Q&A

China issued the revised Well-Known Mark Recognition and Protection Provisions (the "Revised Provisions") in early July 2014. The Revised Provisions provide helpful guidance on the nature and types of evidence to be submitted in support of an application for recognition as a well-known trademark.

According to Article 13 of the PRC Trademark Law, in order to obtain a well-known trademark in China, you will have to show that a third party:•

• Without your authorization, uses a trademark that is identical or similar to your well-known trademark that is not registered in China on identical or similar goods and is likely to cause public confusion; or

• Without your authorization, uses a trademark that is identical or similar to your well-known trademark that is registered in China on dissimilar goods and is likely to cause public confusion so that your interests are likely to be impaired.

Also, it is required to provide the following evidence as stated in Article 9 of the Revised Provisions in order to show that the trademark is well recognized among the relevant public:

• Documents showing the degree of knowledge or recognition of the trademark in the relevant sector of the public, e.g. a market survey;

• Documents showing the duration of the use of the trademark, including those related to the history and scope of the use and registration of the trademark, e.g. the certificate of registration;

• Documents showing the duration, extent and geographical area of promotion of the trademark, e.g. promotional materials;

• Documents showing the record of successful enforcement of the trademark rights, such as documents certifying that the trademark was once protected as a well-known trademark in China or other countries; and

• Other evidence certifying that the trademark is well-known, including materials in the past three years in respect of the output, sales volume, sales income, profits and taxes and sales regions of the principal goods to which the trademark applies.

Only a natural living person can claim personal name right under Article 32 of the PRC Trademark Law. The trademark in question should be identical to the claimant's name, or a well-established translation of it.

This can be illustrated by the famous Michael Jordan case, in which the Supreme People's Court has laid down a threefold test:

1. The particular name should have obtained a certain reputation in China and be known to the relevant public;

2. The particular name should refer to an individual; and

3. There should be a stable, corresponding relationship between the particular name and the individual.

The Supreme People's Court held that the Chinese character name "乔丹" fulfilled the test. It was demonstrated that "乔丹" has been widely known as a designation for Jordan among the relevant Chinese public in the field of sports and basketball. As a result, the Court ruled in favour of Jordan and held that registering "乔丹" as a trademark without the prior approval of Jordan constituted infringement of Jordan's right to his personal name.

The Michael Jordan case affirms that name right is a prior existing right under the PRC Trademark Law and that a registered trademark shall not infringe other's right to use his name. Nevertheless, the extent of the right to use a name shall be determined on a case-by-case basis.

"OEM" refers to "Original Equipment Manufacturing" which means that a foreign purchasing party owns a trademark or has the legitimate right to use the trademark in jurisdictions outside China, and a Chinese manufacturer is paid to manufacture goods within China and label the goods with the trademark. The below are the leading cases, which affirms the position that it does not constitute trademark infringement.

On 8 April 2018, the Supreme People's Court has rendered a retrial judgment on the "Dong Feng" case. The Court affirmed that OEM use of a trademark on goods does not constitute trademark infringement once again after the PRETUL case in 2015. In the "Dong Feng" case., the plaintiff's trademark "Dong Feng" was recognized as a well-known trademark in China. The defendant, i.e. the domestic manufacturer, exported goods bearing the "Dong Feng" mark to Indonesia under the instructions of an Indonesian consignor who registered an identical mark in Indonesia in 1987.

In the second instance decision, the Jiangsu High Court held the defendant liable for trademark infringement, ruling that the defendant had failed to exercise reasonable care in verifying the consignor's trademark rights, given the well-known status of the "Dong Feng" mark in China and the bad faith on the part of the Indonesian consignor.

The defendant applied for re-trial, in which the Supreme People's Court overturned the lower court's judgment and held that:-

• The essential attribute of a trademark lies in its primary function of distinguishing the source of goods or services. The act of using a trademark that is not intended to serve as a badge of origin will unlikely cause confusion as to the source of the goods or services. In the present case, all products were exported to Indonesia and would not cause confusion to consumers in the Chinese market; and

• The reasonable duty of care should be deemed discharged when the domestic manufacturer has verified the trademark rights of the foreign purchaser. Since OEM is a popular and legitimate form of international trade, unless the domestic manufacturer is found to have breached its duty of reasonable care after accepting the entrustment and that its act of entrusted processing has resulted in material harm to the right of the domestic trademark holder, the domestic manufacturer will unlikely be held liable for trademark infringement.

