China Issues Amended Implementing Regulations of the new Trademark Law
1
Background
China's new Trademark Law ("new law") will come into effect on May 1, 2014.
For our earlier comments on the new law, click here
Summary
.
To implement the new law, new regulations have been drafted, the Draft Implementing Regulations ("Draft IR"), which have since been submitted to the Legislative Affairs Office of the State Council of China (LAO) for review. Last month the
LAO issued a call for public comments.
The current Draft IR is subject to LAO's review; LAO is further entitled to make additional amendments based on public comments before submitting the amended draft to the State
Council for a final review. The profession have been submitting comments, and we will keep you posted on further developments.
The Draft IR details the procedures of trademark applications and reviews, and clarifies the uncertainties or ambiguities under the new law. It introduces some new systems and also further regulates the practices of trademark agents in China.

Of note, the Draft IR tries to streamline and clarify existing procedures. This is done through detailing e-filing provisions, introducing the "division of trademark applications" for partially refused applications, allowing for settlement negotiations, and specifying circumstances where non-use of a trade mark may be justified, etc.

The Draft IR also attempts to facilitate enforcement of trademark infringement. Key efforts include providing for calculation of illegal turnover, specifying circumstances where a seller can claim innocent infringement, and stipulating how right holders assist on verification of suspected infringing products in AIC raid cases, etc.

Finally, the Draft IR states that assignor and assignee are jointly responsible for recording the trademark assignment with the China Trademark Office (CTMO).
We outline in detail several notable points below.
1.
Trademark application requirements and procedures amended a.
Requirements of filings for sound marks and clarification of e-filing.
Sound mark applications
As the new law allows sound marks to be eligible for registration as a trademark, the Draft IR specifies requirements of the filing documents for sound mark applications. This includes a sound sample, explanation on how the mark is used, and a description.
E-filings clarified
The Draft IR states that e-filing applications for registration of trademarks under the new law refers to filing trademark registration applications electronically via the internet, and in a format designated by CTMO. It specifies that where the documents are submitted to
CTMO/TRAB electronically:
• The date on which a party submits documents to
CTMO/TRAB shall be the date on which the documents are received by CTMO/TRAB's electronic system;
• The documents submitted shall be subject to
CTMO/TRAB's database records.
It also states that various kinds of documents issued by
CTMO/TRAB can be served on the parties concerned by electronic means, and such documents shall be deemed duly served on the party 15 days after the date on which the document is sent.
b.
Explanations/corrections upon Examiner's Advice
The new law reintroduces Examiner's Advice in the trademark application process. The Draft IR further provides for a 15-day time limit for the applicant to provide explanations or corrections upon receiving CTMO's notification.
c.
Division of application
The Draft IR allows for the "division of trademark applications" for partially refused applications, allowing the preliminarily approved goods/services to proceed to registration and dealing with the rejected goods/services separately. The applicant may, within 15 days upon receipt of CTMO's partial refusal notification, request the CTMO divide the application so that the goods preliminarily approved are moved to a new application. The application on the goods preliminarily approved shall be allocated a new application number and be

