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TRADEMARKS UNDER PRC LAW

 

 

Introduction

 

The PRC Trademark Law was revised in 2019. It includes 8 chapters and 73 articles in total.

 

With the purpose of strengthening trademark administration, this law aims at (article 1):

 

Protecting exclusivity,

Ensuring quality,

Safeguarding reputation,

Protecting stakeholders’ interests: consumers, manufacturers, business operators and the market economy.

 

 

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Unsurprisingly, honesty and trustworthiness are key principles appearing throughout the whole text. Prior trademark right holders also hold a special place and benefit from a strong protection (article 32).

 

What is a trademark according to PRC law, why and how is it registered, and which are the state organs involved in trademark matters? These are the questions we will answer here.

 

1. WHAT IS A TRADEMARK 🔎?

 

PRC trademark law enacts a thorough definition of trademarks, explaining what a trademark could be and what it can’t be.

 

Different types of trademarks

 

Distinct categories of possible trademarks are listed (articles 3 and 16).

 

👉 Commodity trademarks: trademarks on a commodity, a product.

 

👉 Services marks: trademarks on services.

 

👉 Collective trademarks: trademark registered on behalf of a group, association or any other organization for the use of their members.

 

👉 Certification marks: controlled by organizations with supervisory capacity over certain commodities or services, characterized by specific features (place of origin, raw materials, manufacturing method or quality).

 

👉 Geographical trademarks: marks including geographical data to indicate that certain commodities are sourced from certain regions, with the idea of a specific quality, reputation or other characteristics thanks to natural or human factors.

 

Characteristics

 

Two main characteristics are found to be essential for trademark registration:

 

Differentiation (article 8): as a consequence, generic marks, descriptive marks, marks lacking salient features or only representing characteristics are not allowed (articles 11 and 12).

 

Distinctiveness (article 9): as a consequence, prior right holders benefit from a special protection, but also well-known trademarks for example, even if not registered in China (articles 13 and 14).

 

Exclusions

 

Are clearly banned from trademark registration (article 10):

 

Some geographical names, country names, flags,

Discriminatory or deceptive and misleading marks,

Any trademark detrimental to socialist morals or having any other adverse effect.

 

2. WHY REGISTERING A TRADEMARK

 

The main purpose of registering a trademark is of course obtaining exclusive rights on this trademark (article 3) and be able to oppose these rights on others in case of wrongdoing.

 

In order to achieve this purpose of protecting prior right holders, infringements to PRC trademark law are punished with different types of penalties (articles 51, 52, 53, 60, 65, 66), ranging from order to make corrections to confiscation, fines, compensation and even criminal liability.

 

3. WHO CAN FILE A TRADEMARK ?

 

There are different ways of applying for a trademark (article 5 and 18):

👉Individually, meaning personally,

👉Jointly, to enjoy joint exclusive rights,

👉Through a lawfully established entrusted trademark agency.

Cautious: foreigners or foreign enterprises must mandatorily go through a trademark agency.

 

Trademark agencies are strictly regulated and must act according to the following principles (articles 19, 20 and 68):

 

Honesty, trustworthiness: for instance, the trademark agency must notify the applicant in case the registration is not allowed.

Under the limit of the entrustment given by the applicant.

With respect to confidentiality and commercial secrets,

In compliance with laws and regulations,

Under the supervision of a trademark agency industry organization (with members admission and penalties for infringement).

 

4. THE STATE ORGANS INVOLVED WITH TRADEMARK REGISTRATION 🇨🇳

 

Diagram: the PRC state organs for trademark matters

 

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(1)   MSA is the Market Supervision Administration, previously Administration for industry and commerce department of the State Council

(2)   TRABU: Trademark Bureau, in charge of registration and administration

(3)   TRABO: Trademark Review and Adjudication Board, in charge of disputes

 

In terms of trademarks, the MSA, including the TRABU and the TRABO, have in fact extensive powers, such as:

 

📍 asking for explanation and corrections (article 29).

📍 asking to submit a trademark application (articles 51 and 52).

📍 investigating powers, such as interviewing, examining information and facts, accessing and copying materials, onsite and articles inspection, seizing and confiscating (articles 35, 61 and 62).

📍 handling disputes and mediation (article 60).

 

5. FIRST COME FIRST SERVE 🥇

 

In terms of trademark registration, better be fast (article 31):

 

👉 Between two similar applications, the earliest will prevail.

👉 Between two similar applications on the same day, the trademark with the earliest usage will prevail.

 

Early application is also paramount since registrations take time. Roughly, it will take a minimum of 9 months to obtain a first decision from the TRABU on your trademark application (articles 28). This timeframe can be more than doubled in case of objections or procedure with the TRABO (articles 34 and 35).

