Protection of TM rights needs co-operation of various systems

By Wang Yadong and Hu Cuiqin, Run Ming Law Office
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On 30 August, the Standing Committee of the National People’s Congress deliberated on and adopted the Bill to Amend the Trademark Law, which will officially be implemented from 1 May 2014. The New Trademark Law makes several amendments to make registration by applicants easier, safeguard the fair competition market order and strengthen the protection of trademark rights. Particularly in terms of strengthening the protection of trademark rights, it makes some unprecedented ground-breaking revisions.

王亚东 Wang Yadong 润明律师事务所 执行合伙人 Executive Partner Run Ming Law Office
王亚东
Wang Yadong
润明律师事务所
执行合伙人
Executive Partner
Run Ming Law Office

Amended provisions

The New Trademark Law introduces for the first time a punitive damages system, specifying that in the event of malicious infringement, where the circumstances are serious, the measure of damages may be set at between one and three times the losses incurred by the rights holder, the benefits derived by the infringer or the royalties for use of the trademark; additionally, it raises the ceiling on the statutory measure of damages from RMB500,000 (US$81,000) to RMB3 million.

With a view to resolving the issue of damages amounts tending on the low side due to the difficulty of rights holders in adducing evidence, the New Trademark Law adds a provision that where the rights holder has done his best to adduce evidence, and the account books and documentation relating to the infringement are mainly in the possession of the infringer, the court may order the infringer to present the same. If the infringer fails to do so, or presents false account books and documentation, the court may determine the measure of damages by making reference to the claims of the rights holder and the evidence presented by him.

Co-ordinating with other systems

It is our opinion that, on the whole, the most recent amendments to the Trademark Law aggressively address problems that have been revealed, such as weak protection of trademark rights, frequent occurrence of malicious infringement and repeated infringement, the measure of damages tending toward the low side, etc. We are confident that the implementation of the above-mentioned systems will have a positive effect on the practical operation of the protection of rights by rights holders. However, in the midst of this joy, we are also aware of the challenges of implementation.

In past practice, even if a rights holder managed to secure a judgment awarding damages, “difficulty of enforcement” was another nearly insurmountable hurdle that he or she would often face.

According to Supreme People’s Court statistics, in the cases where enforcement was completed by courts nationwide, between 2008 and 2012, and where judged debtor had property, more than 70% of these debtors acted to evade, circumvent and sometimes even violently resist enforcement, and less than 30% voluntarily performed their obligations.

Therefore, the authors are of the opinion that the protection of trademark rights not only needs to rely on protection from the systems offered by the Trademark Law, but also additionally requires the co-ordination of systems at other levels, such as civil enforcement and criminal protection. In this vein, the authors wish to put forward some views and recommendations that may have benefit in trademark protection practice.

胡翠琴 Hu Cuiqin 润明律师事务所 律师 Lawyer Run Ming Law Office
胡翠琴
Hu Cuiqin
润明律师事务所
律师
Lawyer
Run Ming Law Office

Increasing application of the preservation system available in legal actions. The preservation system as a remedy in civil procedures is not only helpful in ensuring the interests of rights holders from the enforcement perspective, but can also to a great extent mitigate the problem of the difficulty of enforcement. However, in practice, numerous restrictions exist on the application of this system. For example, in general, courts treat the provision by the rights holder of leads on the property of the judged debtor as a precondition for the acceptance of an application for preservation.

However, as certain infringers often come prepared, it is generally very difficult for the rights holder to obtain information on their property and, in particular, where information on the respondent’s bank accounts, immovable property, etc. requires the intervention of public authorities before it can be accessed, the rights holder has absolutely no means of satisfying the court’s condition for acceptance. Accordingly, we hope that the courts can appropriately relax the conditions for the acceptance of applications for preservation. Additionally, courts should be more willing to act ex officio in taking preservation measures.

Intensifying criminal crackdowns on trademark infringements. There is still a problem in China of insufficient knowledge of the intangible asset that is a trademark right. In practice, certain people feel that infringing trademark rights only involves civil and administrative issues. But others feel that cracking down on the crime of trademark infringement is not a compulsory task for public security and other law enforcement authorities, and if it is mishandled it will have a negative impact on the local economy – so there is no need to devote excessive effort to it. Certain local law enforcement authorities have ignored certain cases where trademark crimes are obviously constituted, and have failed to perform their statutory obligation of investigation, or of transferring the case to the proper authority for handling.

And if a rights holder attempts to protect his trademark rights by way of a private criminal prosecution, he will often find that he has to give up on this method of protecting his rights because he does not satisfy the criteria for opening a case set by the relevant authority. The authors believe that in the current social environment, where trademark infringement cases are showing an upward trend year after year, criminal sanctions are the most effective legal means for halting this trend. Accordingly, we recommend that relevant authorities need to intensify the application of criminal protection and appropriately loosen the applicable conditions, such as the criteria for case opening in private prosecution cases.

Worthy attempt

In summary, although in a certain sense it can be said that the recent amendments to the Trademark Law are a worthy attempt by the central government to put a stop to negative phenomena, if other relevant legal systems fail to keep pace, judgments awarding damages of RMB500,000 or RMB3 million will not represent a substantive difference for rights holders in their efforts to safeguard their rights. Accordingly, we call upon the central government to carry out certain system and policy revisions that boost civil enforcement, criminal protection etc., to ensure that the trademark rights of rights holders are duly protected.

Wang Yadong is the executive partner and Hu Cuiqin is a lawyer at Run Ming Law Office

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