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Since the PRC Trademark Law first came into effect in 1982, two amendments have been made in 1993 and 2001 in order to adapt to economic development. It is nearly ten years since the second amendment in 2001 and some of the provisions in the 2001 Trademark Law are obviously lagging behind the times. This article will point out some of the problems in the application of the Trademark Law and briefly introduce the amended provisions in the draft amendment pending approval.
I. Problems in the Application of the 2001 Trademark Law
1. The procedure for trademark applications takes so long that a considerable number of applications remain pending at the Trademark Office.
Due to the long procedure for trademark applications, the number of trademark applications in China remained at a considerable figure from 2007 to 2009 while the number of granted trademarks stayed at a relatively lower level. Up until the end of 2007, the number of pending trademark applications reached about 2,000,000. Although the Trademark Office sped up the examination and ratification of trademark applications in 2009, about 2,940,000 applications were still pending by the end of the year. The same problem also influenced the number of pending trademark objection and trademark adjudication cases and the period for handling such cases. The number of applications for trademark review and adjudication in 2009 was 57,871, but decisions were made on just 37,002 of them – nearly 20,000 were still pending. A trademark objection case will last about 4 to 5 years from acceptance to closure.
2. The procedure for declaration of ownership of a trademark right is so complicated that it often causes recurrence of litigation in court.
A declaration of the ownership of a trademark right is subject to two administrative trials by the Trademark Office and the Trademark Review and Adjudication Board, or to two judicial trials by two levels of people’s courts having jurisdiction thereof. The fact that the judicial examination of a trademark right may be subject to administrative litigation has led to the recurrence of litigation in court.
The Supreme People’s Court recently published the administrative case concerning the withdrawal of the trademark “采乐”. Johnson company first submitted the application to the State Administration for Industry and Commerce in 1998, pleading to withdraw the trademark “采乐CAILE” enjoyed by Foshan Shengfang (United) Co., Ltd.; later on Johnson company did not agree with the 2nd instance judgment granted by the Beijing High People’s Court and submitted an application for retrial to the Supreme People’s Court, which finally granted a judgment to withdraw the disputed trademark. This 9-year conflict actually exemplifies the phenomenon of repeated trials of a single trademark by the four authorities in China.
3. Counterfeit and infringement has become a general phenomenon; punishment on infringers is not severe enough.
Among the 51,044 cases concerning infringement of trademark rights in 2009, 43,596 of them concerned the counterfeit of trademark rights, with a total value of RMB 1,012,050,000 and a seized/confiscated value of RMB 405,550,000 (only amounting to around 40% of the former). In the meantime, only 92 cases were delivered to the judicial authority, in which 109 persons were pursued for legal liabilities. These figures reflect that the present penalty system on counterfeit cases is not severe enough to effectively restrain counterfeit and illegal distribution activities.
4. The recognition of well-known trademarks has been abused.
Due to some problems existing in judicial recognition, an overflow of well-known trademarks has entered the market in recent years. In December 2008, the High People’s Court of Zhejiang Province divided the cases concerning recognition of well-known trademarks into the six types of cases where false litigation may easily occur. Since 2008, the Administration for Industry and Commerce of Zhejiang Province has canceled its authority of recognizing well-known trademarks. On January 6, 2009, the Supreme People’s Court required that civil cases concerning recognition of well-known trademarks shall be heard by Intermediate People’s Courts of the cities where the people’s government of the provinces and autonomous regions are located, of the cities with independent planning status and of the cities directly under the jurisdiction of the Central Government. If any other Intermediate People’s Courts need to have jurisdiction over such civil cases, they shall report to the Supreme People’s Court for approval, without which they shall be unable to accept any such case.
II. The Pending Draft of the Third Amendment of the Trademark Law
Since 2003, the State Administration for Industry and Commerce has been formulating the draft amendment of the Trademark Law, with the following purposes: to simplify and improve the procedure for declaration of ownership of a trademark right; to strengthen the protection for and the administration over the exclusive right to use a registered trademark; to enhance the protection for geographical marks; and to improve the supervision and administration over trademark agency conduct. The major amendments in the draft are listed as follows:
1. The period of a trademark application is shortened.
(1) The examination by the Trademark Office of the relative reasons of a new trademark application is eliminated.
(2) The scope of objectors and the reasons for objection are restricted; the time limit for trademark objections is extended.
(3) Publication for an application will be made only once.
(4) A time limit for the examination is specified.
2. The procedure for declaration of ownership of a trademark is simplified.
(1) There will be fewer trial levels.
(2) The litigation identity and status of the Trademark Office and the Trademark Review and Adjudication Board are clarified.
3. The protection for trademark rights is strengthened.
Administrative enforcement is improved.
(1) New types of trademark infringement are specified.
(2) The jurisdiction of the administrative enforcement authority and the basic requirements for accepting a complaint are specified.
(3) A minimum administrative penalty is set forth and the maximum penalty and civil compensation are increased.
(4) The provision that the parties of a trademark dispute may settle the dispute through consultation is deleted.
(5) More details concerning the enforcement are specified, such as the method for calculating illegal turnover and the way of handling seized or confiscated infringing products.
Cybersquatting of another’s trademark is prohibited.
(1) The obligation to use a trademark is emphasized.
(2) The rights of the prior user of a trademark are specified.
(3) Cybersquatting of a trademark that is being used by another person will be prohibited.
(4) Registration of another’s well-known trademark under a dissimilar class will also be prohibited.
(5) The scope of objectors and the reasons for trademark objection are restricted; bad faith trademark objection will be prohibited.
(6) Assignment of a trademark is regulated in that the assignment of another person’s trademark without said party’s consent will be prohibited.
Administration of trademark rights is improved.
(1) The procedure for assignment of a trademark right is improved.
(2) The forms of trademark licenses are specified.
(3) The required recordation of trademark license contracts is modified into voluntary recordation; the legal effectiveness of the recordation is also specified.
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