2 China Issues Amended Implementing Regulations of the new Trademark Law published with the filing date of the original application's filing date.
We understand this provision shall apply to both multi-class and single class applications, though this is not expressly stated in the Draft IR.
However, the Draft IR states that the division shall not apply to international applications designating China for territorial extension. This seems to be an additional advantage domestic applications may have over Madrid applications.
2.
Time limits
As the new law provides for new time limits for CTMO/TRAB's examination of cases in trademark application/opposition, invalidation and cancellation procedures, corresponding provisions/changes in this regard are included: a.
The Draft IR states that the following periods are excluded from the time limit for examination of the cases: i.
ii.
iii.
iv.
v.
vi.
The period of service of CTMO/TRAB's documents;
The time needed for the party concerned to provide explanations or corrections where necessary and for another round of evidence exchange;
Where different applicants apply on the same day for the registration of identical or similar trademarks in respect of the same or similar goods, the time for the applicants to submit evidence of prior use of the trademarks before applying for registration, or to draw lots;
Where the party concerned is changed, the time needed for re-notifying the party to submit defence;
Where in an examination/review, the involved prior rights are to be determined based on the results of another case being tried by a court or handled by an administrative agency, the period of waiting for the results of another case;
The time of waiting for the parties to negotiate a settlement as per their application.
Such provisions are aimed to protect the legitimate rights/and interests of the party concerned, as well as avoid inaction during the statutory examination time limit.
b.
The current 30-day time limit for the applicant to make supplements or amendments as required by
CTMO/TRAB has been shortened to 15 days , and the current 3-month time limit for the applicant to file supplemental submissions in opposition or TRAB's review procedures has been shortened to 30 days.
c.
Clear rules for calculation of time limits/deadlines are added in the Draft IR, which states that, unless otherwise specified in the new law –
• the first date is excluded in calculating all time limits;
• for deadlines calculated in years or months, the deadline falls on the corresponding date of the last month of the deadline, or the last date of that last month in case there is no corresponding date in that month;
• in case the deadline falls on a statutory holiday, it will automatically be extended to the next working date thereafter.
Currently the calculation relies on General Principles of Civil
Law and the Civil Procedure Law in China. The provisions in the Draft IR will make the parties' calculation of the deadlines more convenient.
3.
Certification requirement concerning the identity/locus standi of the applicant
The Draft IR expressly confirms that when filing an application for registration of a trademark, or filing other applications (for change, assignment, renewal, opposition and cancellation etc.) of a trademark with CTMO, the applicant shall submit a copy of certification document (i.e. Certificate of Incorporation or identify certification etc.) confirming their identity/locus standi.
4.
Failure of the applicant to pay required fees for filing trademark applications will result in CTMO's nonacceptance of the filings
The Draft IR clarifies that if the applicant does not pay the official fees upon filing any application, the CTMO shall not accept the application and shall notify the applicant in writing.
Current regulations do not prescribe how to deal with a case where fees are not paid.
5.
Formalities for trademark assignment
Current Regulations provides that the assignee files a recordal of any assignment. Since there are often falsified assignments, the Draft IR states that the formalities for the

China Issues Amended Implementing Regulations of the new Trademark Law 3 assignment shall be handled jointly by the assignor and assignee or by an agent entrusted by both parties. For assignment of pending applications, the provision in the Draft
IR remains the same, i.e. the applicant of the trademark application shall go through the formalities of assignment with
CTMO (as is currently the case).
6.
Transfer for registered trademarks
The Draft IR lists succession and others as statutory reasons other than assignment for transfer of registered trademarks.
7.
Recordal of trademark license contract i.
ii.
iii.
iv.
v.
The opponent is not eligible for filing the opposition, e.g., it/he does not have locus standi either by being a prior rights holder or being an interested party in respective of opposing the mark on the basis of relative grounds;
The opposition is filed not within the statuary time limit;
The opposition does not fall under the scope of relative/absolute grounds as provided in the new law;
Lack of specific grounds, facts and legal basis;
The same opponent files another opposition against the same mark on the basis of the same grounds, facts and legal basis;
The submission does not meet the language requirement (i.e. shall be in Chinese);
Other circumstances of being not eligible for acceptance.
The new law states that an unrecorded trademark license cannot be used against third parties acting in good faith. The
Draft IR therefore expressly clarifies that the recordal shall have the effect against third parties acting in good faith as of the date of the publication of the recordal by CTMO.
8.
Recordal of pledge of registered trademarks vi.
vii.
The Draft IR adds an article on the recordal of pledge of registered trademarks. It states that where a party pledges the exclusive right to his/its registered trademark, the pledgor and the pledgee shall enter into a written pledge contract and jointly record such pledge with CTMO which shall publish the same.
9.
Opposition procedures
To implement the new law's new provisions on opposition procedures, the Draft IR includes the following notable additions/ changes: a.
The Draft IR expressly confirms that the opponent shall provide certification documents concerning their identity and locus standi (i.e. Certificate of Incorporation or identify certification etc. of the opponent) when filing an opposition. This is not explicitly required in the current
Regulations.
b.
Opponent is also required to provide relevant evidence/certification proving it is a prior rights holder or an interested party for oppositions filed on relative grounds.
c.
The Draft IR specifies such circumstances under which
CTMO shall not accept the opposition application, as follows: d.
The current 3-month time limit for the opponent to file supplemental submissions to an opposition is shortened to 30 days . This is one of the most unreasonable amendments as parties (especially foreign parties) will need more time to properly collect pertinent evidence to support the opposition. Instead, the Draft IR confirms that
CTMO may consider the new factual evidence filed out of time during cross examination, which will likely have significant influence on the case provided the other side has a right to reply.
10. TRAB's Review procedures a.
Review scope of TRAB's review procedures
The Draft IR has tried to clarify TRAB's review scope. It amended the current provisions under Rules for the Review and Hearing of Trademarks issued in 2005, as specified in the table below (the underlined parts are additions/ changes):
Case Type
Review on
Refusal of application
Review Scope
TRAB shall review CTMO's refusal decision, the facts and reasons filed by the Petitioner, the review claims, and the factual
Review Principle
Comprehensive

