On April 23, 2019, a decision amending the Trademark Law of the People's Republic of China (the "Trademark Law") was adopted at the Tenth Meeting of the Standing Committee of the Thirteenth National People's Congress.  Amended provisions of the Trademark Law will come into effect on November 1, 2019.  This is the fourth time the Trademark Law has been amended, following amendments in 1993, 2001 and 2013.

This amendment primarily involves three aspects and revisions to six articles. Overall, the amendment tends to strengthen intellectual property protections, combat malicious registration of trademarks not for real use, improve the remedy system for malicious registration and malicious litigation, and increases the amount of compensation for trademark infringement, especially malicious infringement of trademark rights. The costs of violating the law are clearly increased, which will act to deter malicious registration, malicious litigation and malicious infringement.

A prominent problem currently existing in practice is that substantial trademark squatting and hoarding activities which lack real uses have made it difficult to protect domestic emerging enterprise brands and present obstacles for the entry of foreign brands into China. For these reasons, rights holders have had to spend substantial sums to buy the brands created by themselves from trademark squatters. In most previous cases, such circumstances have been governed in accordance with Article 44 of the Trademark Law, which provides that dispute procedures to invalidate trademarks can be initiated only once a trademark has been approved for registration. In case trials, there are relatively high requirements for the number of trademarks squatters have registered and for the public profiles in China of rights holders’ trademarks. These factors greatly increase the cost and risk for brand rights holders to protect their rights, and are also not conducive to effectively curbing the malicious registration of trademarks.

In recent years, the courts and the Trademark Office of the State Intellectual Property Office have begun to explore pre-examinations of such circumstances, that is, at the preliminary examination stage, to directly refuse “large quantities of trademark registration applications that have no actual intended use and are for illegitimate purposes.” This amendment to the Trademark Law provides a clear legal basis for combating malicious registrations in four aspects: the initial examination process, trademark agency process, and in trademark application opposition and invalidation procedures. It is good news for reputable business operators that legal protections are now provided in full aspects, from applications and regulating agents to authorization and dispute resolution. Specifically, the amended Article 4 of the Trademark Law adds that “malicious applications to register trademarks not intended for use shall be refused,” which gives examiners the right to voluntarily refuse applications at the preliminary examination stage. Article 19, para. 3 increases the obligations of trademark agents to review applications, and stipulates that agents may not accept malicious applications to register trademarks not intended for use. Articles 33 and 44 together provide for this circumstance as a reason for filing an opposition or invalidation. The amended Trademark Law can be seen as establishing a comprehensive system to combat malicious squatting and hoarding of trademarks, and this system can be described as interlocking with multiple levels of supervision.