 

Once registered, your trademark will be valid for 10 years, with a specific renewal procedure (articles 39 and 40).

 

During this time, you will enjoy exclusive rights on your trademark and be able to transfer or license your trademark under specific conditions (article 42 and 43).

 

Keep in mind that even registered, a trademark can be revoked, in particular if it has not been continuously used for 3 years (article 49), but also invalidated (article 44).

 

Conclusion

Our tips on Chinese trademarks 💡?

 

Be first and always prefer a local filing to obtain a Chinese registration certificate (article 33), required by some online platforms to sell through them.

 

What is the risk here? Someone else might file your trademark before you, forcing you to pay to get it transferred back.

 

Glad to share this Daxue talk on foreign investment in China.

🎧  Please click on the following link for the Podcast:

 

 

https://mp.weixin.qq.com/s/PQ4u2FabtVVSe95o1r0mUA

 

 

Three Key Takeaways

  1. Even if merging with a Chinese company, it is still forbidden for WOFEs (wholly foreign-owned enterprises) to invest in certain sectors, although the number of forbidden sectors is decreasing substantially every year.

  2. If you want to set up a joint-venture company in Сhina, the company must be Chinese owned but can have foreign investors.

  3. Capital gains tax is generally 20% in China.

Daxue Talks is a show powered by Daxue Consulting, a China-based strategic market research company founded in 2010! With Daxue Talks, you will stay up to date with all the latest business updates in China.

 

 

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Introduction

 

As mentioned in the first article of our series, you know by now that the People’s Republic of China (PRC) has its own Civil Code 📕, effective January 1st, 2021.

 

Reflecting on its implications on businesses, the third and last article of our series addresses the performance of contracts.

 

If you have missed our previous publications on this topic, click here for a read 👇.

 

Part 1 ➡️ https://www.linkedin.com/pulse/civil-code-peoples-republic-china-overview-shift-nicolas-coster.

 

Part 2 ➡️ https://www.linkedin.com/pulse/civil-code-peoples-republic-china-contracts-part-2-nicolas-coster/?trackingId=vCgrQd61KAmv137hhDhW3Q%3D%3D

 

1.     Modification and assignment 

 

A change of name, legal representative, person in charge or person handling the contract does not affect the contract if it is already effective (article 532).

An unforeseeable and significant change of basic contractual conditions, not belonging to commercial risks and making it unfair for a party to perform, can be a ground for renegotiation. In case of failure to renegotiate, the parties could resort to a Court or arbitration (article 533).

A contract can be modified if the parties reach an agreement (article 543).

If not already allowed by law or agreement, assignment of a contract is possible after notification unless the nature of the contract prevents it or it is forbidden by law or agreement (articles 545 and 546).

As for force majeure, it can impact the performance of a contract and exempt the party involved from liability, provided a timely notice is sent (article 590).

 

2.     Suspension of contracts 

 

It is possible for a party to suspend the performance of a contract if they have conclusive evidence that:

-       The business of the other is seriously deteriorating.

-       The other is trying to evade debts (property transferring or funds withdrawing to that purpose).

-       The other is losing business reputation.

-       Other circumstances proving or likely to prove that the other is losing its ability to perform (article 527).

The suspension shall be timely notified, and performance resumed in case of guarantee given by the other party (article 528).

A party can also suspend the performance of a contract if it becomes difficult due to the absence of notification of a division, merger or change in domicile (article 529).

 

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3.     Liability 

 

The consequences of the absence of agreement or unclear agreement as to liability for breach are addressed in article 582, while articles 585 and 586 respectively deals with liquidated damages and security deposits for claims.

Failure to perform its obligations by a party is a breach of contract, involving liability. Remedies include obligation to perform, compensation for loss, or other remedial measures (article 577).

 

4.     Interpretation 💭

 

Dispute over the understanding of a contractual provision, including discrepancy between multi-lingual versions, is resolved in light of the literal meaning, as well as the nature, the purpose, the usual practices and good faith (articles 466, with reference to article 142).

Standard terms are interpreted based on the usual understanding, except in case of multiple interpretations, where preference is given to the interpretation that favors the party who accepted the standard terms (article 498).

 

Conclusion

 

As mentioned previously, the legal ecosystem in the People’s Republic of China is definitely evolving.

 

At this stage, and since this Civil Code is breaking news, we need to observe and assess the impacts of these new developments, whether on businesses or on individuals.

 

Is there more codification on the way❓

 

To know more about Chinese law developments, follow us!

 

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