26 June, 2013

Chinese Intellectual Property Law (Part 2) - Trademarks

(Part 1 discussing copyright law in China can be found here, Part 3 discussing Patents here)

This second part of my short introduction to intellectual property in China, previously having discussed copyright and the challenges China has faced in the field, will now turn to trademarks. Often thought of as a country mostly dealing in knock-offs of well-known brands, trademarks are an important issue that the law has to take into account and protect. As said, this will be an overview of what the current legislation attempts to do in China and aim to point out some issues with it as it stands.

The current legislation in force in China is the Trademark Law of the People's Republic of China (English translation can be found here, Chinese here) enacted in 1982. The latest amendments to the legislation having been made in 2001, coming in the wake of China becoming a member of the WTO.

Much like with copyright the legislation sets out very clearly what it aims to achieve:
"This Law is enacted for the purpose of improving the administration of trademarks, protecting the exclusive right to the use of a trademark, and encouraging producers and dealers to guarantee the quality of their goods and services and preserve the credibility of trademarks, so as to protect the interests of consumers, producers and dealers and promote the development of the socialist market economy."
One has to note a similar approach by the Chinese legislature to what has been established very well here in the common law; a trademark is an indicator of the "place of origin of goods", the 'badge of origin', separating other similar goods or services from those of the ones being sold under a particular trademark. Trademarks are sought from the Chinese Trademark Office and are registrable by any legal person, natural person or organization.

Exhibit A
The Chinese law permits the registration of a sign, including "...any work, design, letter of the alphabet, numeral, three-dimensional symbol and color combination, or any combination of the above", with the list being non-exhaustive. When compared to the allowed marks for example in Australia or the UK, the Chinese legislature has left the express types of signs very short (bearing a close resemblance to those allowed in the latter), however as all legislatures allow for the expansion of the types of marks which can be a trademark, one can't make direct comparisons. The Chinese law also sets a strict list of non-registrable marks, including the Chinese flag and other national symbols. 

Much akin to what was discussed in the Australian case of Phillips v Remington, with regards to three-dimensional marks the Chinese law prevents the registration of those marks "...where the sign merely indicates the shape inherent in the nature of the goods concerned, or it is only dictated by the need to achieve technical effects or the need to give the goods substantive value". Although the provision does not mention any patents relating to those marks, one can easily make the connection between marks that "achieve a technical effect" or "give the goods substantive value" as being a link to patented parts in to the goods.

In their assessment of an application for a trademark, the Trademark Office assesses the mark's degree of public recognition; the duration of its use; the duration and extent of any advertisement of that product; the records of protection it has gained as a well-known trademark; and other factors making that mark well-known. Immediately this drew my mind to the tort of passing off (separate in itself from trademarks per say), and the factor of 'good will'. At common law there is no requirement for the mark to be "well-known", however it does have to distinguish the goods or services in question from others, which could be understood as a requirement for it to be well-known in a sense. 

Exhibit B
But even when the Chinese legislation bears resemblance to the laws of other nations, there are still some problems which plague trademarks in China. Jeroen Lallemand explained some practical issues which affect the registrations of marks: Due to the complexity of the language, companies have to register three different variants of their mark; the original brand, the 'sound-alike' of that brand, and the brand's definition in Mandarin. Without the registration of all three variants, the brand name could be used through another completely legally. Also as China has a 'first come first served' approach to trademarks and should you be late to register your trademark, it could be registered by another entity entirely. A good example of this was the problems faced by Apple with the iPad trademark some time ago.

Another issue, much like when dealing with copyright, is the lack of enforcement in the protection of intellectual property. The US has brought this issue up in WTO dispute settlement proceedings only three years ago, clearly demonstrating that there is still much to improve on that front. A lack of enforcement is illustrated by the existence of fake stores in China, portraying themselves as well-known brands selling knock-off goods under their trademark. 

At their core trademarks are treated similarly in China, and on the face of it, are offered equal protection. Even with the close resemblance of laws in China and common law countries, the lack of enforcement doesn't showcase the protection of trademarks well. Between 2008 and 2010 the Chinese customs seized counterfeit goods for a total value of roughly 160 million dollars, with an arguably much larger amount going past customs to the world market, highlighting this issue even more. Where the Chinese legislature will take trademarks remains to be see. With no amendments in the better part of a decade, one could argue that this would be the time to possibly take a look at better enforcement standards or to even widen protection to linguistically similar brands. Abuses of pre-existing brands should also be something to be looked at, as blatantly trading under a well-known western name clearly is a clash of interests.

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