Last Friday, China’s legislature passed new trademark legislation that purports to crack down on trademark infringement and level the playing field for foreign brands.

Trademark infringement has become a major problem in China, which has more registered trademarks than any other country in the world. Businesses in China have started to treat famous trademarks as “honorary titles” to market their own products, making legal trademark protection there virtually meaningless. Additionally, so many marks have been registered in China that registration wait times have become arduous, and it can be difficult to find a registerable mark, particularly if the mark contains a meaningful world (for example, Tesla’s entry into the Chinese marketplace is currently being held up by a trademark squatter). The new law hopes to address some of these problems and provide increased protection of foreign trademarks.

One major change involves setting time limits for the trademark application process. Previously, the trademark application process could last anywhere from 30 months to 7 or 8 years. The new law limits the process to 9 months, or a full year if objections to the registration are made.

The law also ramps up the penalties for trademark infringement, increasing the maximum fine to $500,000, roughly six times the previous maximum statutory penalty. A common complaint about the previous law was that the cost of protecting a trademark in China was far greater than the cost of infringing on a trademark. The new law seeks to strike a better balance by imposing harsher penalties against infringers.

The new law will go into effect in May of 2014. The effectiveness of the new measures is yet to be determined, but officials hope it will create a better framework for cooperation between China and foreign governments on trademark issues, showing China is serious about intellectual property protection.

–Andrew Bauer

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One Response to China Reforms Its Trademark Law

  1. Andrew says:

    Very interesting article, Andrew. I think this new legislation is much-needed but may not be enough to truly combat the problems of trademark piracy in China. Firstly, the cyber-squatter in China who has registered the “Tesla China” mark may still have the upper-hand in his negotiations with Tesla. It would be difficult for Tesla to prove that its mark is famous in China sufficient to apply the “well-known marks” doctrine. While this new law is a step in the right direction, without a corresponding cybersquatting statute and other much-needed reforms of their trademark regime, China may remain a hotbed for trademark infringement much to the chagrin of multi-national corporations abroad.