Reflections on the 4th Revision of Trademark Law
Du Ying
Professor of Law School of Central University of Finance and Economics
In April 2018, the 4th revision of the Trademark Law was initiated by official declaration of the Trademark Office of the State Administration for Industry and Commerce for public comment. The declaration points out that this revision “was to deeply carry out the spirit of 19th Congress of the Communist Party, to strengthen innovation, protection and exploitation of intellectual properties, and to materially improve the quality and efficiency of examination of intellectual property of trademarks,” by which the historic mission and main purposes are clearly delineated.
In April 2018, the 4th revision of the Trademark Law was initiated by official declaration of the Trademark Office of the State Administration for Industry and Commerce for public comment. The declaration points out that this revision “was to deeply carry out the spirit of 19th CPC National Congress, to strengthen innov a t i o n , prot e c t i on and exploitation of intellectual properties, and to materially improve the quality and efficiency of examination of intellectual property of trademarks,”1 by which the historic mission and main purposes are clearly delineated.
Backdrop of 4th revision of the Trademark Law
The history of China’s intellectual property regime is a process from “being forced to use it” to “using it for our own purposes,” that is, a process from involuntary implant to voluntary policy arrangement.2 The current Trademark Law of modern China was enacted in 1982, and implemented on March 1, 1983. In the 80’s of the 20 century, China acceded respectively to the Paris Convention for the Protection of Industrial Property, and Madrid Agreement Concerning the International Registration of Marks. For streamlining with international practices, and for the needs of the market economy development, the Trademark Law had its first overhaul in 1993, and the second in 2001, motivated for and aimed at compliance of the undertakings for the accession to the World Trade Organization. The first two revisions carried apparent attribution of “involuntariness” and “outside pressure.” But the third revision of the Trademark Law in 2013 was made “voluntarily” out of the present need in China. Following the policy footing of the third revision, the current revision will still be oriented by China’s present problems, and truly a metamorphosis of the intellectual property regime from involuntary legislation under foreign pressure to an initiative one.
What are the background and the main task of the current revision? In view of the author, the fundamental purposes of the third revision have been accomplished, expanding the subject matter of trademark, explicitly providing the time limit for reviewing trials, curbing overprotection famous mark, and unifying the infringement test, all for good practical results. Yet changes have emerged since the third revision in terms of China’s economic development, market environment, and the current status of IP protection, to which the current revision will provide response.
1.To cope with transformation of government functions and deepening of deregulation reform to facilitate trademark registration
In recent years, the Chinese government has been calling for changes in administration philosophy and methods, stressing on reduction of government interference in the market, lowering of administrative cost for market operation, and increase of market players’ vitality and innovativeness, with the most immediate result as the facilitation reform in trademark registration by reduction of the registration fee on one hand, and simplified process, quicker examination, and ease and efficiency of trademark registration on the other.
2.In response to China’s economic reform upgrade from, emphasis on speed to laying stress on quality leading to brand-building
In 2017, the number of trademark applications in China reached 5.748 million, a 55.7% increase from 2016. By year end of 2017, effective trademark registrations reached 1492, on top of the world for 17 consecutive years,3 but indigenous international brands are few and far between, a considerable distance from a strong trademark nation. For this reason, the design for trademark legal system should also push for internationalization of domestic brands. The 4th revision of the Trademark Law is to guide the building of trademark brands from the perspectives of regime and rule design.
3.Strengthening trademark protection by calling for honesty and good faith in business philosophy to build healthy market environment
The 2013 revision of the Trademark Law strengthened trademark protection from all perspectives, such as enlarging scope of trademark rights, fortifying relief for trademark infringement, etc., yet problems of free riding and trading on other’s business reputation still largely linger on, destroying the fair competition and honest market environment. This 4th revision needs to give consideration from the perspectives of mind-induction as well as systematic constraint.
Main problems targeted by the 4th revision
The problems faced by this revision are two-faceted in both substantive and procedural prongs. Substantively, it needs to resolve designing rules to crack down on bad faith registration of trademarks, while procedurally it needs to improve systems of examination for registration and opposition to increase examination efficiency.
1.Remolding of trademark use requirement in registrations scheme
China follows the trademark registration scheme, which is in line with traditions of China’s trademark legal system and international trend,4 and has the benefit of low costs.5 China’s first-to-file model with use requirement is only used as supplement, however, overlooks the substantive contents of trademark rights, leading in reality to the problem of trademark warehousing. Back in 2001, the Trademark Law clearly prohibited bad-faith trademark squatting of other’s mark under prior use having certain reputation, but bad-faith registration, trademark warehousing and profiteering have been rampant. From a positive point of view, this reflects societal recognition of the value of trademarks, and heightened awareness of trademark protection by market players. But on the negative side, “registering a mark without using it” reflects the absence of honesty of the market players, which runs counter to the fundamental designs of the trademark regime. For this reason, the 4th revision of the Trademark Law needs to readopt the trademark use requirement to put the system back on track.
The 3rd revision of the Trademark Law laid emphasis on trademark use when dealing with relief for compensatory damages in para. 1 of Article 64, only on the condition that infringement claim has been asserted, with limited effect for containing bad faith registration of marks. The widely discussed and more effective measures are the pre facto, interim and post facto measures. The pre facto measure is to require that the trademark registrant provide evidence or declaration of use or intent to use when filing application; the interim measure is to require that evidence of actual use be furnished during registration or at renewal; the post facto measure would invalidate a bad faith registration, or finding for noninfringement due to bad faith registrant’s trademark misuse.6
2.Reformoftrade mark examination scheme and opposition proceedings
Currently, trademark examination faces multi-faceted pressure, as examiners face tremendous workload with increasing applications, while work cycles are repeatedly shortened, making the examination work more difficult. The State Administration explored the big data solution for mark comparison, yet it could not replace human examination within a short time for the time disparity and technology limitation. Procedural simplification has become necessary, and it appears that the solution lies with elimination of relative grounds for examination, which is consistent with the private property right attribute of the trademark,7 which saves the time for trademark registration process. But the opposing view believes that this method will cost more for asserting trademark rights, and encourage bad faith registration. Whether examination on relative grounds will be eliminated, whether it will alleviate examiners’ workload, and whether subsequent procedural mechanisms may be set up, such as search report system, observation by third party system and the settlement system, ect., all depend on furthur investigation.
Trademark examination efficiency also relates to reform of the opposition scheme. Every revision of Trademark Law relates to opposition, as, e.g., the 2013 revision made significant changes to the scheme as to the grounds for application by the applicant who may request invalidity if not satisfied with a trademark registration, whereas the opposition proceeding upon implementation resulted in injury to opponents’ interest with drastically increased invalidation cases, and large scale of rampant bad faith oppositions.
From a global perspective , moreover, there are several modes of registration examinations: (1) absolute grounds examination + opposition before registration which is adopted by European Union, the United Kingdom and France; (2) absolute grounds examination + opposition after registration, represented by Germany; (3) all grounds examination + post facto opposition, represented by Japan and Taiwan of China; (4) all grounds examination + prior opposition, as adopted by China, which is the most complicated and time-consuming of all trademark examination procedures. It needs to be discussed upon this revision whether the currently acceptable absolute grounds examination + prior opposition or full scale examination + post facto opposition should be adopted.
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