The decision of the Court is consistent with its ruling in the PRETUL case, affirming that the OEM use of trademark in general does not amount to trademark infringement.

• The original English or foreign trademark; and

• The Chinese transliteration or translation of the original trademark.

There are various articles in the PRC Trademark Law that deal with bad faith trademark filing:

• Article 7: trademark application and use should follow the "good faith principle"

• Article 15: Where an agent or representative registers, in its own name, a trademark of one of its principals without authorization, and the principal objects to the registration, the trademark shall not be registered and shall be prohibited from use

• Article 32: trademark application may not infringe another person's prior rights and no applicant may register a trademark that is already in use by another person by improper means

• Article 44: a trademark would be rendered invalid if its registration was obtained by fraudulent or other illegitimate means

Strategies to remove the bad faith filing:

1. Before the applied-for mark is registered, you should file an opposition against it. However, if the right holder has no prior trademark registrations in China, and does not have a history of sales in China, the chance of success of the opposition will not be optimistic;

2. After the applied-for mark is registered, you should file an application for non-use cancellation after the mark has been registered for three years; or

3. You should file an application for invalidation within five years from the date of registration of the mark. You will have to prove the well-known status of the mark in case the application is filed beyond the five-year period.

Key evidence for opposition and invalidation:

1. Evidence of agency relationship, such as distributorship agreement between the right holder and the former agent;

2. Evidence showing that the squatter had prior knowledge of the right holder's mark; and

3. Evidence showing that the squatter had applied for a large number of trademarks similar or identical to the right holder's or others' trademarks.

Further, at the same time of taking action against the bad faith filing, IPR holders should remember to file new applications as soon as possible to avoid squatters from getting an earlier filing date.

Similar to most jurisdictions, China adopts the 11th version of the Nice Classification. Each class is further divided into different subclasses, each of which contains a list of "standard items" of goods and services.

Under the latest policies of the CTMO, examiners are increasingly rejecting specifications that differ from the standard items, even if only in minor ways. Upon the issuance of a Notice of Correction by the CTMO, you will only be given one chance to respond by replacing the rejected descriptions with the standard items. CTMO's rejection of a request for approval of non-standard items may result in the total rejection of the application. Furthermore, under the current Trademark Law, the CTMO would only issue filing receipts after the specifications have been reviewed and approved. Hence, for applications which are rejected by the CTMO following non-acceptance of the non-standard items, they are technically deemed not to have been filed in the first place. It is therefore important to seek advice before filing.

Further, retail services in Class 35 (apart from retail or wholesale services in relation to various pharmaceutical, veterinary and sanitary preparations and medical supplies) are not accepted.

Customs recordals can be used for registered trademarks, copyright and design patents.

The customs recordal system is useful as it stops both the import and export of infringing products. Recordals mean automatic monitoring across all parts of China and trademark owners need to act only when notified. In order to effectively utilize customs recordals, right holders should:

1. Act on customs notifications expeditiously in order to seize infringing goods;

2. Record trusted licensees with customs to prevent unnecessary delay; and

3. Provide customs trainings to the customs officials regularly at the most used ports to familiarize customs officials with the products.

On 20 April 2017, the Beijing People's High Court announced the Revision of the Guidelines for Determining Patent Infringement (the "Revised Guidelines"). The Revised Guidelines provide, for the first time, guidance on topics such as standard-essential patents (SEPs) and design patents covering graphic user interface (GUI).

• The brief description of the design;

• The International Classification for Industrial Designs;

• The function of the product;

• The circumstances of sale; and

• The actual use of the product

The two products are regarded as belonging to the same or similar category if their functions, purposes of use and use conditions overlap.

Huawei v Samsung
This case concerns Samsung's alleged use of Huawei's technology without a license. Two main issues were considered by the court, namely (i) whether the patents owned by Huawei are essential to the 4G/LTE standard; and (ii) whether the FRAND obligations have been breached by either party during the negotiation process.

