Trademark
Legislation
The Trademark Law of the People’s Republic of China was first adopted in 1982. The State Council promulgated Regulations on the Implementation of the Trademark Law in 1983. The Trademark Law was revised in 1993 and 2001, and in 2002 new Implementing Regulations were issued, in part, to bring China’s trademark legislation into compliance with the WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPS). The revised Trademark Law extended protection to collective marks, certification marks and three-dimensional symbols, as required by TRIPs.
China has a “first-to file” system that requires no evidence of prior use or ownership, leaving registration of popular foreign marks open to third parties. China joined the Madrid Protocol in 1989, which requires reciprocal trademark registration for member countries, which include the United States.
Foreign companies seeking to distribute their products in China are advised to register their marks and/or logos with the Trademark Office. Further, any Chinese language translations and appropriate Internet domains should also be registered. As with patent registration, foreign parties must use the services of approved Chinese agents when submitting the trademark application, however foreign attorneys or the Chinese agents may prepare the application. Recent amendments to the Implementing Regulations of the Trademark Law allow local branches or subsidiaries of foreign companies to register trademarks directly without use of a Chinese agent.
The reader should also be aware that there is a body of supplemental directives and interpretations issued by the Supreme People’s Court concerning trademarks.
trademark registration in China
For additional information, please see the Ask the Experts section below.
Coverage – What Can be Covered?
Article 8 of the Trademark Law states that the following visually perceptible marks may be the subject of an application for trademark: words, designs, letters, numbers, three-dimensional signs, and color combinations, as well as combinations of the aforementioned elements. Companies can register the following types of trademarks in China:
Product trademarks are those that are affixed to and identify goods
Service trademarks are trademarks that service providers use to identify the company providing the service, such as the trademark for an airline
Certification marks are symbols that are controlled by an organization that has the ability to oversee certain products of services and which are used by companies or individuals other then the overseeing organization on their products or services to verify the original place of manufacture, the raw materials used, the method of manufacture, the quality or other specific features
Collective trademarks are symbols registered in the name of groups, associations or other organizations for the use of members of the group in their commercial activities to indicate their membership of the group.
A mark is eligible for trademark registration if it is distinctive, easily distinguishable, does not conflict with the prior lawful rights obtained by a third party and is not otherwise prohibited by the Trademark Law.
The following symbols are prohibited and cannot be registered as trademarks:
Symbols that are the same as or similar to the Chinese State name, national flag, national emblem, military flags or military decorations of the PRC, other country or intergovernmental or international organization, unless approved by such government or organization
Symbols that are the same as special names of places where Chinese government offices are located, or names or images of symbolic buildings
Symbols that are the same as or similar to official symbols or inspection imprints that indicate the implementation of controls or that give guarantees, unless authorized;
Names and symbols that are the same as or similar to the Red Cross or Red Crescent
Symbols that are racially discriminatory
Symbols that make exaggerated claims or are fraudulent
Symbols that harm socialist moral behavior or have other undesirable effects
Further, symbols shall not be registered as trademarks that:
Contain a product’s generic name, graphics or model
Merely directly indicate a product’s quality, main raw materials, function, weight, quantity or other characteristics
Lack any prominent characteristics
Well Known Marks China has had special provisions for the protection of “well-known” marks since 1996. Protection of foreign well-known marks was also required as part of the 1992 U.S.-China Memorandum of Understanding on Intellectual Property Rights, as well as part of China’s accession to the Paris Convention in 1985. China is required to provide national treatment to foreign marks holders, as part of its WTO accession as well as other international commitments. However, many companies continue to complain that their marks are not treated in the same manner as Chinese marks.
Recognition of a trademark as well known is of particular importance to larger, multinational companies. A trademark that is registered in one class of use may not be protected against registrations or infringement in another class of use, unless it is well known. Under China’s system of administrative enforcement, treatment of a mark as well-known may facilitate administrative raids and/or criminal enforcement against commercial scale infringers. However, Chinese authorities have also promulgated from time to time lists of trademarks for “enhanced enforcement” or have judicially recognized marks as well-known on a case-by-case basis, which occasionally may provide the same results as well-known mark recognition by administrative authorities.
Many Chinese companies use their “well-known mark” recognition as a marketing tool, which has little to do with intellectual property protection per se.