4 China Issues Amended Implementing Regulations of the new Trademark Law
Review on
Opposition
(filed by registrant of the trademark)
Invalidation
Request
Review on
Invalidation
Decision
(ex officio declared by state at the time of review. In relation to registrability,
TRAB may make a decision to overturn the
CTMO's decision.
TRAB shall consider the applicant's opinions before making a review decision.
TRAB shall review the facts, reasons and claims as described in the party's application for review and defense.
Responding arguments not filed by the original opponent or arguments that are not submitted in review though claimed in opposition procedures shall not be within the review scope.
TRAB shall review the facts, reasons and claims as described in the party's application for review and defense.
TRAB shall review CTMO's invalidation decision as well as the facts,
Based on review claims
Based on parties' claims
Comprehensive
CTMO)
Review on
Cancellation reasons and claims as described in the party's application for review.
TRAB shall review the facts, reasons and legal basis for the
CTMO to make the decision on cancelling or sustaining the registered trademark, unless the Petitioner claims the mark has now become generic or is no longer in use and needs to supplement evidence.
On a case by case basis b.
Oral hearing
The Draft IR clarifies that TRAB may, at the request of the party concerned or on the basis of the practical needs, decide to hear the application for review orally. The "oral hearing" is similar to the oral hearing procedure in patent invalidation cases. Current similar provisions are present but oral hearings rarely take place. It will be interesting to see how this will be implemented c.
Negotiations between the parties
The Draft IR states that during the review procedures, parties may negotiate a settlement on their own, and that where a settlement agreement is reached between the parties and if it is not in violation of provisions of the law, TRAB may close the case or make a decision or ruling.
11. "Proper reasons" for non-use of a registered trademark
The Draft IR adds an article specifying circumstances which constitute "proper reasons" for non-use of a registered trademark for an uninterrupted period of three years in nonuse cancellation cases, including

China Issues Amended Implementing Regulations of the new Trademark Law




Force majeure;
Governments' policy-based restrictions;
Insolvency liquidation;
Other proper reasons not attributable to the registrant.

Mailing;

Printing;

Concealing;

Business premise; or

Internet service, etc.
12. Definitions of “similar trademarks”, “similar goods” and "similar services"
The Draft IR gives general definitions of “similar trademarks”,
“similar goods” and "similar services". Specifically, it states -

The term “similar trademarks” under the new law refers to marks similar in the font style, pronunciation, meaning of the words, or in the composition and colour of the devices, or in the overall structure of all the elements combined.

The term “similar goods” under the new law refers to those goods that are identical or essentially the same in respect of functions, purposes of use, producers, marketing channels, target consumers, etc.

"Similar services” are those that are identical or essentially the same in respect of the purposes, contents, manners, objects, etc. of the services.
Current understanding/interpretations on “similar trademarks”,
“similar goods” and "similar services" are provided in the
Supreme People's Court on Several Issues Concerning the
Application of Law to the Trial of Cases of Civil Disputes over
Trademarks (2002) . The Draft IR simplifies the definitions based on current interpretations, i.e. it deleted "cause confusion among relevant general public" as a circumstance of constituting similar goods/services or as a condition for constituting similar trademarks under current interpretations.
We consider this not a substantive change on determining similar trademarks and goods/services as the new law explicitly states that likelihood of confusion is necessary when assessing the use of a similar mark in respect of same or similar goods.
13. Facilitating trademark infringement
The new law expands the definition of trademark infringement to intentionally facilitating trademark infringements and helping others to conduct infringing activities. The Draft IR adds an article specifying what can be deemed to qualify as
“providing facilitating conditions (secondary or contributory liability)”, including providing -

Storage;