With regard to the first issue, the two patents asserted by Huawei were both held as essential to the 4G/LTE standard. Samsung has infringed Huawei's patent rights by manufacturing and selling 4G capable terminal products in China. Besides, the court held that Huawei's patent rights were not exhausted through being implemented in Qualcomm's products (which were then used in Samsung products) as Huawei did not grant any licence with regard to their 4G/LTE technology to Qualcomm. For the second issue, it was found that Samsung has obviously breached its FRAND obligations in the process whereas Huawei has made conscious efforts in resolving the conflict through negotiation and arbitration.

Consequently, the court ordered Samsung to immediately cease the manufacturing and sales of the infringing products. The court also indicated in the press release that this decision has a great significance on Shenzhen's "innovation-driven development strategy".

Panasonic v Zhuhai Jindao Electric Appliance Company Limited & Beijing Likang Fuya Commercial and Trading Co. Ltd
Kingdom, a beauty apparatus manufacturer in China, had been producing, selling and advertising facial vaporizers, which allegedly infringed Panasonic's patented product. Panasonic accordingly filed a design patent infringement suit with the Beijing IP Court against Kingdom and e-commerce company Li Kang, which sold the infringing products.

The Beijing IP Court ruled that Kingdom's products were similar to Panasonic's product and fell within the protection scope of Panasonic's patent. The court ordered the defendants to stop the infringement, ordered Kingdom to pay RMB 3 million (around USD 438,000) as damages and held the defendants jointly and severally liable for reasonable expenses of RMB 200,000 (around USD 29,200). The judgment and the amount of damages were upheld by the Beijing Higher People's Court.

This design patent infringement case is considered significant as the Beijing Higher People's Court fully accepted Panasonic's claim for damages, which amounted to RMB 3.2 million (around USD 467,500). This is significantly more than the statutory damages of RMB 1 million (around USD 146,000) under the Patent Law.

The rapid development of the computer software industry in China has prompted the amendment of the Guidelines for Patent Examination (the "Amended Guidelines"), in which the scope of patentable subject matter has been significantly broadened. Previously, patents could only be obtained for process claims or "means plus function" claims, in which the latter has been narrowly construed by examiners of the National Intellectual Property Administration of the PRC (CNIPA). Hence, patent protection for software-related inventions was very limited.

The Amended Guidelines have created a positive climate for patenting software-related inventions as patent holders can obtain more comprehensive protection for their software. The Amended Guidelines distinguishes between computer programs per se, which are non-patentable, and computer program-related inventions, which are patentable. Software claims such as a computer program product, a machine-readable medium, and an apparatus claim are eligible for patent protection. The scope of protection has also been broadened by replacing "functional modules" with "program modules". The component parts of an apparatus claim may contain not only hardware but also computer programs. Therefore, inventions are patentable even without the accompany hardware.

In general, a design application shall be limited to one design only. However, according to Article 31 of the PRC Patent Law, it is possible to file multiple designs in one application in the following situations:

• Two or more similar designs of the same product; or

• Two or more designs which are incorporated in products belonging to the same class and being sold or used in set.

Similar designs of the same product
In the brief description of the designs claimed, one of the designs shall be indicated as the main design and the remaining designs shall be similar to the main design in order to meet the unity requirement. If normal consumers, through an overall observation, find that the difference between the main design and each of the remaining designs does not notably affect the overall visual effect of the product, the remaining designs would be deemed as similar to the main design. The number of similar designs contained in an application for design shall not exceed 10.

Designs of products in set
For designs of products in set, the products should have the same concept of design and should be customarily sold or used at the same time. Hence, when consumers use one product of the set, they should be able to associate it with the other product of the set, such as teapot and tea cup.

In case the patent application is rejected after substantive examination, you may, within three months from the date of receipt of the rejection decision, file a request for reexamination with the Patent Re-examination Board (PRB). You must explain the causes and attach the relevant evidence in the request for reexamination.

In filing the request for reexamination or responding to the reexamination notification issued by PRB, you may amend the application documents, but the amendments are subject to the following limitations:

• The amendments shall be limited to addressing the defects indicated in the rejection decision or as pointed out by PRB;

• The amendments shall not go beyond the scope of disclosure contained in the initial application documents; and

• Amendments to the application for a patent for design shall not go beyond the scope of the original disclosure as shown in the initial drawings or photographs.

Therefore, it is not permitted to introduce a new technical solution which is not recorded in the initial descriptions or claims after the filing date. It is advisable to provide a comprehensive disclosure with a number of fallback positions in the initial application documents.

