, the court may punish the parties who filed the lawsuit. Punitive damages may be assessed up to five times (previously up to three times) of the actual losses of the plaintiff or profits made by the infringer and statutory damages have been raised to RMB 5 million (about US$720,000) from RMB 3 million;
- Counterfeit goods shall be destroyed at the request of the trademark owners in civil proceedings. Counterfeit goods shall not be allowed to enter commercial channels even after removing counterfeit trademark labels. Materials and tools mainly used for manufacturing counterfeit goods shall be destroyed without any compensation, or shall be excluded from commercial channels, with no compensation.
The amendments leave several questions unanswered. How can an intention to use be proven? What if legitimate companies need to register back-up trademarks for future use? How can a trademark agent’s misrepresentation of a client be evidenced? There will certainly be more questions for the Implementing Regulations to answer and clarify.
Meanwhile, it is clear that the amendments aim at tackling trademark squatting and hoarding, and infringements and counterfeiting will be dealt with severely. The change is good news for brand owners who have been challenged in enforcing their trademark rights in China.
The unexpectedly quick approval of the amendments reflects the Chinese government’s determination to strengthen intellectual property protection in China.