Transport;
The above is a non-exhaustive list. This widens the scope of facilitating trademark infringements, as under current provisions only mailing or concealing, or providing storage or transport are considered as facilitating infringement.
14. Administrative penalties for trademark infringement
(AIC raid) a.
Calculation of illegal turnover
Under the new law, "illegal turnover" is the basis of calculating administrative fines for AIC raids. The Draft IR provides how to calculate illegal turnover in different circumstances.
Specifically, the Draft IR states i.
ii.
iii.
"Illegal turnover" shall mean the value of the infringing products that the infringer has manufactured, stored, transported or sold. The value of the sold infringing products shall be calculated at the actual sales price.
The value of the manufactured, stored, transported or unsold infringing products shall be calculated at the average actual sales price. If the actual sales price is unable to be ascertained, the value shall be calculated at the price marked on the infringing products or at the average market price of the infringed products (i.e.
genuine products) if there is no marked price.
The value of semi-finished infringing products labelled/marked with infringing trademarks shall be included in the value of illegal turnover and calculated at the actual costs associated with the semi-finished products.
For finished infringing products to which the labels of infringing trademarks have not been attached (including stickers), the value shall also be included in the illegal turnover, if there is sufficient evidence that such products will infringe.
The Supreme Court and Procuratorate and the Ministry of
Public Security provided their interpretations/ opinions on calculation of illegal turnover in handling IPR infringement criminal cases (concerning goods trademarks) in the
Interpretation of the Supreme People's Court and the
Supreme People's Procuratorate Concerning Some Issues on
5

6 China Issues Amended Implementing Regulations of the new Trademark Law the Specific Application of Law for Handling Criminal Cases of
Infringement upon Intellectual Property Rights (Fa Shi [2004]
No.19) issued in 2004 and Opinions on Several Issues concerning the Application of Law in Handling Intellectual
Property Right Infringement Criminal Cases (Fa Fa [2011]
No.3) issued in 2011. The Draft IR makes slight amendments based on the said 2004 Interpretation and 2011 Opinions and further clarifies whether to include and how to calculate the value of semi-finished infringing products labelled/ marked with infringing trademarks.
specifies that the following can be considered "proof that he has obtained the goods lawfully": i.
Verified supplier list and payment receipt with a supplier seal; or ii.
Verified purchasing contract signed by the supplier and the seller; or iii.
Legal purchase invoice can be provided and records on such invoice correspond to the goods involved; or iv.
Other circumstances that is able to prove that the goods involved were obtained lawfully.
iv.
Illegal turnover of business operations infringing others' service trademark means the infringer's operating revenue through the infringement. This is an addition in the Draft IR.
In practice, the verification of the authenticity of this evidence will become problematic.
b.
Repeated infringement
15. Right holder's obligation to assist on identification/ verification of suspected infringing products in AIC raid cases
The new law provides for punitive punishment for repeated infringement, i.e. where an operator has engaged in infringing activities more than two times within five years, or if other serious circumstances exist, he shall be given a heavier punishment. The Draft IR elaborates on what circumstances can be considered "engaged in infringing activities more than two times within five years" and "other serious circumstances" under the said provisions. Specifically, it states that i.
It shall constitute "engaged in infringing activities more than two times within five years", if –
 the same operator was penalised by an AIC or a Court to have infringed others' trademark rights, or
 there is verified evidence that the same operator has committed trademark infringing acts.
The Draft IR confirms the trademark right holder's obligation to assist in identifying/ verifying the infringing products in AIC raid cases. It states that during a raid action against trademark infringement, the AIC may ask the trademark right holder to identify/ verify the products. The right holder shall provide assistance on identification/verification of the products and issue written opinions. It also states that where the party concerned is not able to provide the related authorization letter on the suspected infringing products seized on scene, the AIC can recognize the products as infringing products directly.
16. Madrid International Registration of Marks ii.
Any of the following circumstances shall be considered
"other serious circumstances":
 large-scale infringement; or
 long-time infringement; or
 the infringement caused severe social influence.
The Draft IR adds a Chapter on Madrid International
Registration of Marks. The added provisions are in accordance with the Madrid Agreement and Protocol
Concerning territorial extension, and are based on current
Chinese Measures for the Implementation of Madrid
International Registration of Marks issued by SAIC in 2003
(2003 Implementation).
a.
Applications for international registration of marks with China as the country of origin c.
Seller obtaining the goods lawfully i.
The new law states that if infringing goods are sold, and the seller is able to prove that the goods are lawfully obtained, the
AIC shall order cessation of sale. This means that the new law allows AIC not to impose a fine on the seller. The Draft IR
Qualifications of the applicant - The Draft IR confirms that the applicant shall have a genuine and effective industrial and commercial business place in China, or have its domicile in China, or have the nationality of China.

