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China – The Amendment On Trade Marks Law Entering Into 2nd Draft Stage.
25 July, 2013

 

Following the closing of public comment solicitation on the 1st draft amendment, the 2nd draft amendment on the China TMs Law has taken shape by the NPC Law Committee and submitted to the 3rd Session of the Standing Committee of the 12th NPC for further review and approval on 26 June 2013.

 

Although currently the 2nd Draft is not yet made available to the public, the press has released several major changes that occurred, including the deletion of regulations on single colour mark, stipulating the recognition authorities and management of WKTM (Well Known TM), setting time limits on examinations of various TM cases and others.

 

1.      Specifying authorities empowered to recognize WKTM

 

The Draft lists the following authorities and conditions for the recognition of WKTM:

 

a.                   The CTMO (China Trade Marks Office) may recognize the well-known status of a TM subject to the right owner’s claim during TM registration examination, and TM infringement investigation handled by AIC (Administration of Industry and Commerce);

b.                  The TRAB (China Trademark Review and Adjudication Board) may recognize the well-known status of a TM subject to the right owner’s claim during TM dispute examination;

c.                   The courts designated by the Supreme Court may also recognize this status subject to the right owner’s claim during civil and administrative lawsuits examination.

 

2.      Prohibiting WKTM from being used as advertising

                                           

The Draft also plans to prohibit manufactures and operators from using the wording of “WKTM” on the products, packages or containers, or in association with advertising, exhibitions or other commercial activities.

 

The current laws and regulations on WKTM were enacted with the aim to render broader protection over true TM owners whose TM are widely known and recognized among the public. It is mainly expected to be adopted as a strategy against improper registrations by “copycats” or TM “squatters”. However, due to lack of detailed-governing regulation, in past years the WKTM protection has been frequently seen to be adopted in a twisted way in China. Many TM owners treated the WKTM as an honor or an advertising tool to attract customers. Some even used fake materials to gain the “well-known” status. In some cases, the local authorities (mainly AIC and courts) abused their power and used the WKTM system as a cover for regional protectionism.

 

The final wordings of the new regulations on WKTM and the effect of enforcement remain to be seen. But the NPC committee has made it clear that the principle of “recognition case by case” and “protection subject to right owner’s claim” should be further embodied in the new law on the protection of WKTM.

 

3.      Setting time limits on examinations of TM cases

 

The Draft sets up explicit time limits for CTMO and TRAB on TM application examination, review and adjudication examinations as follows:

 

CTMO:

a.                   Preliminary examination of TM applications: 9 months

b.                  Decision on opposition against TM application: 9 months

 

TRAB:

a.                   Review on CTMO’s refusal against TM application: 6 months

b.                  Review on CTMO’s refusal against a TM application in an opposition: 9 months

 

Under certain special circumstances, these time limits may be extended upon approval by SAIC (State Administration for Industry & Commerce).

 

The Draft also stipulates time limits on dispute and cancellation examinations.

 

The new articles on time limits are seen as an effort to accelerate the examination process and benefit TM applicants.

 

4.      Raising maximum statutory compensation amount in TM infringement

 

The statutory compensation amount in TM infringement is another major change, from “no more than 1 million RMB” to “no more than 2 million RMB”, and also sets a minimum compensation of “no more than 20 thousand RMB”. This clearly shows the determination of authorities to better protect lawful TMRs and deter TM infringements.

 

5.      Single Colour – registrable subject matter in China?

 

At the end of year 2012, the draft amendments published gave hope to the registration of single colours as TM because it was proposed that the Article 8 of the China TMs Law be amended to:

 

An application for TM registration may be filed for any visible mark including word, design, letter, number, 3D (three-dimension) mark or color combination, or the combination of the elements above mentioned, that can distinguish the commodities of the natural person, legal person or other organization from those of others.

 

An application for TM registration may be filed for a single colour if the single colour has been used on the goods and the packaging of the goods, and has acquired distinctiveness through use, enabling the goods to be distinguished from other goods.

 

This was seen as a green light to registration of single colour marks so long as acquired distinctiveness can be proved. Recently, the prospect of registering single colour marks in China was dimmed by the comments made by ZHANG Hui, the Director General of SAIC’s Legal Affairs Department, in a seminar held in Beijing on 16 June 2013.

 

According to Director ZHANG, it was decided (in the most recent TMs law amendment workgroup meeting) that a single colour would not be treated as a TM which was possible for registration.  The main concerns were the legal effect and the social benefit of registering single colour marks, and both need to be further clarified before proceeding further.

 

In the wake of these comments, on Wednesday 26th June 2013, a new draft was submitted to the Standing Committee of the 12th National People’s Congress for the second reading. This new draft revealed that single colour marks have been removed from the list of registrable subject matters.

 

Therefore, it appears that for the time being, turning single colour TM applications into registrations again become a distant hope.

 

It should be highlighted that the 2nd Draft is still under review and approval, and uncertainty remains as any proposed amendment may still be subject to change.

 

 

For further information, please contact:
 
Grace Li, Ella Cheong (Hong Kong & Beijing)
gli@ellacheong.com

 

 

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