While China is often seen as having little regard for intellectual property, it has had trademark legislation for over 30 years now. Official statistics from June 2013 show that China holds the world”s largest number of registered trademarks and valid trademark registrations, at 8.17 million and 6.8 million respectively, according to the latest official statistics.
The new law, passed on 30 August 2013, comes into force on 1 May next year. It offers stronger legal protection, in particular increased penalties for infringement and more stringent requirements on trademark agencies. Key points include:
- the principle of good faith is to be applied during the registration and use of trademarks.
- more efficient trademark application process
- owners of well-known trademarks can ban others from registering their trademarks or using similar ones – even if similar brand names are in use or available.
- trademark agencies cannot accept entrustment if they know or should know that their clients are conducting malicious registration or infringing on the trademark rights of others. Penalties for violating agencies include fines, credit score penalties and for serious cases suspension of business.
- fines for trademark infringement may be as much as 5 times the revenue generated from illegal business.
- the compensation ceiling for trademark infringement has been raised to 3 million yuan (US$500,000), six times the previous limit.
- requirements for proving infringement and the amount of loss have been made less onerous for trademark. Instead alleged offenders will need to present account books or other materials to assist investigation.
Hornet already uses reputable factories and suppliers to protect clients’ intellectual property, so this law may not have any immediate impact, but it is a sign of China’s improving attitude to intellectual property protection.
Another key point to remember – China is a ‘first to file’ country. So even if your trademark has existed for many years and is well known, another entity which applies to register it before you do is likely to get trademark rights. If you are concerned about protecting your brand and trademark, you may wish to consider Chinese trademark registration whether or not you are sourcing from China.
This blog post has excellent summary information on trademarks in China. For Hornet clients whose goods are being manufactured for export, an English language trademark seems to be enough.
Austrade also offer an introductory guide to protecting IP in China, available here.
If you would like more information about intellectual property protection in China or have specific concerns about how it affects your business, please contact us.