November-December 2012 China Bulletin

On December 28, the National People’s Congress issued the latest revised draft of the Trademark Law.  Key provisions include expressly requiring that applications conform to principles of honesty and credibility, broadening the right to block bad faith applications by business associates, narrowing the definition of use to marks that distinguish the origin of the goods or services, limiting the right of the trademark owner to prohibit continuation of prior use, and limiting protection for well-known marks to ”copies, imitations or translations”.  For a detailed legal review of the draft from the industry perspective by Joe Simone of SIPS, click here.

The current Trademark Law, promulgated in 2001, has undergone several revisions and comment periods since April, 2006, when a drafting team organized by the State Administration for Industry and Commerce prepared the first draft.

The new Draft continues or introduces provisions:

(In wording reinstated from earlier drafts) requiring applications and use of trademarks to be carried out in conformity with the principle of good faith (literally “with principles of honesty and credibility”).  Parties in China are subject to a general obligation to act in good faith under Article 4 of the General Principles of the Civil Law, but adding this provision to the Trademark Law may serve as a basis for actions against trademark squatters or for the authorities to issue an expanded interpretation addressing trademark squatters.

Broadening the right of an owner of a trademark not registered in China to block an application in China made in bad faith by certain third parties.  An earlier provision, allowing a user to block an application by an agent or representative of the owner, is expanded to encompass opposition to an applicant with a contractual or other relationship to the trademark owner that should make the applicant aware of the owner’s prior right in the mark.  However, if the applicant in China is not an agent or representative, the trademark owner would have to demonstrate prior use in China

Narrowing the definition of trademark use to marks intended to distinguish the origin of goods or services.  This requirement would arguably exclude original equipment manufacturers (OEMs) or others that manufacturer goods solely for export from being challenged for infringing a trademark registered by one party in China and by another party (typically the OEM’s customer) abroad.  However, the revised wording does not appear to include enough detail to finally settle the issue of whether OEMs are excluded.

Not permitting a trademark owner to use its registration to stop another party from continuing to use the same or similar mark on identical or similar goods if the use was in place prior to the registration.  The trademark registrant can, however, require the prior user to add a distinguishing sign to avoid confusion.

The new Draft is open for public comment until January 31st.

Questions?  Contact Allan Marson at china.desk@ishimarulaw.com for a complimentary response.