Francisco A. Laguna & Jimmy Wang
This week, we conclude our two-part series on China’s new Trademark Law, by examining the Law’s provisions concerning trademark oppositions and the calculation of damages.
1. Opposition and invalidation procedures
The new Law addresses procedures to oppose and invalidate the registration of a mark. The owner of a prior right or an interested party can bring an opposition on “relative grounds”, but anyone can bring an opposition on “absolute grounds”. Relative grounds are based on the notion of preventing the registration of a mark either because it is similar to another trademark that has already been registered for the similar goods or services, or because it is identical to a well-known trademark. Absolute grounds are not based on a comparison with an existing trademark. A typical example of absolute grounds is to challenge the registration because it is not distinguishing, but rather merely descriptive and / or generic.
During the opposition process, a registered trademark has no retroactive effect on others’ use of similar marks on similar goods. However, a user who uses the trademark in bad faith will be liable for any losses the registrant sustains. If the opposition is accepted, the application is canceled. Nevertheless, the trademark applicant can appeal the decision of the China Trademark Office to the Trademark Review and Adjudication Board. If the opposition is rejected, the mark will proceed to registration. Opponents can no longer file for review by the Trademark Review and Adjudication Board if the opposition has been rejected. In this case, the only remedy is to file an invalidation action with the Trademark Review and Adjudication Board. This can be frustrating for real IP owners as they will need to go through the invalidation procedure, rather a direct appeal / review.
The China Trademark Office shall invalidate a registered mark where such trademark should not have been registered in the first place due to a violation of Trademark Law, or if the registration has been acquired by fraudulent means. The procedure to invalidate can also be initiated by other entities or individuals. Decisions of the Trademark Office may be appealed to the Trademark Review and Adjudication Board within 15 days as of receipt of the decision. Similarly, decisions of the Trademark Review and Adjudication Board may be appealed to a court within 30 days of receipt thereof. Any registered trademark that has been declared invalid shall be deemed to be non-existent from the date of registration. However, the decision to invalidate shall have no retroactive effect on any judgment, decision, or agreement issued or entered into prior to the invalidation declaration of the trademark in question.
2. Calculation of damages
The new Law provides a method for the calculation of civil damages for trademark infringement. The amount of compensation shall be determined in the following order: 1) actual losses resulting from the infringement; 2) the benefits acquired by the infringer if actual losses cannot be determined; 3) a reasonably multiplied amount of the royalties generated by the trademark if both the actual losses and the benefits acquired cannot be determined. The Law increases the amount of statutory damages in cases where all of the above amounts are difficult to determine. The court may, based on the circumstances of the infringement, determine the amount of compensation to be up to RMB 3,000,000 (~ US$ 490,000). If the infringer is determined to have acted in bad faith, punitive damages can be awarded, which can be up to three times the amount of civil damages. The amount of compensation shall also include reasonable expenses incurred by the trademark holder to prosecute the infringement.
The Trademark Law also provides circumstances under which an infringer may be exempt from compensation, including instances in which an infringer acts unknowingly and is able to prove that he obtained the goods lawfully and can identify the supplier. Another example is where the registered trademark was not actually used during the preceding three years.
TransLegal has assisted clients register trademarks in China, the Dominican Republic, the European Union, Spain, the United States and Vietnam. Please call us with your questions concerning the recently enacted Chinese Trademark Law.