Protection under Treaty
Article 24 of the Trademark Law provides that where, within six months of applying to register a trademark outside China, the trademark registrant applies to register the same trademark for the same type of product in China, they will receive priority registration in accordance with bilateral agreements between that country and China, or multilateral agreements to which both countries are party. China is a member of and has ratified the following agreements relating to trademark protection:
Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) (since 2001)
Berne Convention for the Protection of Literary and Artistic Works (since 1992)
Madrid Agreement Concerning the International Registration of Marks (since 1989
Paris Convention for the Protection of Industrial Property (since 1985)
Convention Establishing theWorld Intellectual Property Organization (WIPO) (since 1980)
In 1988, China promulgated the international classification of commodities with registered trademarks, bringing its classification into line with international norms.
Market Entry Planning
As China's economy continues to expand and China implements its WTO commitments, increasing numbers of small and medium size U.S. companies have sought – and found – opportunities to sell their goods in China. With U.S. exports to China up approximately 20 percent since 2001 and foreign investment in China growing, more U.S. firms than ever before have questions about how to succeed in the China market, and at the top of their list is how to protect their company’s intellectual property. Since joining the WTO, China has strengthened its legal framework and amended its laws and regulations regarding IPR. However, despite stronger statutory protection, China continues to be a haven for pirates. Further, pirated products made in China are increasingly finding their way into international markets.
New market entrants should develop a strategy for protecting their company’s intellectual property early in the planning stages of doing business in China. Registration of trademarks before the product enters the stream of commerce in China is the primary means of ensuring that the mark is eligible for protection under Chinese law, and ensuring that trademark infringement can be remedied through either administrative or judicial proceedings.
Prevention – The best weapon is prevention. Be clear of your rights before your product ever crosses the border into China. Use every legal means available to mitigate the risks from the start, including:
Register your trademark in China
Develop and register a Chinese language version, and do so throughout the other jurisdictions of “Greater China,” including Hong Kong, Taiwan, Macao and Singapore
If you do not create a Chinese mark, the market will do so, creating a Chinese “nickname” for your product. Your company may not like the image this mark projects, or someone else in China may like it so much they register it in their own name, forcing you to “buy it back.”
Register your trademarks in neighboring countries both for potential expansion and to block others from registering marks to use on products consumers may confuse with yours
Execute and register trademark licensing contracts. If you are allowing another party to use your mark, under Chinese law you must establish a trademark licensing contract. Chinese law also requires the registration of trademark licensing contracts in order for the licensee to remit royalty payments overseas in foreign exchange. Note that the recorded license agreement may take legal precedence over a non-recorded agreement in the event of a dispute between the licensor and licensee
Conduct a survey to identify potential products infringing your trademark or products bearing a trademark confusingly similar to yours but registered by another party
Establish a corporate system for monitoring the marketplace for infringing products
Engage the services of a trademark agent or law firm to monitor the Trademark Gazette for registrations similar to your mark. The Gazette is the authoritative journal for publication of trademarks that have been approved on a preliminary basis. Monitoring the Gazette will allow a rights holder to comment on or oppose registration of similar marks in the same or related classes. Some companies may be able to handle this function in-house.
Protection – If you discover that your trademark is being infringed, do something immediately to protect and enforce your rights. Investigations, raids, seizures and well as civil litigation and criminal prosecutions are some of the tools available. Before deciding which tools to use, however, ask yourself the following preliminary questions:
Is the trademark registered or otherwise capable of being protected in China?
Is the harm in China or overseas?
What is the source of the harm? Competitors? Employees, agents or contractors
Professional Advice – Engage the assistance of legal professionals with both China and IPR expertise early in the process, and involve them in the development of your overall Chinese business strategy. Membership in anti-piracy organizations can also help.
The Trademark Registration Process
Register your mark early! While the United States confers trademark rights upon the first party to use a trademark in commerce, China has established of a “first-to-file” system that grants trademark rights to the party that first applies to register the trademark.
China does recognize the international registration of trademarks based on the Madrid Agreement Concerning the International Registration of Marks and the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks, to which China and the United States are signatories. Companies that would like to determine the application of an international trademark registration in China should seek advice from an experienced foreign or Chinese attorney.
