Key Points of the Amendment of the Trademark Law of China (2019)
On April 23, 2019, the Decision on Amending the Trademark Law of the People's Republic of China was adopted at the 10th Session of the Standing Committee of the 13th National People's Congress.
The highlight of this amendment is on the restriction of bad-faith trademark registration applications. Specifically, it is added in paragraph 1 of Article 4 that the application for registration of a bad-faith trademark that is not intended for use shall be rejected.
At the same time, the amended Trademark Law stipulates that a trademark agency shall not accept a client's authorization where it knows or should have known that the client's trademark registration application is a bad-faith registration application (Article 19, paragraph 3); and anyone may file an opposition with the Trademark Office against a bad-faith trademark registration application for a preliminarily approved and published trademark, within three months from the date of publication (Article 33). In addition, Article 4 becomes a ground for invalidation of a registered trademark (Article 44, paragraph 1).
Furthermore, in consistence with the draft patent law, the amount of compensation for a trademark infringement is amended to be based on a one-to-five-time standard, as compared to the previous one-to-three-time standard; and where it is difficult to determine the actual loss suffered by the right holder, the profits acquired by the infringer, or the royalty of the registered trademark, the maximum amount of compensation is raised from the original three million yuan to five million yuan (Article 63). Also, two paragraphs are added as paragraphs 4 and 5, respectively, of Article 63:
- "In the case of a trademark dispute, the people's court shall, upon the request of the right holder, order to destroy goods on which a registered trademark is falsely used, except for special circumstances; and to destroy, without any compensation, the materials and tools mainly used for the manufacture of goods on which a registered trademark is falsely used; or in special circumstances, order to prohibit, without any compensation, the aforementioned materials and tools from entering the commercial channel.
- “Goods on which a registered trademark is falsely used may not enter commercial channels after only removing the registered trademark.”
This amendment is another demonstration of China's determination to strengthen its protection of intellectual property rights. Stronger IPR protection is a requirement of foreign companies and even more so of Chinese enterprises. In 2018, China's external payments of IPR royalties rose to $35.8 billion and the export of Chinese patents only amounted to $5.6 billion, resulting in a deficit of $30.2 billion. Though the deficit is going to persist, with the government incentives, financial and policy supports, and awakening of IPR protection in people, it is believed that it will narrow in the long run with China's IPR-related capabilities growing.