In March 2018, the Trademark Office announced its intention to revise the Trademark Law and invited the public to make comments and suggestions. The period for such contribution lasted until the end of June.

Wanhuida sent to the Trademark Office its views about the trademark law situation. This analysis was divided into three parts, which can be summarized as follows : (1) the number of trademark applications is abnormally high : too many trademarks are filed, mostly for the wrong reasons, (2) over the years, the Supreme People's Court has issued Interpretations and judgements that have directly impacted the practice of trademark law, some of them are positive and should be introduced in the future revision, others have had a negative impact, and should be rectified, (3), finally, a few  practical issues could be clarified.

A year later, for reasons perhaps related to the commercial negotiation between the United States and China, the Trademark law was rapidly revised, without public consultation.  This revision, which is relatively limited, has mainly two objectives: address the problem caused by trademark applications made in bad faith and without intention to use (refusing their registration and sanctioning abuses), and increase the powers of the courts in the judicial enforcement (statutory damages, punitive damages and destruction of counterfeit goods).

A lot remains to be done, however, which will be object of the fifth revision of the Trademark law.

Proliferation of unused trademarks

The revocation of unused trademarks should be facilitated. This would progressively contribute to make the filing of trademarks, for the sake of their accumulation, less attractive. For example, if the CNIPA would allow the evidence of use submitted by a trademark registrant to be cross-examined by the party who filed the non-use revocation application, such a simple procedural change could have a significant impact on the duration of the whole procedure. Furthermore, where a trademark application is refused  ex officio by the CNIPA and the applicant files an application for review, the CNIPA could invite the owner(s) of the prior cited trademark(s) – if they have been registered for more than three years – and request it/them to submit evidence of use. If the cited mark(s) is/are not used, then, the refused trademark should be accepted. Last but not the least, the time limit to submit the use evidence, which could of course be extended upon request, should be strictly respected. If a trademark registrant does not submit any evidence of use in due time, the revocation should be absolutely final, without possibility of review or appeal.

Positive trend in the Supreme People's Court Interpretations and case law

Some of these Interpretation or judgements had a very beneficial impact on the protection of trademarks.

For example, according to article 13.2 of the law, a well-known unregistered trademark can obtain the refusal, or invalidation, or cessation of use of an identical or similar sign, but nothing is said about obtaining damages. This has been rectified by case law: there is no more obstacle for a well-known trademark acting on the basis of article 13, to obtain damages in case of infringement.

Likewise, courts decisions accept, more and more, the possibility to obtain protection, based on the well-known status, even if the conflicting trademark is used on same or similar goods, which means that a likelihood of confusion is not necessary: a risk of "association" is sufficient. These positive changes could be clearly inserted in the future revised law.

Some negative impacts raised by the SPC Interpretations

But the future revision of the law will also be an opportunity to revise some concepts that had been established at the very beginning of the trademark legislation in 1982 and had never been put to question.

Two judicial interpretations of the SPC in 2008 and 2009 provide that where the trademark registrant needs to sue a later registered trademark, it needs, first, to invalidate the defendant's registered trademark, unless it can prove (1) that the distinctive feature of the defendant's trademark has been modified or such trademark is used on different goods, or (2) that its own trademark was already well-known on the date of filing of the defendant's trademark. As a result, while the case is submitted before the CNIPA for invalidation, the alleged infringer may continue to use the conflicting trademark.

The background of these SPC interpretations can be found in the wording of the trademark law (articles 3 and 56), namely in the words "exclusive right to use a trademark". This is where the fundamental error is. It suffices to compare this wording with the equivalent in the TRIPS agreement (article 16.1) : "The owner of a registered trademark shall have the right to prevent all third parties…". "Right to use" implies that the registration confers a positive right whereas "right to prevent" constitutes a negative right. As a matter of fact, there is no such thing as a right to use a trademark and a business operator does need to obtain an authorization to use a distinctive sign. The registration only grants the right to prevent others from using the same or a similar sign.

This error, which dates back to the first version of the law, is the reason why the SPC issued the abovementioned restrictions. These restrictions are in contradiction with the last sentence of article 16.1 of TRIPS : "The rights above shall not prejudice any existing prior right…". They are even in contradiction with the rest of the interpretation of 2008 : the SPC provides that prior copyright, design or enterprise names are not subject to the restriction imposed on prior trademarks, which makes such restriction all the more unjustified. Why should a copyright, a design and an enterprise name be better protected than a prior registered trademark ?

It seems, therefore, that the 2008 and 2009 SPC restrictions were made as a sort of compromise with the Trademark Office (CTMO). Indeed, the CTMO's argument was that, since trademark applications are subject to an ex officio examination of their availability, if the mark is approved, this implies the absence of prior trademarks, hence the granting of a "right to use".

This apparently logical argument overlooks an important procedural detail.  Firstly, the trademark approved by the CTMO is subject to oppositions by third parties, which means that the approval is not equivalent to an authorisation. Furthermore, even if the opposed trademark becomes automatically registered after the opposition fails (as provided in the 2013 revision of the law), the opponent may still file an application for invalidation.  Actually, before the 2013 revision, a negative CTMO decision on the opposition was subject to review before the TRAB (and the courts eventually). So, the "target" trademark was still not registered, and it was possible for the prior trademark owner to take legal action aiming to prevent its use. However, since the revision of 2013, when the opposition fails, the opposed trademark becomes registered, and the prior right owner seeking to sue this later registered trademark is faced with the obstacles raised by the SPC in its Interpretations of 2008 and 2009.

So, it is necessary to prescribe in the trademark law that, in any case, the “exclusive right to use ” (if such wording is maintained) is conferred by the registration without prejudice to any prior right,  including a registered trademark. Alternatively the law should modify its wording and replace the terms "right to use" by "right to prevent others…".

Article 7 as an independent ground for action

A further revision of the Trademark law concerns whether article 7 of the law - which provides for the principle of good faith in filing and using trademarks - may constitute an independent ground of action.

Today, article 7 is only considered as a "general principle" and may not serve as an independent legal ground for legal action.

This "self-imposed" restriction has no justification. In fact, nothing in the law prevents CNIPA or the courts to accept a case based on article 7. Actually, article 30 of the law provides, not only, for the refusal of trademarks that are identical or similar to prior registered or applied trademarks, but also, in very general terms, for the refusal of trademarks that do “not conform to the provisions of this law…". Therefore, a trademark filed or used in bad faith should be considered as not conform to the provisions of the law. It should be possible to oppose a trademark application or apply for the invalidation of a registered trademark on the sole basis that it has been filed, or is being used, in bad faith.

In particular, this logic should be implemented in article 45 which concerns the invalidation of registered trademarks. Firstly, if bad faith existed at the time of filing, the elimination of the five-year limit for filing an application for invalidation should apply in favour of all parties concerned and not only in favour of the owner of a well-known trademark.  Secondly, if at any time (no time limit after registration), the registered trademark becomes used in an altered form which infringes a prior registered trademark, this should be considered as a specific violation of article 7, and therefore, as a ground of invalidation.

Indeed, making alterations to a registered trademark in actual use, with the intention and effect of infringing a prior registered trademark, while claiming the existence of a "right to use", is the most malicious and sophisticated form of bad faith.

No legal right should be allowed to survive bad faith. As the Old Romans used to say : "fraus omnia corrumpit", fraud corrupts everything.

Contributors: Mr. Bai Gang & Mr. Paul Ranjard