Step 1: Select a Chinese Trademark Agent
The Trademark Law provides that a foreign company that has not established a physical presence in China must register its mark through a State-designated trademark agent. For a list of these agents, please see the Ask the Experts section below. A foreign company that has a presence in China is not required to use such agents and may apply directly to the Trademark Office, although many foreign companies do use a trademark agent to assist in the process.
Certified trademark agents typically prepare the application, conduct a pre-application trademark search, and submit the trademark application to the Trademark Office of the State Administration of Industry and Commerce (SAIC). If a foreign company decides to use a Chinese or foreign law firm to prepare the application, that law firm is still required to work through a State-designated trademark agent if the trademark applicant has not established a physical presence in China.
The standard rate charged by certified trademark agents for preparation and submission of a trademark application is RMB2,000 per application for one class, maximum 10 items (designated goods) within a class.
Step 2: Determine Whether the Mark is Eligible for Registration
A trademark agent or lawyer will determine whether a trademark is eligible for registration under Chinese law. See “Coverage – What Can Be Trademarked”, above. The agent or lawyer also will conduct a preliminary search at the Trademark Registry for registered similar or identical trademarks.
Step 3: Complete the Application Forms
Complete and sign the Trademark Application Form and Power of Attorney, also referred to in China as a “Letter of Entrustment.” For copies of these forms, please see the Ask the Experts. Attach five black and white trademark specimens, or attach one black and white specimen and five color specimens. Each specimen should not exceed 10 cm in length and 5 cm in width.
All documents must be submitted in the Chinese language. Documents submitted in languages other than Chinese are deemed “not to have been submitted” to the Trademark Office.
Step 4: Select the Number of Classes
China uses the International Classification of Goods, which categorizes commodities and services into 42 classes, with sub-classes. A trademark must be registered in connection with at least one particular class of goods. However, it is often a good idea to register your mark in classes of products you may make or sell in the future, or where there is room for consumer confusion.
Step 5: Perform a Pre-Application Trademark Search
A preliminary trademark search is necessary to ensure that there is no prior conflicting registration. Normally a registered trademark agent will do this search, using a database of only words and Chinese characters. The database is not the official register, and does not include pending trademark applications. The China Trademark Office does not maintain a publicly available database of registered trademarks which applicants can use to evaluate the availability of a mark or likelihood of infringement.
Step 6: Application for Priority Registration under an International Agreement
If the applicant is entitled to priority registration under an international treaty or agreement, the applicant must prepare a letter of priority and attach it to the Trademark Application Form. A photocopy and translation of the foreign trademark registration must accompany the application for priority registration. These documents must be certified by an organization designated by the State Council, which is usually a registered notary.
The applicant should also simultaneously submit a copy of the trademark application submitted in a signatory country (although the deadline to submit this is three months after the application in China). Failure to provide this document within a timely manner, or failure to submit a written statement to request the right of priority, is deemed a waiver of the right.
Step 7: Trademark Agent or Applicant Submits Application to the SAIC Trademark Office in Beijing
Step 8: The SAIC Trademark Office Review
The Trademark Office will review the trademark application materials to ensure that it they are complete and comply with all the application requirements, and that the trademark meets criteria for eligibility for registration.
Step 9: Preliminary Approval and Publication in the Trademark Gazette, or Rejection of the Application
If the Trademark Office determines that the application packet is complete and no other similar or identical trademark has been previously registered, the Trademark Office will grant preliminary approval and publishes the trademark in the Trademark Gazette. The trademark application is subject to public opposition for a period of three months.
Where the Trademark Office decides to reject the application, it must notify the applicant in writing. Within 15 days of receipt, the applicant may request administrative review by the Trademark Review and Arbitration Board (TRAB). If the applicant is dissatisfied with the TRAB decision, it may seek judicial review by filing an administrative appeal to the People’s Court within 30 days of receiving written notification of the TRAB decision.
Step 10: Registration
If no party files an opposition to a mark that has received preliminary approval within three months, the Trademark Office will register the trademark and publish notice of the registration in the Trademark Gazette.
Opposition to a Preliminary Approval of Registration
If your company discovers that another company has received preliminary approval for a mark you believe would infringe on your company’s mark, your company may file an opposition. This must be done within three months of publication of preliminary approval in the Trademark Gazette. A party filing an opposition must submit to the Trademark Office an “Application for Trademark Opposition” in duplicate setting out the relevant information. Thereafter, the parties are entitled to provide additional information, within strict time limits. It is important for a company to use experienced trademark counsel to advise on filing an opposition.