There is no limit as to the number of reexamination notifications issued by the panel. It should be noted that only one request for reexamination can be filed in response to each rejection decision. If the panel decides to uphold the rejection decision and the applicant is not satisfied with such decision, the applicant will have to resort to administrative lawsuit before the court.

According to Chapter 4 of the Implementing Regulations of the Patent Law of the PRC (the "Implementing Regulations"), the reexamination procedure can be terminated under the following situations:

• The request for reexamination does not comply with the prescribed form and the applicant fails to rectify it within the time limit fixed by the PRB;

• The request for reexamination does not comply with the provisions of the Patent Law as well as the Implementing Regulations and the applicant fails to submit his observations within a specified time limit upon the PRB's request; or

• The applicant withdraws the request for reexamination before the PRB renders its decision.

Since China is a signatory to the Berne Convention, copyright arises automatically for any work created inside or outside China. Although copyright recordal is not mandatory in China, you may find it helpful in enforcing your rights.

Copyright is a powerful tool for combating piracy in China. Article 32 of the PRC Trademark Law provides that "applications for trademark registration are not to infringe upon another's existing prior rights".

In order to assert prior copyrights under Article 32, you will have to adduce evidence to prove the following:

• Your work is original and can be reproduced in a tangible form;

• The infringing work is identical or substantially similar to your prior work;

• The person applying for the right had access or could have had access to your prior work; and

• The person applying for the right did not obtain your permission to register the mark.

This can be illustrated by the following case:

"The Adventures of Tintin" is a famous series of comic albums created by a Belgian cartoonist and the rights in association with the work have managed by Moulinsart. "The Adventures of Tintin" entered the Chinese market in 1998 and has become very popular among Chinese readers. In 2004, Moulinsart applied for the mark "Tintin" and "

" in China in respect of goods and services in Classes 9, 16, 25, 28 and 41. In the same year, someone applied for the same mark " " (the "Contested Mark") in China in respect of goods in Class 18.

In 2013, Moulinsart brought an action against the Contested Mark claiming that the use of this mark constituted an infringement of Moulinsart's prior copyright. Moulinsart adduced the following evidence to support its claim:

• Trademark registrations of the marks "Tintin" and "

  

  ";

• Comic book of "The Adventures of Tintin" published by China Children's Press and Publication Group; and

• Notarized declaration on the ownership of copyright of "The Adventures of Tintin".

• Based on the evidence adduced by Moulinsart, TRAB held that:

• Moulinsart enjoyed copyright over "The Adventures of Tintin" prior to the application of the Contested Mark;

• The images on the Contested Mark are substantially similar to the characters in "The Adventures of Tintin";

• "The Adventures of Tintin" was published in China and has gained popularity prior to the application of the Contested Mark;

• The Contested Mark was a malicious imitation of the characters in "The Adventures of Tintin"; and

• The registration of the Contested Mark should be declared invalid.

The revised Anti-unfair Competition Law (the "Revised AUCL") came into effect on 1 January 2018. It is made up of 5 chapters: General Provisions, Acts of Unfair Competition, and Investigations upon Engaging in Unfair Competition, Legal Responsibilities and Supplementary Provisions.

The Revised AUCL specifically prohibits the following 7 categories of unfair competition conducts:

• Acts of confusion which make people mistake one company's product for another company's product (Article 6);

• Commercial bribery (Article 7);

• False or misleading statements in promotions (Article 8);

• Trade secret infringements (Article 9);

• Unfair prizes-attached sale activities (Article 10);

• Commercial defamation (Article 11); and

• Internet-related unfair competition conducts (Article 12)

Article 6 of the Revised AUCL helps to fight against trademark squatters by providing that a business operator is prohibited from conducting any of the following acts of confusion to cause its products from being mistaken for others' products or from being mistaken as having a specific connection with others:

• Where the business operator uses, without authorization, logos identical with or similar to others' product names, packaging or decoration that has certain influence;

• Where the business operator uses, without authorization, others' enterprise names (including abbreviations, trade names, etc.), social organization names (including abbreviations, etc.) or names (including pen names, stage names, translated names, etc.) that have certain influence;

• Where the business operator uses, without authorization, the main parts of others' domain names, website names, web pages, etc. that have certain influence; or

• Other acts of confusion enough to cause its products from being mistaken for the products of others or from being mistaken as having specific connection with others.