China Issues Amended Implementing Regulations of the new Trademark Law 7 ii.
For applications in accordance with the Madrid
Protocol, the Draft IR clarifies that, for a qualified applicant, if his/its trademark has been registered with CTMO, or an application for registration of the trademark has been filed and has been accepted by
CTMO (this is added), he/it may apply for international registration of the trademark in accordance with the Madrid Protocol.
CTMO to issue
Decision on
Opposition
Within 18 months as of the expiry of the time limit for Rejection, the date of the coming into force of the administrative decision or court judgment c.
Follow-up Assignment/Abridgement of trademark registrations designating China for territorial extension b.
iii.
iv.
i.
The Draft IR confirms that the designated goods/services of application for international registration of mark shall not be beyond the goods/services coverage of the basic national application or registration of the trademark.
The current 15-day time-limit for the applicant to make supplements or amendments where necessary is extended to
Examination and oppositions procedures of applications designating China for territorial extension
30 days .
i.
Assignment
The Draft IR confirms that the assignor shall at the same time assign all of his/its registered trademarks identical with or similar to the trademark to be assigned in respect of the same or similar goods/services. Where the assignor fails to apply for assigning his/its related trademarks simultaneously, the current 30-day time limit for the assignor to make a correction upon receipt of CTMO's notification is extended to 3 months.
The Draft IR also states that if the assignor fails to make the correction before the expiry of the time limit, or if the assignment may cause confusion or other adverse effects, the
CTMO shall make a decision that the assignment is invalid in
China and shall declare that to the International Bureau.
The Draft IR states that CTMO shall examine the applications designating China for territorial extension and make a decision in accordance with
Chinese Trademark Law within the time limit for
Rejection prescribed in the Madrid Agreement or
Madrid Protocol and inform the International Bureau of WIPO. It means that the 9-month time limit for examination of national trademark applications under the new law does not apply to international applications designating China for territorial extension.
ii.
Limitation
The Draft IR states that where the limitation of goods/services contents does not conform to the requirements of China on classification of goods and services, or is beyond the scope of original designated goods/ services, the CTMO shall make a decision that the limitation is ineffective in China and shall declare that to the International Bureau.
ii.
Timing of opposition procedures specified in the
Draft IR are provided in the table below –
17. Trademark agency's obligation to receive and sign for documents issued by CTMO/TRAB
File Opposition
CTMO to notify
International
Bureau of
Opposition filed
Trademark applicant to file
Defense
Within 3 months as of the first day of the next month after the WIPO's
“Gazette of International Marks” is published
Within the time limit for Rejection prescribed in Madrid Agreement or
Madrid Protocol
Within 30 days upon receipt of
CTMO's notification forwarded by the International Bureau
The Draft IR adds the trademark agency's obligation to receive and sign for the legal documents issued by
CTMO/TRAB to the party concerned. It states that after the documents have been served to the related trademark agency, the service to the party concerned shall be deemed completed; where the trademark agency is not able to serve the documents to the party due to objective reasons, it shall explain in writing the situation and return the documents to the
CTMO/TRAB within 15 days upon receipt, and then
CTMO/TRAB will serve the documents to the party by public announcement.

8
18. Trademark agents' practices
To further regulate the practice of the trademark agencies based on the new law, the Draft IR expressly sets out a number of provisions which include the qualifications of a
Trademark Agency and a Trademark Attorney, and requirements for trademark agencies' activities and how cases are handled etc.
The above is a snapshot of the provided regulations. For specific advice, please contact us. We will keep you informed of further developments.
Further information
If you would like further information please contact a person mentioned below or the person with whom you usually deal.
Contact
Beijing
Deanna Wong*
Partner deanna.wong@hoganlovells.com
T +86 10 6582 9419
Rae Yan*
Partner rae.yan@hoganlovells.com
T +86 10 6582 9528
Shanghai
William Fisher
Partner william.fisher@hoganlovells.com
T +86 21 6122 3850
Feng Zhen*
Partner zhen.feng@hoganlovells.com
T +86 21 6122 3826
Hong Kong
Henry Wheare*
Partner henry.wheare@hoganlovells.com
+852 2840 5087
.
* Partners or Directors of the Hogan Lovells Intellectual
Property Service Co. Ltd.
China Issues Amended Implementing Regulations of the new Trademark Law

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