Cancellation of a Registered Trademark
If your company discovers that another company has completed registration of a trademark you believe infringes on your company’s mark, your company may attempt to cancel the registered mark. However, cancellation is more difficult that an opposition and is more time consuming and expensive.
Enforcement Approaches – How to Address Infringement
What Constitutes Infringement?
Article 52 of the Trademark Law, as supplemented by Article 50 of the Trademark Law’s Implementing Regulations, provides that the following acts are considered infringement:
Using a trademark that is the same as or similar to a registered trademark on the same or similar goods without the authorization of the registered trademark holder
Selling products that violate the exclusive right to use a registered trademark
Counterfeiting or fabricating without authorization a mark or a symbol that is part of a registered trademark of another person, or selling marks or symbols that have been made or fabricated without permission
Modifying a registered mark without the authorization of the registered owner and putting on the market products with the modified mark
Use of identical or similar words, graphics or packaging as that of a registered trademark in connection with identical or similar goods to mislead others
Causing harm in other respects to the registered trademark holder’s right to exclusive use
Providing transport, storage, mailing, hiding or other conveniences in order to facilitate others in the infringement of the exclusive rights of a registered trademark holder
Three Types of Actions Against Infringers:
Article 53 of the Trademark Law allows a registered trademark owner to seek redress for trademark infringement through the People's Court or through administrative adjudication. Where the infringement is serious, the Trademark Office should refer the complaint to the Public Security Bureau for prosecution.
1. Administrative Adjudication
In most cases, rights holders seek administrative adjudication of trademark infringement because the investigations can occur shortly after filing the complaint, the rights holder may in some cases participate in the investigation, and only a few weeks are required for a determination of infringement or non-infringement and, if appropriate, the imposition of a remedy.
Disadvantages of the administrative channel are: the rights holder receives no compensation for IPR infringement as a result of administrative adjudication; sometimes administrative agencies refuse to investigate a complaint due to local protectionism, corruption or lack of resources; and fines are too low to put the infringer out of business or deter future criminal activity.
The Trademark Office of the SAIC has responsibility for handling trademark infringement complaints, in addition to its role in trademark registration and administrative recognition of well-known marks.
The Trademark Division of each provincial and municipal Administration for Industry and Commerce (AIC) has authority to investigate trademark infringement within its geographic jurisdiction, seize evidence and adjudicate complaints. The administrative remedies that may be imposed by a local AIC Trademark Division include:
Cease and desist orders
Confiscation and destruction of trademark representations that my be separated from the goods, in which case the goods may be returned to the alleged infringer
Confiscation and destruction of counterfeit goods where the trademark representation cannot be separated from the goods
Confiscation of materials, tools and equipment used mainly for production of infringing goods and trademark representations
Fines up to a maximum of three times the illegal profit, or in cases where it is difficult to determine the illegal profit, a maximum fine of RMB100,000 (US$12,000). The law does not specify minimum fines. “Illegal profit” is normally calculated based upon the infringer’s documentation of illegal gain or declared value of the counterfeit product.
Note: Compensatory damages cannot be awarded to the rights holder through the administrative adjudication process. The rights holder can seek compensatory damages through civil litigation.
2. Civil Litigation
Jurisdiction and Venue: According to the Supreme People's Court “Several Questions on the Application of Law in Trial of Trademark Civil Dispute Cases” (Interpretation), which came into effect October 16, 2002, a registered trademark owner may file a lawsuit in the place (a) where trademark infringement occurred, (b) where infringing products are stored, sealed, or detained, or (c) where the infringer is domiciled (Article 6). Article 7 explains court jurisdiction in cases involving multiple defendants who may have committed infringing acts in different locations. A foreign right holder is allowed to file its complaint before the Economic or Intellectual Property Division of the People's Intermediate Court nearest to one of these three places.
Elements of the Complaint: The rights holder is required to demonstrate that (a) the alleged infringing act involves a mark that is identical or similar to a registered trademark; (b) the infringing representation of a registered trademark was used in connection with or affixed to similar goods or services; (c) the unlawful act interfered with the registered trademark holder's right of exclusive use or caused the registered trademark holder economic loss.
