(July 30, 2019) On April 23, 2019, the Standing Committee of the National People’s Congress (NPC) of the People’s Republic of China (PRC or China) adopted an amendment to the PRC Trademark Law specifically prohibiting bad-faith trademark filings. The amended articles will take effect on November 1, 2019. (NPC Standing Committee Decision of Amending Eight Laws Including the PRC Construction Law (Apr. 23, 2019) (NPC Decision), Ministry of Justice of the People’s Republic of China, Chinese Government Legal Information Network (CGLIN) (in Chinese); Benny Yip & Catherine Zheng, Good News About Bad Faith: China Amends Its Trademark Law, LEXOLOGY (June 21, 2019).)
The significant change made by the amendment to the PRC Trademark Law states that “[a]pplications made in bad faith for trademark registrations that are not intended for use shall be rejected.” (PRC Trademark Law (adopted by the NPC Standing Committee on August 23, 1982, last amended Apr. 23, 2019) art. 4, para. 1, CGLIN (in Chinese) (translation by author); Amendments to China’s Trademark Law Will Be Implemented on November 1, 2019, CCPIT Patent and Trademark Law Office (Apr. 29, 2019) (containing English translation of amendments to Trademark Law).)
The new Law further prohibits trademark agencies from representing clients if the agencies know or should know the trademarks to be filed for registration by such clients fall under the circumstances prescribed in article 4. (Id. art. 19, para. 3.)
Filing trademark applications in bad faith is subject to administrative penalties such as a warning or a fine, according to the amended article 68. (Id. art. 68.)
The amendment also increases penalties for trademark infringement. Where the infringement is committed in bad faith and the circumstance is serious, the maximum punitive damages are increased from one to three times of the relevant base amount to one to five times. (Id. art. 63; NPC Decision § 6(5).) Where it is difficult to determine the base amount, the maximum punitive damages are increased from 3 million yuan renminbi (RMB) (about US$436,000) to RMB5 million yuan (about US$727,000). (Id.)
According to some legal commentators, although the current Trademark Law includes methods to fight bad-faith trademarks, “the need to challenge such marks through lengthy and expensive opposition and invalidation proceedings has made brand protection difficult in China, particularly for foreign entities.” (Yip & Zheng, supra.) By making it clear that trademark applications filed in bad faith should be rejected, the amendment empowers the trademark registration authority to reject bad-faith applications at the examination stage. These commentators also applaud the increase in penalties for trademark infringement, because the overly small damages awarded in Chinese intellectual property (IP) cases have been a major complaint against China’s IP system and are believed to have discouraged brand owners from enforcing their rights in the Chinese courts. (Id.)