The new Chinese Trade Mark Reforms will come into effect on 1 May 2014. The key points of the amendments are as follows:

• Applications are required to be made in good faith;
• Multi-class applications are available;
• Protection is available for sound marks;
• Additional protection for prior right holders and a clarification of well-known marks;
• Statutory time limits have been added;
• No automatic right of appeal should an Opponent be unsuccessful in an opposition;
• Introduction of an invalidation procedure;
• Increasing compensation in infringements and fines for improper use of unregistered trade marks; and
• Providing for relevant measures for repeat infringers.

I will deal with some of the key points below.

Good Faith

The principle of good faith, or alternatively bad faith, is likely to be familiar to many readers. When filing a Chinese application, the mark must be filed on the basis of the principle of honesty and credibility.

It is unclear whether this now means that right holders can also specifically claim against acts of bad faith – it will be interesting to see if this is now picked up in oppositions or invalidations.

Sound Marks

Prior to the reforms, only word, slogans, device or combination colour marks were registrable in China – sound marks can now be added to this list.

However, single colours, smells and moving images are not registrable.

Well-Known Marks

The new law suggests that a mark no longer needs to provide masses of evidence to demonstrate that it is well-known in China. Instead, it may be sufficient that its well-known status outside of China means that it has in fact developed a reputation in China also.

This may assist right holders where they do not have examples of advertising materials within China, for example, which often seems to be one of the reasons a mark may not be considered to be well-known in China at present.

Statutory Time Limits

These are detailed below.

Removal of Right to Appeal by Opponent in Unsuccessful Oppositions

This is an extremely disappointing provision given that many UK Opponents find that the initial opposition decision rarely falls in their favour. Accordingly, the review process has been a very helpful system in overturning such decisions.

The decision now lies on whether earlier right holders feel it worthwhile opposing from the outset, if they have a strong case for example, or allowing the mark to register and filing an invalidation action, which has a right to appeal.

Invalidation

Currently, registered marks in China can only be declared cancelled, rather than invalid. However, where a registered mark violates provisions in the law explicitly stipulating that it shall not be registered or if it acquired by unfair means, this will now be declared invalid. The legal effect of this means that the mark will be deemed to have never been filed.

Infringement Compensation

Where illegal turnover exceeds RMB 50,000, a fine not exceeding five times the illegal turnover can be imposed. If no illegal turnover exists, or it is less that RMB 50,000, a fine of no more than RMB 250,000 may be imposed.

If an infringer has engaged in the infringing activities more than twice in five years, additional penalties may be imposed.

In terms of civil damages, the compensation is determined according to (i) actual losses caused by the infringement, (ii) benefits acquired by the infringer through the infringement, and (iii) reasonably multiplied amount of royalties of that trade mark.

The statutory damages have been increased to RMB 3 million, which is six times the previous amount.

There are exemptions to compensation if the third party unknowingly offers for sale goods that infringe, provided he can prove that the goods were obtained lawfully, or if the third party successfully proves that the registered trade mark has not been used in the last three years and therefore should be cancelled.

Summary

Accordingly, it would appear that these reforms are intended to speed up the process in China, whilst making it transparent and fair to all users of the system. This has previously been a complainant for many foreign users, who found the system to be slow and somewhat complicated and frustrating in terms of oppositions and infringements. It will be interesting to see what changes the reforms have in practice in the coming months and years.

Charlotte Blakey 14 April 2014