On 23 April, the amended Trademark Law ("Amended Trademark Law") was passed by the Standing Committee of the National People's Congress of the People's Republic of China. The Amended Trademark Law will take effect on 1 November 2019. Compared to the existing rules, the most important change is the restriction of bad-faith registrations of trademarks.
Under the Amended Trademark Law, trademark registrations that are registered without the intention to use the trademark will be considered as bad-faith registrations of trademarks. The Trademark Office of National Intellectual Property Administration ("Trademark Office") will not approve any of the abovementioned bad-faith registration applications. Further, the Amended Trademark Law grants prior right holders, interested parties and any third parties, the right to raise oppositions within the announcement period on the grounds of bad-faith registration against any trademarks that have passed the preliminary review. In the event that no one raises such oppositions and the trademark is successfully registered, any third party will still have the right to apply to the Trademark Office to invalidate the registered trademark on the grounds of bad-faith registration within a certain period.
In addition, the Amended Trademark Law increases the maximum penalty for deliberate trademark infringement from three times to five times the actual loss suffered by the victim (or the profit of the infringer). Where it is difficult to determine the actual loss or profit, the People's Court shall have the discretion to decide the amount of compensation. The maximum award has increased from RMB 3 million to RMB 5 million. Further, the Amended Trademark Law clarifies that no goods bearing a counterfeit trademark shall be permitted to trade in the market, even if the counterfeit trademark is removed from the goods. A victim may apply to the court to destroy the goods bearing the counterfeit trademarks as well as the materials and tools used for producing the counterfeit trademarks.
On the one hand, the amendment to the Trademark Law shows the government's determination to strengthen the protection of intellectual property in China. On the other hand, enterprises may need to reconsider their trademark strategies in China if they have registered certain defensive trademarks, which are not for use.
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