China Amends Trademark Law: Stronger Protection for All

Background: Regulatory Reforms

The Iron Fist Action provides specific operational benchmark/measures to combat trademark infringement, while the revision of the Trademark Law provides more legal support. These rules are likely to have a significant impact on China's wine market as government steps up protection of well-known brands and cracks down on trademark 'tufthunting' and counterfeiting.

Note: 'tufthunting' refers to the practice where merchants trademark the names of established brands and use their reputation to attract business without paying or informing the brand ^[3].

Chart 1 Fake brands (examples of Supreme)
 

Trademark Law Amendment: Say 'NO' to malicious trademark registration

• Article 4 of the trademark law has been appended as follows, ‘application for the registration of malicious trademarks shall be rejected. The new content gives examiners the right to reject applications at the preliminary review stage.

• Article 19 paragraph 3 adds that agencies shall not apply on behalf of other entities to register a malicious trademark.

• Article 33 and 44 shall provide such circumstances (malicious registration) as one of the reasons for filing an objection and invalidating the application.

Chunxiang Zhao, a prominent Chinese lawyer, outlined that the methods used to identify and the scope of malicious trademark application still require refinement ^[4].
 

'Iron Fist Action' strengthens IPR infringement rectifications focusing on 3 key areas:

Iron Fist aims to crack down on violations of intellectual property rights of trademarks, patents, geographical indications and special marks, focusing on strengthening law enforcement in the three major areas of e-commerce, key commodity trading markets and foreign investment.

The plan requires that domestic and foreign-funded enterprises shall be treated the same, and the intellectual property rights of domestic and foreign right holders shall be equally protected. Additionally, the campaign will intensify punishment for issues highlighted by international enterprise such as trademark confusion and patent counterfeiting. It will strictly investigate the source of production and sale of infringing goods, and vigorously punish the illegal acts of internal and external collusion and cross-border production and sale of infringing goods.

According to a GAC report released in 2018, infringing goods show an obviously common feature ^[5], that is, the infringement of the exclusive right of trademark. A total of approx. 24 million pieces of goods suspected of infringing trademark rights have been confiscated, accounting for 96.7% of the total number of suspected infringing goods.
 

Trademark Infringement and the Wine Industry

Invariably, during the annual China Food and Drinks Fair and other local wine fairs, there will be some domestic wine products on sale that use names imitating the names of high-profile international brands by adding prefixes or/and suffixes to the names. This practice is also common across China's e-commerce platforms. According to data released by GAC, due to the rapid development of cross-border e-commerce, the import and export of goods increased dramatically, and the number of batches of infringing goods seized by postal channels increased significantly, with a total of 45,500 batches of suspected infringing goods seized, a year-on-year increase of 156.33%.

Case Studies

Due to the ubiquity of counterfeit trademarks in the wine industry, after the revision of China's Trademark Law and the implementation of the Iron Fist campaign, many regional market administrations have taken measures to regulate the local wine industry.

In April, 2019, only two days after the start of the Iron Fist, China's SAMR released the Typical Cases of 2018 Intellectual Property Administrative Law Enforcement ^[6], which involved some cases related to the wine industry. The following table summarizes some representative cases.

Achievements and Future Trends

The outline of the National Intellectual Property Strategy has been promulgated and implemented for more than a decade. With the continuous improvement of intellectual property awareness and protection, China is fostering a better business environment where innovation is rewarded. The number of patents, trademark and copyright registration applications in China has been growing rapidly, and in terms of total patent applications granted China has ranked first in the world for seven consecutive years. In terms of expanding IPR protection, China's GAC approved 11,488 new IPR protection applications in 2018 ^[8], with a year on year growth at 24.9% and offered 9.2million RMB worth of exemptions from annual filing fees to industry. .

China IPR reforms are not only paying dividends for its domestic enterprise, international enterprise are also benefitting ^[9]. According to a report released by World Bank in 2018, the magnitude of improvement in China's business environment ranks No.3 in the world, and China is the best region in the East Asia Pacific region. However, it is undeniable that compared with Europe and the United States, China is still lagging behind in terms of IPR protection. There are still many aspects need to be optimized, such as cross-border cooperation and joint law enforcement.

On April 23, during a 2019 GAC Press Briefing, Hai Jin outlined GAC's plans to further strengthen sharing of information and statistical data exchange between local authorities at a national level and between China's trading partner at a global level. In this respect China is already working closely with Russia to bolster cross-border IPR protection and is working towards developing mechanisms with the European Union, Japan and South Korea. The next step for China will be to form a joint law enforcement system with the United States.

To visit China's IPR Protecting official website, please click here.