What Next After Registering Trademark in China?

China’s trademark regime follows a first-to-file system and so does not recognize international trademarks if they are not registered in the mainland. Once a trademark right is granted in China, the trademark owner enjoys the exclusive right to use the sign in relation to the goods or services covered by the trademark, and may prohibit others from using it without prior consent. Like many other countries, China uses NICE classification.

However, a key difference in Chinese trademark practice is subclasses. Chinese Classification Table for Similar Goods and Services (Classification Table) is the main criteria that examiners in China adopt in determining whether goods/services are similar. The Classification Table is mainly based on NICE Classification, but also includes nearly 2,000 items of goods and services that are commonly used in China but not included in the NICE Classification.

Foreign applicants without residency or place of business in China are required to submit trademark applications through a local Chinese trademark agent who will deal directly with the CTMO. The China Trademark Office, or CTMO has issued requirements that must be met in order to approve your trademark application in China. Before you begin the process to register your mark, be sure that you have met the following requirements to obtain a trademark registration in China:

  • The mark must be available to use.
  • The mark must be easily differentiated from other registered trademarks.
  • The mark cannot be descriptive of the goods or services provided.
  • The mark should have a positive connotation.

Cancellation on the basis of non-use

The authority of mainland China stipulated that a registered trademark, including a trademark for goods, a service mark, a collective mark and a certification mark, refers to a trademark that has been approved and registered by the Trademark Office. Chinese trademark law states that if in the three years following the mark’s registration the mark has not been used for a continuous period of at least three years without due cause, it might be subject to cancellation proceedings.

It can take years of painstaking effort for a trademark owner to develop a strong brand. A trademark owner, however, must be vigilant in protecting the brand or the goodwill associated with the brand can be lost.

Two important requirements after your trademark is registered in China

First: Keep a close eye on the possible infringement of your trademark. Closely monitor third party applications for similar trademarks.

Second: Separately register the trademark with China customs. Unless your trademark is registered in China customs, they will not seize allegedly counterfeit products under your trademark.

Nevertheless, Chinese trademark law provides foreign companies in particular with two essential legal remedies to take action against an unlawful trademark application in China. Registered trademarks shall be so distinctive as to be distinguishable and shall not conflict with any prior right acquired by another person. trademarks mean signs which are controlled by organisations capable of supervising certain goods or services and used by entities or individual persons outside the organization for their goods or services to certify the origin, material, mode of manufacture, quality or other characteristics of the goods or services.

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Why Registering Trademark in China Will Become More Significant in the Future

Since the adoption of its policy of reform and opening up, the Chinese Government has been paying increasing attention to the importance and role that IP plays in socioeconomic development and consistently working to improve the country’s IP system. The Trademark Office of the administrative authority for industry and commerce under the State Council shall be responsible for the registration and administration of trademarks throughout the country. The Trademark Review and Adjudication Board, established under the administrative authority for industry and commerce under the State Council, shall be responsible for handling matters of trademark disputes.

In the year 2019, the Supreme People’s Court’s newest regulations on interim and preliminary injunctions came into effect. The Regulations clarify the existing procedure and standards for IP trials, and provide typical cases illustrating them. China’s latest Trademark Law Amendment was passed by the Standing Committee of the thirteenth National People’s Congress on April 23, 2019 and the revised articles (Articles 4, 19, 33, 44, 63, and 68) became effective on November 1, 2019. The latest amendment addresses two longstanding concerns of the business community in the country – tackling bad faith trademark applications and intensifying the punishment for trademark infringement.

 

Besides registration, the prior use of a trademark can also be protected in China. For example, a bona fide prior use of an unregistered mark can defend against the tort claim of infringement. An unregistered well-known trademark can be protected against copy or imitation by a third party on similar goods/services, through oppositions or invalidations, as stipulated by the China Trademark Law. China has had specialist IP tribunals in the Chinese courts to deal with patent (and other IP-related) cases. Article 19 of the 2013 Trademark Law provides inter alia that a trademark agency should not accept representation of a trademark applicant client if it knows or should know that the application for registration of a trademark by its client violates a third party’s prior rights (in violation of Articles 15 and/or 32 of the Trademark Law). The 2019 amendment expands the scope of Article 19 to include violations of revised Article 4, thereby requiring that an agent refuse representation of a client if it knows or should know that the subject trademark is being filed in bad faith and without an intent to be used.

The amount of damages granted is determined either by ‘the actual losses suffered’ or ‘the gains derived by the infringer’. Article 63 has been amended to increase the maximum amount of statutory damages available from RMB 3 million to RMB 5 million. In addition, punitive damages allow, ‘in serious cases’, for the compensation amount to be up to five times this amount (previously the maximum was three times). Having said this, the punitive multiplier is rarely used on the basis that it is hard to calculate the amount of actual losses or gains derived in the first place. Therefore, the increase in statutory damages is expected to have more of an impact.

Trademark has a value not only to the owner due to its distinctiveness but also to customers who associate this trademark to a specific product or service. Moreover, if a foreign company wants to enter into a licensing agreement with a Chinese distributor, the foreign firm has to register trademark in China first. Most of the renowned Chinese distributors will only form business relationship with the overseas enterprises whose trademark is registered in China.

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