Amendment to Trademark Law in China Kangxin Partners, P.C.

Trademark development in China Major amendment in 2014 New IP Court TO-DO

1. Trademark development in China

Timeline of Trademark Law in China China Trademark Law (1982, 1993, 2001) The 3rd amendment： 2003 ~ 2013 Final decision: August 30, 2013 Date of Effectiveness: May 1, 2014 4

Trademark application in China

2. Major amendment in 2014

1. Multiclass application Article 22 An applicant for trademark registration shall fill in the class and the designation of the goods on which the trademark is to be used in accordance with the prescribed classification of goods and file the registration application. An applicant for trademark registration may apply for registering the same trademark for several classes of goods through one application. Documents concerning application for trademark registration may be filed in writing or via data message. 8

Conclusion: NOT RECOMMENDED Benefit VS Shortage Benefit: Easy management for one mark number Shortage: Divisional application is not available everywhere Applications for all classes will be suspended until the decision of opposition in that class is issued. No divisional application is available in this proceeding. Assignment shall be conducted over whole applications in all classes. No divisional application is available in this proceeding. Cost does not change for either official or attorney fee. Conclusion: NOT RECOMMENDED

2. Examination period 10

3. Sound Mark Article 8 Any sign that distinguishes the goods of a natural person, legal person, or other organizations from those of others, including any word, device, letter, number, three-dimensional sign, color combination, sound and combination thereof, may be registered as a trademark.

4. Opposition TMO Opposition TRAB Review of Opposition Beijing Intermediate Court Administrative litigation TM Infringement litigation（1st instance） Beijing High Court TM Infringement litigation（2nd instance） Invalidation

5. Invalidation (Instead of Dispute cancellation) Absolute Ground Relative Ground TMO Review by TRAB(9months) Sue to the Court N/A Interested Party TRAB(9 months) Sue to the court TRAB(12 months)

6. Bad faith The Article 7.1: The application for registration and use of a trademark shall be based on the principle of good faith. Grounds for opposition under Article 33: Article 10, 11, 12, 13.2&3, 15, 16.1, 30, 31, 32 (Except Article 7.1) Grounds for Invalidation under Article 44&45: Article 10, 11, 12, 13.2&3, 15, 16.1, 30, 31, 32 (Except Article 7.1) The Article 7.1 cannot be independently used as an argument. Then How to use the Article 7.1??

Case of Registration in Bad Faith Party A owns a mark in Class 25 Party A produces the clothes in China and export to the USA Party B (Chinese company or individual) applies for registration of the same mark in Class 18 15

Strategy Opposition Non-use cancellation Assignment negotiation Article 13: Well-known trademarks (little change) Article 15: Trading relationship（protection range extended） Article 31.1: Prior right (copyright) (No change) Article 32.2: The prior use on the same goods and enjoy certain reputation (No change) Article 10.1.8: Detrimental to socialist morals or customs, or having other harmful influences (No change, but…) Herein, the Article 7.1 can be used as supplementary argument upon abovementioned articles. 16

7. Agent or Representative Article 15: Agent or representative Interpretation 1) TM agency or representative 2) Sales agent or representative Before 1)Agent or representative 2) contractual, business or any other relation between the applicant and others Know other’s prior used but unregistered mark Now

Case of “WEISS” Dispute cancellation Article 15+similar goods (metal door, building part VS adhesives, special cleansing agent, etc. )? TRAB- PEK Intermediate court - PEK High Court Case of “WEISS” Mark “WEISS” registered in Class 6 in 2008 by Party C Party A: Real Owner of mark Negotiation with Party C over assignment of the mark Party B: (exclusive license) Sale representative in China of Party A Party C: Affiliate company of Party B in Shanghai; Became independent company in 2009 Contract of sale representative with Party A in 2009 (Clause of TM protection included)

8. Confusing Similarity in Infringement case Article 52 1) Identical or similar mark + same or similar goods; … Before Article 57 1) Identical mark + same goods; 2) Similar mark + same goods; Identical mark + similar goods Similar mark + Similar goods + Confusing similarity (for well-know trademark but level of similarity is lowered. ) Now

9. Compensation in Infringement case Article 56 1) Profits of the infringer 2) Losses of the infringed party+ reasonable expenses of the right owner to prevent the infringement 3) RMB 500, 000 Before Article 63 1) the right owner's actual losses 2) Profits of the infringer 3) Multiple times of the royalties of the registered trademark 4) Seriously malicious infringement：1 – 3 times of the aforesaid amount + reasonable expenses of the right owner to prevent the infringement 5) RMB 3,000, 000 6) Infringer shall bear no liability for compensation if the mark has not been used over the past three years (risk of non-use cancellation) 7) Burden of proof Now

10. Burden of proof Article 63 For the purpose of determining the amount of compensation, where the account books and information regarding the infringement are held by the infringer while the right owner has put to the proof as practical as possible, the People's Court may order the infringer submit such account books and information; in case the infringer refuses to submit the account books and information or submit a false version thereof, the People's Court may determine the amount of compensation with reference to the right owner's claim and proof.

11. Use of well-known trademark Article 14.5 Producers and operators shall neither use characters such as "Well-known Trademark" in the goods, on the packaging or vessels nor apply the same for advertising, exhibition or other commercial activities.

How to get Well-Known Trademark? TMO, TRAB Through Trademark Opposition before TMO Through Trademark invalidation before TRAB AIC Court

12. Renewal Article 40 When it is necessary to continue using the registered trademark upon expiration of period of validity, an application for renewal shall be made within: New Law: 12 months Old Law: 6 months before the expiration. If such an application cannot be filed within that period, an extension period of six months may be granted. The period of validity for each renewal of registration shall be ten years as of the next day of the previous period of validity. If the formalities for renewal have not been handled upon expiration of period of validity, the registered trademarks will be deregistered. The Trademark Office shall announce the registered trademarks for renewal.