In order to curb trademark squatting, harsher penalties have been imposed for violating Article 6. Article 18 stipulates the potential legal consequences, including a confiscation order in respect of the infringing commodities, an order to cease the infringing conducts and administrative fines.

Another notable feature of the Revised AUCL is the introduction of a provision which regulates unfair competition conduct on the Internet. This newly added provision clearly provides that companies should not engage in the specified unfair competition behaviours while operating their Internet-related businesses and should not impede the provision of Internet-related goods and services by other companies by misusing technical means to influence consumers' choice.

This can be illustrated by the case Bayer Group v Li Qing.

Bayer Group is the owner of a famous brand "Coppertone" which produces sunscreen products. Li Qing, a local trademark squatter preemptively registered the two marks "

" and " " in Class 3. The two designs were originally created by Bayer and have become the most distinctive parts of Coppertone sunscreen products. Upon registration, Li lodged complaints against Bayer with Taoabo where the Coppertone sunscreen was being sold, claiming that the Coppertone sunscreen had infringed his trademark rights. In the meantime, Li approached Bayer attempting to sell the marks at a high price. Li filed complaints with the local AIC upon rejection by Bayer.

Bayer subsequently brought an action against Li on the ground that Li's preemptive registration of the two device marks and the malicious complaints have infringed Bayer's lawful prior rights and likewise constituted unfair competition. This has violated Article 2 of the Revised AUCL for contravening the principle of good faith and generally recognized business ethics.

The Court held that:

• Bayer enjoys prior rights over the two designs;

• Li's registered trademarks are highly similar to Bayer's original designs and there was sufficient evidence showing that Li had copied Bayer's designs;

• Li was a professional malicious trademark registrant, who had registered hundreds of trademarks that were identical or similar to other famous brands and subsequently filed complaints against the genuine brand owners;

• Li's registration of the two designs and the subsequent complaints were filed in bad faith and had damaged Bayer's rights over the designs; and

• Li's conducts constituted unfair competition and trademark infringement.

The Court then ordered Li to:

• Immediately cease the unfair competition activities; and

• Pay RMB 700,000 (around USD 102,000) to Bayer as damages.

This case is significant as it recognized that the malicious registration of another party's trademark and profiting from false accusations of trademark infringement could constitute unfair competition. The Court applied Article 2 of the Revised AUCL, which is a general rule similar to Article 7 of the PRC Trademark Law. We may now resort to this good faith principle to fight against trademark squatters.

The recordal of trademark license contracts with the CTMO is not mandatory. The contract remains valid even if it is not recorded with the CTMO. Previously, if a licensor wished to receive royalty payments in foreign exchange from a PRC-based licensee, the contract had to be recorded. However, new rules have been implemented in governing the remittance of royalties offshore, which may avoid the need to record.

Recording of license contracts is generally more beneficial to licensees. According to Article 43 of the PRC Trademark Law, a trademark license that is not recorded with the CTMO cannot bind bona fide third party infringer, meaning that the license contract would be effective between the licensor and licensee only, and that it would provide no defence against any good faith third party infringer. Hence, it is advisable to record the license contract so as to expand the scope of available enforcement targets. In case of infringement, the licensee can file suit against the infringer in its own name even if the trademark owner takes no step to prosecute. Therefore, a recorded trademark license contract would provide greater protection for the licensee. However, as decordal requires both parties' signatures, mechanisms will need to be put in place for licensor to be able to unilaterally decord the trademarks should there be a contentious termination of contract.

China has been strengthening the protection of data privacy to crack down on the infringement of citizens' personal information.

• Article 111: people's personal information shall be protected by law –

  • Anyone who needs to obtain personal information of others should obtain the information according to the law and should ensure the safety of the information obtained

  • It is not permitted to illegally collect, use, process or transfer others' personal information of others

  • It is illegal to buy and sell, supply or publish others' personal information

• It stipulates the security-related obligations of network product and service providers;

• It requires network operators to implement a comprehensive personal information protection system;

• It provides clearer regulations over the protection of personal information;

• It sets out the framework of security protection for Critical Information Infrastructure (CII); and

• It regulates cross-border transmission of important data through CII.