Certain provinces in China have begun to penalize businesses where licenses, authorizing the use of registered trademarks, have not been recorded with the Trademark Office and adequate notice thereof has not been provided to the local Administration for Industry and Commerce (AIC).

In particular, the Guangzhou AIC has announced its intention to enforce Rule 35 of the Implementing Regulations, which requires that, where the use of a registered trademark has been licensed, a written "License Agreement" must be executed by the parties, recorded against the relevant trademark registration at the Trademark Office and notified to the local AIC. The penalties for failure to comply with Rule 35 include fines and cancellation of the registered trademark. It is anticipated that similar actions will be taken in other provinces.