License agreement recordal 13. Recordal of Licence Article 43 When granting others to use the registered trademarks, the licensor shall file the licence of the trademarks with the Trademark Office for records, which shall announce the same. Without putting the licensing of the trademark on records, the trademark shall not be used to defend the bona fide third party. Old Law New Law Name License agreement recordal License recordal Document Licensor: POA, Application form, Certificate of Incorporation; Licensee: Certificate of Incorporation Licence agreement is required. Licensee: Application form, Certificate of Incorporation Licence agreement is not required. No 3 month restriction after execution of the licence agreement.

Recordal of Assignment Old Law New Law Document Assignor: Application form, Certificate of Incorporation; Assignee: Application form, POA Certificate of Incorporation Assignor: Application form, POA, Certificate of Incorporation; Assignee: Application form, POA, Certificate of Incorporation

14. Argument of prior use of the mark Article 59.3 Where an identical or similar trademark with certain influence has been used, prior to the use by the trademark registrant, with respect to the same goods or similar goods by others before the trademark registrant's application for trademark registration, the exclusive right owner may not prohibit the user of the aforesaid trademark from continuous use of such trademark within the original scope but may request its user for addition of proper logos for distinction purpose.

Use of the mark by Party A Earlier than Use and application for the mark by Party B Party A can counter-argue for the prior use of the mark before the court if Party B sue them Party B can request A to add logo or other distinctive part to the mark If Party A use the mark in bad faith; If Party B register the mark in bad faith;

2080+device+Dental Clinic + Korean characters Trademark Infringement Ligation Similar Marks? Prior use? Guangzhou Intermediate court – Guangdong High Court Case of “2080’S” Party A Chinese company No. 6734292 “2080’S” in Class 3 applied in 2008 and registered in 2010 No prior use + no reputation Party B Licensee of Korean company C 2080+device+Dental Clinic + Korean characters Registered in Korea in 2002 + Prior use in China (2007) + certain reputation (contract, order letter, official receipts, receipt of exportation and importation, etc.)

15.Trademark Agents Article 19: Good faith; Confidentiality; Obligation to inform; Refuse commission (Art 15, 32) Not applying mark except its own service mark

Art 68 AIC can issue warning, impose fine: RMB10,000~100,000 (organization) RMB 5,000~50,000 (individual) Forge document, signature, stamp Unfair competition Art 19.3 & 4 AIC credit record TMO and TRAB stop accepting its cases Civil liability

3. New ip court

Beijing IP Court Beijing IP Court IP Tribunal at Beijing High Court Local court Civil case: copyright (excluding software), trademark (excluding well-known TM), unfair competition(excluding know-how), technical contract, franchise, domain name; Administrative case: administrative act of official dept. at county level for copyright (excluding software), trademark ,unfair competition (excluding know-how) Beijing IP Court Civil and administrative case: including patent, new plant varieties, integrated circuit layout design, know-how, computer software (including procurement of patent, new plant varieties, integrated circuit layout design) Administrative case: administrative act of official dept. at State Counsel level for copyright, trademark , unfair competition (including procurement of trademark) Civil case for well-known trademark IP Tribunal at Beijing High Court

Shanghai IP Court Shanghai IP Court IP Tribunal at Shanghai High Court Local court Civil case: copyright (excluding software), trademark (excluding well-known TM), unfair competition(excluding know-how), technical contract, franchise, domain name; Administrative case: administrative act of official dept. at county level for copyright (excluding software), trademark ,unfair competition (excluding know-how) Shanghai IP Court Civil and administrative case: including patent, new plant varieties, integrated circuit layout design, know-how, computer software (excluding procurement of patent, new plant varieties, integrated circuit layout design) Administrative case: administrative act of official dept. above county level for copyright, trademark , unfair competition (excluding procurement of trademark) Civil case for well-known trademark IP Tribunal at Shanghai High Court

Guangzhou IP Court Guangzhou IP Court IP Tribunal at Local court Civil case: copyright (excluding software), trademark (excluding well-known TM), unfair competition(excluding know-how), technical contract, franchise, domain name; Administrative case: administrative act of official dept. at county level for copyright (excluding software), trademark ,unfair competition (excluding know-how) Guangzhou IP Court Civil and administrative case: including patent, new plant varieties, integrated circuit layout design, know-how, computer software (excluding procurement of patent, new plant varieties, integrated circuit layout design) in Guangdong province (except Shenzhen); Administrative case: administrative act of official dept. above county level in Guangzhou city for copyright, trademark , unfair competition (excluding procurement of trademark) Civil case for well-known trademark in Guangdong province(except Shenzhen) IP Tribunal at Guangdong High Court Guangzhou IP Court

4. TO - DO

To-Do Strategy of trademark portfolio management and protection under new law Update the deadline for all pending cases Set-up/Improvement of Evidential base Review the success rate of all pending opposition (evaluate the risk of infringement) The change of examination criteria for new trademark application 37

Thanks! David Song Kangxin Partners, P.C. Email: david.song@kangxin.com Tel: +86 10 56571377

KANGXIN PARTNERS, P.C. Beijing · Changsha · Wenzhou · Shenyang · Suzhou · Xi’an · USA · Germany · Japan Floor 16, Tower A, InDo Building, A48 Zhichun Road , Haidian District, Beijing 100098, P. R. China T: (8610)56571588 F: (8610)56571599　E: iplaw@kangxin.com