Amendments to Chinese trademark laws

On 1 May 2014, amendments to the Chinese trade mark laws came into effect. Many of the changes are aimed at improving the efficiency and effectiveness of the Chinese trade mark system. Most of the changes will be welcome by all brand owners, such as the good faith obligation for all new trade mark applications. It is anticipated that the effect of some changes will take time to be settled in practice. Importantly for Australian brand owners manufacturing in China, the new laws do not settle the question of whether manufacturing branded goods (but not selling those goods) in China equates to trade mark use.

The changes include:

a new obligation of good faith for new trade mark filings and all trade mark agents. This is aimed at deterring trade mark pirates from seeking to register the brands of others, including in the context where distributers or manufacturers register business partners brands;

an increase in the maximum compensation available for trade mark infringement. This has been increased to around US$500,000 which is substantially higher than the previously available amount and is intended to further deter trade mark infringers;

multi-class trade mark applications will now be allowed, which will be welcome by brand owners with trade marks that span goods and services in multiple classes;

the ability to register new (non-traditional) trade marks such as sounds;

the need to record a trade mark licence for the licence to be enforced. It should continue to be considered a crucial step to record any licence arrangements in China; and

stricter timelines for trade mark examinations, opposition decisions and reviews, where these could previously take several years. As a basic guide, examinations should occur within 9 months of filing, and opposition decisions issued within 12 months (with extensions available). Greater certainty around these time frames will be welcome.

However, trade mark opponents will no longer be able to request a review of an unsuccessful opposition decision. This highlights the need to ensure an opposition is fully supported at the time of filing, which may create additional frustrations for brand owners given the short evidence gathering allowed before the Chinese Trade Marks Office.

Of particular interest to Australian brand owners who manufacture in China, the new laws specifying that the use of a trade mark includes the use of the trade mark on goods, packages, containers or in trading documents, advertising, exhibitions or any other business activities, which identify the source of the goods. This will no doubt impact the ongoing debate in China as to whether simply manufacturing your branded goods (but not selling those goods) in China is trade mark use. This issue has not been settled by the new laws, but Chinese commentators do generally note that the prudent approach is to assume that application of a trade mark in China on manufactured goods should be regarded as trade mark use. Chinese sources do anticipate that this issue will be clarified shortly as the Supreme People’s Court issues its rolling interpretations of the new laws.

From an Australian brand owners perspective, the changes are generally positive and are aimed at creating greater certainty within the Chinese Trade Marks Office. It will be interesting to see how some of the changes are applied in practice, particularly in relation to the need to record trade mark licences, and use of a trade mark for manufacturing purposes.

Source: Norton Rose Fullbright

Norton Rose Fulbright has a market leading Intellectual Property practice. Please contact Frances Drummond or Cameron Harvey if you would like to know more about the changes to the Chinese Trade Mark legislation and the implications for your business.