The recently published Draft Amendment to the Chinese Trademark Law is proposing the introduction of important changes to the current trademark system in China. In addition to introducing tighter filing requirements and proof of use to combat trademark theft (see my prior blog), it is proposing amendments to the process for determination of a trademark’s status as well-known. Given that recognition of well-known status plays a critical role in trademark prosecution matters such as opposition and invalidation proceedings, these changes are of great importance to right holders.
Confirmation on Demand
The Draft Amendment to the Trademark Law (Article 18) finally codifies the established practice that well-known status is neither a one-time decision by a higher administrative body (as it used to be before 2009) nor a permanent state. In practice, the recognition of well-known status will have to be claimed or affirmed in formal cases, for example, in opposition and invalidation as well as in infringement proceedings. In a first-to-file system like China, claiming well-known status is a very common strategy in cases involving unregistered marks and right holders are thus encouraged to preserve evidence of use of their trademarks in China to be able to use them in support of such claims.
Intensity and Scope of Protection
The draft provides for the first time that the scope and intensity of protection of a well-known trademark shall be commensurate with its distinctive features and popularity. Therefore, well-known status is not a defined degree of notoriety. There will be varying degrees of notoriety. This will enhance the chances of a brand to obtain a certain degree of well-known status recognition. This provision harmonizes the concept of well-known with other, already existing definitions of a “lesser” degree of notoriety, like those of “certain reputation” or “high reputation” that were already codified in relation to defenses and claims in opposition and invalidation proceedings. For example, the actual art. 32 of the Trademark Law requires that no trademark shall be registered if it collides with a prior unregistered mark that has acquired a certain or high reputation in China.
The definition of the boundaries between concepts like “well-known,” “certain,” and “high reputation” are important. If the latter two definitions were now to be considered as lesser degrees of well-known, they could be claimed also against trademarks in classes that are different from the one involved in a specific dispute. The draft Article 18 Trademark Law correctly removes the distinction between registered and unregistered well-known marks. The current provisions allow only a registered well-known mark to be wielded against similar or identical marks but in different classes. Such distinction has been removed. Under the new draft, well-known status, whether the trademark is registered or not, can always be claimed against any priorly used or registered similar or identical mark even if in different classes as long as there is a risk of confusion.
Will such “benefit” therefore apply to lesser degrees of notoriety like certain or high reputation? This will have to be tested and we shall see how the China National IP Administration (CNIPA) will interpret this new provision (assuming it will be adopted in its drafted text).
Key Factors for the Recognition of Well-Known Status
Article 14 of the current Trademark Law provides that the examiner or judge invested of a well-known status decision must consider the following factors: 1) the degree of awareness of the trademark by the relevant public; 2) the duration of the use of the trademark; 3) the duration, extent, and geographical scope of any advertising of the trademark; 4) the records of the trademark being protected as a well-known trademark; 5) other factors concerning the well-known status of the trademarks. It is important to add that all these factors are to be considered geographically limited to China. For example, by “geographical scope” of the advertising it is not meant worldwide but, rather, China-wide. The same applies to the definition of relevant public.
In the past few years, the CNIPA and Chinese courts have started considering the geographical scope of these factors beyond the Chinese boundaries. Several decisions and a new trend have recognized that factors such as “relevant public” have been affected by traveling and new technologies, specifically, Chinese travel abroad, use of the internet and shopping internationally. All this brings the relevant public into contact with foreign brands even if these are not directly marketed in China. In a recent case concerning proctoring testing services, the CNIPA recognized well-known status to an American proctoring brand even though it never sold nor advertised its services in China. The CNIPA in this case found that the relevant public are Chinese students that study in the US and all of them have acquired familiarity with the proctoring brand in question while studying in the foreign school.
The Draft Amendment to the Trademark Law has recognized such practical changes by introducing new factors such as: 1. The value of the trademark (which is not limited to a geographical scope); and 2. Information about the history and status of the trademark not only in China but also abroad, including whether it has been already protected as a well-known mark outside China. All this gives more opportunities to trademark holders to be able to build-up persuasive arguments and succeed in obtaining some degree protection.
Evidence preservation and retention
All these new advantages, which are favorable to right holders, come with a price: that of creating, collecting, and retaining appropriate evidence of their use of the trademark in China and abroad. Considering that the recognition of well-known status is not permanent and could be claimed and challenged with every new infringement action, opposition or invalidation proceeding, right holders must establish clean processes that will allow them to preserve the evidence they successfully used in prior cases, the favorable decisions, and anything else that can support the claim of all the above listed factors that an examiner and a judge will consider in each specific new case.
In a data driven society, with other changes in the same trademark law that will impose evidence retention burdens on right holders (see my previous blog), the above is not surprising. However, right holders will need to build awareness and processes to ensure that they will be in the best possible position to use the advantages provided by the amendments of the Chinese Trademark Law.