Global IP Matrix - Issue 5

Second, the trademark agency shall be
standardised, adding that “trademark agency
shall not accept the entrustment if the
trademark agency knows or should know that
the entrusting party has engaged in malicious
application” in paragraph 3 of article 19.
At present, the majority of trademark
agencies in the market are very professional.
However, there are some bad agencies which
assist in and are even directly engaged
in malicious application and hoarding
trademark applications. Some agencies set
up affiliated companies in the field unrelated
to the business which file a large number of
trademark applications for sale. Some use their
professional knowledge to maliciously file
applications for the trademark of customers
and also ask for high transfer fees. These have
had an adverse impact on society. Under
the new amendment, the trademark agency
shall not accept entrustment for bad faith
applications; otherwise, the trademark agency
will be punished.
Third, enhance the punishment against bad
faith applications and bad faith litigations.
Pursuant to paragraph 4 of article 68, those
who apply for trademark applications in bad
faith shall be given administrative penalties
such as a warning or a fine according to the
circumstances. Where a trademark lawsuit is
brought in bad faith, the People’s Court shall
punish it according to the law.
As introduced, these kinds of bad faith
applications will be directly rejected in the
first pass of examination, but rejection is
still far from enough because of the abuse of
trademark rights. Bad faith litigation is not
only detrimental to the alleged enterprises but
also is a waste of judicial resources; moreover, it
does not comply with the legislative purpose for
trademark protection. Therefore, it is necessary
to increase the provisions of punishment,
which could give bad faith applications and
bad faith litigations a real blow.
Fourth, as a supporting measure for the
revision of the trademark law, the CNIPA
is studying and drafting a departmental
regulation; “Regulation for Standardising the
Trademark Application Behaviour,” which will
operate a level of refinement. The content of
the law to modify the specific behaviour of bad
faith applications and hoarding trademarks
and possible punishment measures. For
instance, very obvious large numbers of
trademark applications beyond a reasonable
limit and repeated applications based on
improper purpose will be listed.
In addition to the possible rejection in
examination, opposition, and invalidation,
CNIPA also will use the credit record, industry
self-discipline measures. Furthermore, if the
circumstances are serious, the CNIPA could
stop accepting applications represented by
the trademark agency which violate the above
provisions. At the same time, it stipulates
that any organisation or individual that finds
any abnormal trademark applications may
provide clues to help the CNIPA to identify
and punish the violator. The regulation is
now closed for public comment and will be
improved according to feedback, to implement
the revised content of the new Trademark Law.
Major change 2: strengthen
the enforcement and raise
possible damages for brand
owners
In recent years, China has been advocated
to strengthen the protection of intellectual
property rights and improve the system of
punitive damages of intellectual property
infringement. In judicial practice, such as
the Beijing Intellectual Property Court, it has
been gradually enhancing the damages for
infringement of intellectual property rights.
We have been able to see a few million and
more than ten million worths of damages for
patent cases. On the trademark side, it is rare
to see more than a few million and
even ten million worth of damage, which
mostly ranges from more than tens of
thousands to less than one million, which is far
less than the profit of the infringing party.
The low amount of damage for infringement
has dramatically dampened the enthusiasm of
intellectual property right owners. Therefore,
a higher level for punitive damages needs
to be introduced to substantially raise the
cost of breaking the law and make infringers
pay a heavy price. To further aggravate the
infringement cost, infringers in bad faith
should be punished, trademark rights should
be strictly protected, and brand owners should
be awarded adequate compensation. More
specifically, for the statutory damage, it should
be raised from 3 million to 5 million RMB. For
willful infringement, it could be punitive and
be raised once but not more than three times
to the one time and not more than five times
in total.
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The new Trademark Law also provides that, in
the trial of a trademark infringement litigation,
the People’s Court may, at the request of the
rights holder, order the destruction of the
commodities that bear a registered trademark
which is owned by brand owners and the
materials and tools that are mainly used to
manufacture the counterfeits. Counterfeit
goods may not enter into commercial channels
after only removing trademarks. The above
measures to take destruction and prohibition
of access to commercial channels greatly
increases the illegal cost of the counterfeiters
and forms an effective deterrent to them. At
the same time, the added provision makes
the protection of trademark rights more
comprehensive.
Epilogue
In recent years, Chinese President, Mr. Xi
Jinping, officials and heads from all different
levels of courts, the National Intellectual
Property Administration and other
departments have been implementing and
emphasising the system of punitive damages
for intellectual property to effectively curb
IPRs infringement.
The overall trend of this amendment is mainly
to strengthen the protection of intellectual
property rights, hit bad faith trademark
application behaviour without the real purpose
of use, improve remedy systems against the
bad faith applications and bad faith litigation,
and increase the damages for the trademark
infringement, especially willful trademark
infringement in bad faith. Therefore, illegal
cost will be significantly increased.
It can be predicted that the cost of
IPRs infringement will be higher in
the future. For those who violate IPRs
in bad faith, they may be punished
until they lose all their money and
have “nowhere to continue.” This
is also good news for honest and
trustworthy operators in China.
Therefore, in conclusion, it will
undoubtedly be more and more
meaningful for operators to actively
design and build their own intellectual
property rights protection systems;
so, they are timely and effectively
detect infringements. They should
also take vigorous rights protection
actions where need be.
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