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China's rapid economic growth and determination to improve its IP regime to meet international standards has resulted in a busy time for the authorities with a number of recent judicial interpretations on the protection of trademarks. In June, the State Administration of Industry and Commerce released the latest draft of the Third Amendment to the Trademark Law. The latest revision to the law has been driven by the Trademark Office in an effort to improve efficiency in the application and enforcement process. However, it is interesting to note that a number of the major revisions proposed in the previous 2007 draft have been dropped. The key proposed amendments are summarised as follows:
Expanding the meaning of trademarks
Under the current Trademark Law, a trademark means any visual sign, including words, devices, letters, numbers, three-dimensional signs and combinations of colours, capable of distinguishing the goods of one undertaking from those from others. The amendments provide that sound, smell and single colour marks may now be registrable as trademarks. Interestingly, "motion" marks will also be registrable.
Multi-class applications
At present, only single class applications are permitted which has led to a heavy workload for the examiners. The amendments provide for multi-class applications which should reduce the number of applications and help to resolve the current backlog of cases.
Combating bad faith registrations
Bad faith registrations have become a serious phenomenon in China in recent years. The amendments aim to help trademark owners in their battles against the pre-emptive bad faith registration of their marks. Use and registration of a trademark must be in compliance with the principles of honesty and credibility. In particular, applications for an identical or similar trademark, which has been used by another party in China, should be rejected if the applicant knows of the subject mark because of a contractual or business relationship with such other party. Should these provisions become law, bad faith applications by a business partner or a supplier of goods could be prevented even if the prior mark in question has not yet been registered in China. However, since prior use in China is a pre-requisite, it will not help foreign brand owners to combat pre-emptive bad faith registration of their marks if they have not yet entered into the China market.
Another significant amendment is to provide cross-class protection for registered trademarks having "certain influence" in China, but not officially recognised as "well-known" in China, as long as the registered marks are sufficiently distinctive and the third party's registration would mislead the public. This provision will certainly be welcomed by foreign trademark owners in view of the difficulty in obtaining well-known status for trademarks in China.
Examination
The 12-month time limit for examining trademark applications proposed in 2007 has now been deleted. In view of the increasing number of applications and huge backlog of pending cases, this probably recognises that the time limit was too ambitious.
The latest draft also restores substantive examination of trademark applications on relative grounds, which was previously abolished in the 2007 draft. Due to the rising number of bad faith applications in China, if the Trademark Office ceased to examine the applications on relative grounds, the burden would be on trademark owners who would have to allocate considerable resources to monitor published trademark applications. The revival of substantive examination on relative grounds should be welcomed by trademark owners and is an indication that the authorities are prepared to refine the revision in light of practical concerns.
Oppositions
Under the current Trademark Law, any person may initiate opposition proceedings. The amendments provide that only prior right holders or other interested parties have standing to file opposition proceedings. This is intended to eliminate improper opposition proceedings under the current system.
The amendments also provide that oppositions will no longer be adjudicated by the Trademark Office but will be heard directly by the Trademark Review and Adjudication Board (TRAB). Decisions of TRAB may be appealed to the People's Court. However, TRAB's decision on the registrability of a trademark in question shall be final and the People's Court shall only adjudicate on the legality of the decision of the TRAB.
Currently, opposition proceedings can take many years to complete. It is hoped that simplification of the opposition procedures will help shorten the time frame. However, granting exclusive power to TRAB to determine registrability of marks may concern trademark owners as the examination procedure at the TRAB may not be very transparent.
Mandatory licence recordal
The current Trademark Law provides a scheme for recordal of licences but does not specify any consequence or penalties for failure to record. The amendments provide that trademark licence recordal will be mandatory and local AICs may order rectification of the register or impose a fine.
Enhanced enforcement powers
In order to strengthen the power of enforcement, the latest draft (1) expands the types of infringing activities; (2) gives more power to the AICs to seize or detain goods when investigating infringing activities; (3) clarifies the concept of use of a trademark; (4) introduces more severe punishment for repeated infringing acts; and (5) increases the maximum statutory damage from RMB 0.5 Million to 1 Million.
Conflicts between trade marks and trade names
Conflict between trade marks and trade names has always been a difficult area. The latest draft provides that use of someone's trademark as part of a trade name is a type of infringing activity. The amendments also allow trademark owners to apply to the enterprise name registration authorities to cancel enterprise names, identical or similar to a registered trademark, which are likely to cause confusion among the relevant public. This is good news for trademark owners who will now be able to request removal of conflicting company name registrations. However, it remains to be seen what evidence will be required to establish "likelihood of confusion".
Conclusion
China has been working on amendments to the Trademark Law since 2003. Although there is no exact time frame for the enactment of a new law, the Outline for the National IPR Strategy released by the State Council in 2008 and the 2009 IPR Protection Action Plan issued by the State Intellectual Property Office in 2009, both emphasise amending the Trademark Law as a priority. It is expected that a new law will be finalised and implemented within the next 2 years. However, three drafts have already been issued as part of the process of continuous research and consultation and it is possible that significant changes could still be made. | 
