Second version of draft amendment to Trademark Law published for comments

On September 2 2011 the Legislative Affairs Office of the State Council of China published a second version of its draft amendment to the Trademark Law for public comments. The deadline for submitting comments is October 8.
The Legislative Affairs Office carried out the same exercise for the first version of its draft amendment in early 2010, and the second version was eagerly awaited. 
In this latest version, the majority of the clauses contained in the current law were left untouched, which reflects the authorities' intention to avoid any dramatic changes to the current system. Nevertheless, a few notable changes seem to respond directly to requests from the international community.
First, bad-faith filings (also referred to as 'trademark squatting') have long been a problem for international brand owners, as it is very difficult to get rid of marks that copy or imitate existing brands. According to the experience of practitioners, the key problem is that the Trademark Office and the Trademark Re-examination Board have taken a conservative approach with regard to bad-faith filings. One of the most relevant provisions in the current law simply states that an applicant should not use “improper means” to register a mark which has a reputation and has been used by others.  
However, the proposed draft has taken steps forward by expanding the current rules. According to the draft, if a party tries to register a trademark similar to an earlier mark for similar goods, and the applicant is aware of the existence of the earlier mark due to prior dealings with the brand owner, a geographical closeness or any other relationship, the Trademark Office must refuse to register the mark. This change should help brand owners whose trademarks are not so well known in China. Moreover, if a party has copied a distinctive mark with a reputation, thus causing confusion, the Trademark office must also reject the application. This change should help owners of well-known foreign brands. 
Arguably, the new rules do not address all the problems resulting from trademark squatting; however, the changes show that the Legislative Affairs Office realised that bad-faith filings are detrimental to brand owners and that it had to include some solutions in the amendment.  
Another important change relates to opposition proceedings. Currently, opponents have a three-month window to oppose an application once it has been preliminarily approved. Opposition proceedings can easily delay registration for a few years. It seems that the Legislative Affairs Office wishes to prevent the abusive use of opposition proceedings and, under the draft amendment, only parties that have prior rights or interested parties will be allowed to file an opposition. Although this change may be justified, it could create unwanted problems for brand owners fighting trademark squatters. 
As expected, with regard to the enforcement of IP rights, the draft suggests increasing statutory damages to Rmb1 million, as well as increasing administrative penalties against repeat offenders. The amendment also incorporates the principle of general criminal liability for counterfeiters, but does not specify which criteria will be used.
Finally, under the draft, it will be possible to register sounds as trademarks. The Chinese media has taken note of, and welcomed, this amendment, as it brings the Chinese legislation closer to international practice.
It is thought that the Legislative Affairs Office hopes to finalise this new version of the draft amendment in the near future. It should be submitted to the National People’s Congress for review and ratification in the next six to 12 months. 
He Jing, ZY Partners, Beijing

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