Xiaoxian Qi
On August 30,
2013, the Standing Committee of the National People's Congress passed the
Decisions of the Standing Committee of the National People's Congress on
Amendment to the Trademark Law of the People's Republic of China, marking the
third amendment to the Trademark Law. Reading the amended Trademark Law
carefully, we can find that the provision that a “well-known trademark” shall
not be used for advertisement purposes in the draft version was retained as
Article 14.5 of the Trademark Law, which provides as follows:
Manufacturers
and business operators shall neither use wording such as "well-known trademark"
on the goods or on the packaging or containers of the goods, nor apply the same
for advertising, exhibition or other commercial activities.
As the third
amendment to the Trademark Law (hereinafter the “new Trademark Law”) entered
into force on May 1st, 2014, it is very important for us to figure out how to
regulate trademark owners’ advertising activities in accordance with the
provision of Article 14.5 (hereinafter referred to as the “Prohibition
Provision”) of the new Trademark Law.
A Complete Prohibition on Use of the Wording “Well-Known
Trademark”
Since the Prohibition Provision includes “other commercial
activities” as a transparent clause, we believe that it has completely ruled out
the possibility of advertising by the wording “well-known trademark” in the use
of trademark.
It’s noteworthy that before the new Trademark Law took effect,
the wording “well-known trademark” could be used in advertising as long as the
trademark has been recognized by the relevant administrative or judicial
authorities as a well-known trademark. The Prohibition Provision, however,
provides that the use of the wording “well-known trademark” is by nature an
illegal act that permits no exception.
For this reason, the Prohibition
Provision in fact eliminates the possibility of the wording “well-known
trademark” appearing in any kind of commercial activities.
Violation of the
Prohibition Provision may incur stiff administrative penalties and civil
litigation proceedings.
On the one hand, Article 53 of the new Trademark Law
provides that “In the event of a violation of provision of Article 14.5 hereof
(i.e. the Prohibition Provision), the local administrative department for
industry and commerce shall order rectification of such violation and impose a
fine of CNY100,000.” It is obvious that the new Trademark Law provides stiffer
administrative penalties on activities in violation of the Prohibition Provision
instead of imposing a flexible amount of fine depending on the circumstance of
the breach.
On the other hand, we believe that the Prohibition Provision may
also serves as a legal basis for unfair competition accusations in anti-unfair
competition actions. Business operators’ use of the wording “well-known
trademark” in promotional activities inevitably gives the relevant public,
especially the average consumers, a positive impression. After the new Trademark
Law took effect, such promotional activities may constitute unfair competition
because the illegal advertising activities will invest unfair competitive
advantages in the business operators, run counter to the principle of good
faith, impair other business operators’ legal rights and interests and disturb
social and economic order. The other business operators suffering from the
above-described illegal acts may file civil actions, demanding the offender to
bear civil liability.
The Prohibition Provision does not prohibit trademark
advertising.
Although the Prohibition Provision completely bans the
advertising of “well-known trademark”; we still believe that right owners of
trademarks that enjoy an extremely high reputation among the relevant public can
continue to advertise the reputation and public awareness of their
trademarks.
First, the Prohibition Provision only prohibits the use of the
wording “well-known trademark” rather than the wording “well-known”. Accordingly
the advertisement of “well-known XX trademark” or “XX trademark is well-known”
remains unaffected as long as it is not suspected of fraudulent advertising.
Second, Chinese language has provided more than abundant words for us to
choose. Trademark owners are not necessarily restricted to the wording
“well-known”; instead, they can use synonyms such as “famous” or “reputable” as
an alternative.
In any case, for trademarks that deserve the “well-known”
title, the Prohibition Provision will not materially harm the use and
advertising thereof.
It is advisable to check one’s own goods and promotional
materials to ensure compliance with the new Trademark Law
According to the
general principle of non-retroactivity of law, goods, advertisement or
promotional activities sold, published or carried out prior to the
implementation of the new Trademark Law shall not be affected by the Prohibition
Provision; accordingly, the use of the wording “well-known trademark” before the
new Trademark Law entered into force shall not result in any legal
consequences.
However, what about the products that were manufactured before
but sold after the new Trademark Law took effect? We believe that before the
Regulations for the Implementation of the Trademark Law or other applicable laws
provide a specific provision in this respect, trademark owners should cautiously
deal with this issue, check products which were manufactured before the
effective date of the new Trademark Law but may be sold thereafter, and take
precautions to remove (or cover) the wording “well-known trademark” on the
products to avoid unprepared risks.
In addition, trademark owners should pay
more attention to the wording “well-known trademark” in their promotional
materials and delete such wording from all promotional materials to be
distributed in the future.
In summary, the Prohibition Provision puts an end
to the use of the wording “well-known trademark” in trademark advertising. Any
violation of such a provision may be subject to severe legal consequences.
Nevertheless, the Prohibition Provision will not cause any material impact on
the advertising of truly “well-known” trademarks. Trademark owners are advised
to check and remove the wording “well-known trademark” on their products and in
their promotional activities to ensure compliance with the law.
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