China say NO to malicious registered trademarks

On April 23, 2019, the Tenth Meeting of the Standing Committee of the 13th National People’s Congress deliberated and adopted the “Decision on Amending the Trademark Law of the People’s Republic of China”, fully responding to the various sectors of society in recent years about the application of trademark law with difficult opinions and suggestions.

The fourth revision of the Trademark Law is an important measure to promote the high-quality development of intellectual property rights in response to China domestic market demand. There are still some voices that do not understand or even question the revision of the trademark law in the current society.

We believe that it is necessary to provide a clear and concise interpretation from the perspective of jurisprudence. The content of the trademark law modification will help to clean up the business environment, regulate the registration application of trademarks, and improve the protection level of prior users and relevant stakeholders.

Registered trademarks must be used for the purposes

Applicants who registered hundreds, thousands or even tens of thousands of trademarks without the purpose of use are indeed exist now. These acts have severely reduced the function of the registered trademark system in China’s trademark law and alienated China’s trademark registration system.

The trademark law modification has imposed containment measures on the application for registration of malicious trademarks for the purpose of non-use, and has set up containment measures at the time of application, within 3 months after the preliminary examination and announcement, and has been registered Penalties for malicious litigation.

The revision of the Trademark Law provides the following valid legal basis for solving these problems that have long plagued the community.

Regarding the purpose of use and its evidence

The “purpose of use” added in Article 4 of this revised Trademark Law is the basic stone for all legal norms to curb the application for registration of malicious trademarks. Since the current law does not stipulate the “purpose of use” as a requirement for a registered trademark application, the trademark reviewer does not examine whether the applicant has the“purpose of use”, but only in case of objection, withdrawal and invalidation procedures they review whether the person or registered trademark owner has “purpose of use”.

According to the revised Trademark Law, applicants should be required to submit evidence of “actual use” or “honest use intention” at the time of registration of the trademark application. For the “defense trademark” that the industry is widely concerned with, it is recommended that the “defense” itself be regarded as “honest use intention” if it is necessary to exist.

Of course, if in the future the trademark reviewer can prevent others from registering the “defense trademark” which should have belonged to other third part, it will release many symbol resources that can be registered as trademarks.

The responsibility of the trademark agency

Article 19, paragraph 3 of the amended Trademark Law stipulates that the trademark agency knows or should have known that the trademark applied for against the principle belongs to the provisions of Articles 4, 15 and 32 of this Law, they can not accept application.

If the above provisions are violated, the administrative department shall order it to make corrections within a time limit, give a warning and impose a fine of 1,539 USD — 15,390 USD. For the responsible supervisors and other directly responsible personnel, a fine of more than 769 USD but less than 7,690 USD will be fined.

If a crime is constituted, criminal responsibility shall be investigated according to law. Investing responsibilities of trademark agencies can curb a considerable number of malicious applications for trademark registration and purify the trademark application and use environment.

Penalties for malicious Trademark applications and litigation

The purpose of maliciously registered trademarks includes at least holding large number of trademarks for sale, preventing other operators from doing proper business operations in existing markets or new markets, blackmailing specific rights holders, misleading other people’s goodwill and causing consumer confusion and misunderstanding.

Article 68 of the Trademark Law of this amendment adds the fourth paragraph “administration of warnings, fines, etc. according to the circumstances of the registration of a malicious application for a trademark; if a trademark lawsuit is filed against a malicious person, the people’s court shall impose a penalty according to law.”

According to the above provisions, the prior rights holders or interested parties can claim relief in the application, objection, withdrawal, invalidation process. The malicious application and the malicious conduct of trademark litigation penalties will be imposed.

In practice, there have been some people who have maliciously registered trademarks, and have obtained hundreds of thousands of dollars. These acts of malicious registration and malicious litigation, if unchecked, will inevitably lead to unscrupulous attempts, against the core principle of honesty and credit and the recognized business ethics.

Increase penalties for trademark infringement

In the course of the investigation, we were informed that some people who infringed the intellectual property rights of others said that they would rather be in prison for several years than the compensation of several million dollars.

To a certain extent, this can reflect that it is a very effective way to curb infringement by reasonably and reasonably “improving” the amount of damages.

According to the existing laws, the amount of damages for infringement of intellectual property rights is calculated by the plaintiff’s loss, the defendant’s benefit, the reasonable multiple of the license fee and the statutory compensation.

All four calculation methods require the plaintiff to submit the corresponding evidence. However, the reality is that the evidence that the plaintiff can submit the proof of the loss is extremely limited. Therefore, it may be difficult for the defendant to bear the compensation amount to produce the effect of “killing one and warning one hundred”.

Under this circumstance, the revised trademark law will raise the upper limit of compensation to 769,000 USD and raise the punitive damages to a maximum of 5 times. It is possible to realize the “illegal cost” by comprehensively expropriating which the Infringers have got, even making them go bankrupt.

Strengthen the destruction of infringing materials tools

It has been a question of re-entering commercial channels after the removal of counterfeit registered trademarks for counterfeit registered trademarks. Infringement of intellectual property rights has become an organizational trend, they have used various material resources and will lead to waste of resources.

Blocking the infringing goods, semi-finished products, infringement marks, manufacturing tools and other re-entering commercial channels is a major event concerning whether the legislative purposes of the intellectual property legal system can be realized, whether judicial decisions and administrative enforcement measures can ultimately be effectively operated.

It has been pointed out that allowing only the infringement mark to be removed without destroying the infringing goods may breed the infringed’s purchase or improperly retrieve some infringing goods and re-attach the infringing mark, providing the infringes with a very low cost of resuming the old business. It will ultimately damage people’s belief in the law.

Article 63 of the amended Trademark Law adds provisions, except for special circumstances and at the request of the right holder, the people’s court shall order the destruction of counterfeit registered trademarks goods, materials and tools which mainly used to manufacture counterfeit registered trademarks.

The people’s court shall order to prohibit the mentioned materials and tools from entering commercial channels without compensation. The “special circumstances” in the above provisions mainly consider the destruction of the environment, and the confiscation of raw materials and equipment for other legal purposes.

It can be expected that this new regulation will solve the problem of the system design to curb trademark infringement, and objectively construct a complete system chain to protect trademark owners. It is expected that this revised trademark law, together with other intellectual property legal systems, will become the basic guarantee and important support for implementing the innovation-driven development strategy and building an innovative country for China.