Amendments to China's trademark law that take effect November 1, 2019 are bringing smiles to the faces of trademark owners worldwide. Probably a result of pressure by the Trump administration for better IP protections in China in the countries' ongoing trade dispute, the China Trademark Office is getting a mechanism to reject malicious applications and invalidate registrations where the owner has no intention to use the mark. To deter the activity before it starts and punish it when it occurs, the Office is also getting the power to impose fines against bad-faith filers and their agents. Next, infringement will be deterred by making malicious infringers subject to "one to five times" damages, up from "one to three times"; moreover, the statutory damage limit is being raised from around US$450,000 to around $750,000. Furthermore, to deter malicious plaintiffs who try to extort those who should be the real brand owners, courts will be able to impose unspecified penalties.
While these changes are being celebrated, whether they will be effective depends on how local authorities apply the new rules. The evidentiary burden in China is often high, so how, for example, will the Office establish lack of a bona fide intention to use a mark? It is always harder for a plaintiff to prove a negative (i.e., lack of intent) compared to a positive (i.e., the nature and extent of actual use). U.S. brand owners are familiar with "lack of bona fide intent" as a basis for challenging U.S. trademark applications/registrations and know proving it is not always straightforward. Will infringers really be deterred by higher damages if they were not already deterred by the threat of sizable damages, and if it remains hard to prove infringement in the first place?
Ultimately, China is taking good-faith steps in the right direction, though it will likely take years and even more aggressive steps to change the "infringement" and "extortion" culture that exists among the large community of bad-faith filers and infringers. So brand owners will still need an arsenal of trademark registrations and, where appropriate, well-known protection for globally significant marks to take on these parties, even after November 1.