Statute of Limitations: The statute of limitation for bringing a suit to remedy trademark infringement is two years, commencing on the date the trademark registrant knew or should have known about the act of infringement. Article 18 of the Interpretation describes some circumstances in which a lawsuit may be brought after two years.
Preliminary Injunctions/Preservation of Evidence: A trademark registrant, licensee, or other party of interest may petition the people's court to issue a preliminary injunction and order preservation of evidence. The petition may be filed in the place where the trademark infringement occurred, or where the respondent resides. The petition must explain the reason that the legal interests of the trademark holder will be irreparably harmed if the infringement does not cease immediately, or explain that relevant evidence is likely to be lost or difficult to obtain at a later time.
Under Article 58 of the Trademark Law, the court may require the petitioner to “provide security” or a bond prior to the issuance of the injunction. The amount ordered is usually a percentage of the value of the goods. Within 48 hours of receiving a petition, the court must decide whether to grant the petition. The preservation measures will be removed in the event that the petitioner does not file a lawsuit within 15 days after execution of the preservation measures. See “Supreme People's Court, Interpretation in Response to Practical Questions Concerning Pre-litigation Injunctions and Preservation of Evidence,” effective January 22, 2002.
Remedies: In addition to the administrative remedies listed above, the People's Court may also award compensatory damages to the trademark rights holder. In cases where it is difficult to determine the damages suffered by the rights holder, the court may order the defendant to pay an amount not to exceed RMB500,000 (US$60,000) as provided in Article 56 of the Trademark Law.
3. Criminal Prosecution
Investigation: In circumstances where trademark infringement is “serious,” the Trademark Office is required to refer the complaint to the public security bureau for investigation, which in turn may recommend prosecution by the procuratorate. The criteria for determining whether a case is serious enough to merit criminal prosecution is not stated in the laws and regulations that govern trademarks, but Chinese officials have stated in other administrative directives that the quantity of infringing products produced, the amount of illegal gain, or the prospective injury to public health and safety are factors to be considered.
Sentencing: Articles 213 – 215 of the Criminal Law set forth sentencing guidelines in connection with infringement of a registered trademark. If the circumstances are “serious” or if the amount of sales is “huge,” the defendant may be sentenced to three to seven years imprisonment, and may also be fined. The law does not stipulate what constitutes a serious circumstance or huge amount of illegal income.
The sentencing guidelines for “crimes of producing and marketing fake or substandard commodities,” as described in Article 140 of the Criminal Law, are an indication of what may be considered a serious offense that harms public health and safety.
Article 140 Any producer or seller who mixes impurities into or adulterates products, or passes off a fake product as a genuine one, a defective product as a high quality one, or a substandard product as a standard one -
if the earnings from sales are more than RMB50,000 but less than RMB200,000, the defendant shall be sentenced to a fixed-term of imprisonment not to exceed two years and shall also, or shall only, be fined not less than half but not more than twice the amount from illegal sales;
if the amount of earnings is more than RMB200,000 but less than RMB500,000 the defendant shall be sentenced to a fixed-term imprisonment of two to seven years and shall also be fined not less than half but not more than twice the amount from illegal sales;
if the earnings from illegal sales exceed RMB500,000 but are less than RMB2 million, the defendant shall be sentenced to fixed-term imprisonment of seven years and shall also be fined one-half to twice the amount of the earnings from illegal sales;
if the earnings from illegal sales are more than RMB2 million the defendant shall be sentenced to fixed-term imprisonment of 15 years or life imprisonment, and shall also be fined one-half to twice the amount of earnings from illegal sales or be subject to confiscation or property.
Some foreign trademark holders have complained that the local AICs rarely refer cases for criminal prosecution due to inter-agency conflicts within the local government. Administrative agencies may have a financial incentive to adjudicate cases that are more appropriate for criminal prosecution because the administrative fines paid by the respondent go to the coffers of the administrative agency.
The “Provisions on Standards for Prosecution of Economic Crimes,” jointly issued by the Supreme People’s Procuratorate and the Ministry of Public Security on April 18, 2001, sets out criteria for criminal prosecution. The standards apply to manufacturers, sellers (wholesale and retail) and others involved in counterfeiting activity. If the circumstances meet the criteria set out below, the procuratorate shall initiate an investigation and prosecute the case.