At the turn of the year 2023/24, Chinese trademark law is to undergo significant changes. A potentially very facilitating change in the administrative procedure and interpretations in the intention to use are already being implemented.
I. Administrative Procedure
1. Apostille Convention
On 8 March this year, China acceded to the Apostille Convention, with the effect from 7 November 2023. By acceding to the Convention, the authentication procedure for public documents, which include judicial, official and notarial documents, will be simplified. The previous very time-consuming and costly legalisation will be replaced by the apostille. It is possible that in future foreign companies will no longer have to go through the legalisation process when preparing documents for submission to Chinese courts. The subjunctive of the previous sentence is intentional, as it is not yet clear whether the facilitations will then actually take full effect. Further developments will tell. However, the accession alone is already an indeed positive development.
2. Intention to use in “mass” applications
Previous experience shows that the CNIPA is quicker to assume bad faith when it comes to “mass applications” for trade marks. The initiative is essentially directed against the practice of trademark squatters filing a large number of mostly unrelated trademarks. However, this new practice can quickly become a problem for applicants acting in good faith who, for example, want to secure the launch of a new product by filing several trade mark applications.
If the CNIPA nevertheless refuses registration in the case of applications filed in good faith because of doubts about the intention to use the mark, the applicant can try to change the office’s opinion, e.g. by providing explanations and evidence. It will be very interesting to see in which direction the practice of the Office will consolidate, as there is certainly a high potential for problems for applicants acting in good faith.
II. Changes in Trade Mark Law
1. Transfer of bad-faith-trademarks
According to the proposed law, it will be possible not only to cancel trademarks applied for in bad faith as before, but as an alternative to transfer them to the legitimate trademark owner. The application is subject to a number of conditions, which, however, should be easy to fulfil in the vast majority of cases. This amendment creates a mighty new tool for taking action against trademark squatters.
2. Proof of use
Similar to US law, the proposed amendment provides for the introduction of stricter rules on use. Thus, the applicant shall be required to prove the use of his trademarks at the time of filing. Furthermore, the trademark owner shall be required to submit declarations of use or legitimate reasons for non-use within 12 months after the expiration of 5 years from the date of trademark registration.
3. Prohibition of re-applications
Re-applications of an identical trademark by the same applicant are to be prohibited. It will have to be observed how exactly this prohibition will be enforced, as for the time being, re-application is still an effective tool in case of trademark problems and this tool might get lost.
4. Reduction of the opposition period
The opposition period is to be reduced from 3 to 2 months.
5. Consent letters
Until recently, consent letters were an effective means of overcoming an objection by the CNIPA based on earlier rights, e.g. in the registration procedure. Unfortunately, the practice has changed considerably and consent letters are now only an effective means in very few exceptions. Since around August 2021, the CNIPA has been rejecting consent letters in increasing numbers.
6. Action against trademark squatters based on unfair competition
In 2022, squatting of a trademark was recognised for the first time as unfair competition giving rise to civil claims for the plaintiff (“In-Sink-Erator Case”). The defendant was ordered to pay damages of approximately USD 230,000. This is very welcome and opens up an interesting new defence possibility.
III. Conclusion
The amendments are of a far-reaching and welcome nature. However, they also render previous trademark strategies ineffective in some areas. It will be very interesting to observe in which direction the practice will settle and whether the amendments and their implementation and execution will lead to gaps in daily practice.
