It is an ordinary cold sunny morning in Beijing. I am checking emails while enjoying the sunshine and warmth in the office. An email from a new client came into my sight, which reads as follows:
I’m writing to you regarding the detection of a newly filed application published in the CNIPA official Trademark Gazette on December 27, 2020. My client owns a U.S. Trademark Registration for the same mark covering “clothing; shoes; hats” in Class 25 (see attached Certificate of Registration). The client does not own a trademark registration or have a pending application in China, but the client has used the mark in China since 2018. Please let us know how best to proceed.
I receive similar emails almost every week. Following an investigation, many such applications are considered as malicious trademark filings or hoardings. For this case, I have an intuition that it might be a bad faith trademark application as well because the detected mark is identical with the client’s mark, which inherently has a very high degree of creativity and distinctiveness; it could not be explained by coincidence. I quickly checked the trademark portfolio of the detected applicant and its related companies. And yes, they have 3 related companies and filed up to 1300 trademark applications within a short period. More importantly, lots of the marks have the trace of copying others’ famous brands, not only copying the client’s mark.
Why are malicious trademark filings and hoarding still serious in China? We must admit that the fist-to-file principle adopted in China contributes to it to some extent. In addition, low costs and high earnings within short time have attracted trademark applicants to file trademark applications in bad faith without intention to use the marks. It not only seriously disturbs the order of trademark registrations in China, but also infringes on the legitimate rights and interests of other market entities, which has a bad impact on the business environment of fair competition in China.
For the above case, I am confident that we will have a good chance of success in opposing the detected mark.
Why am I so confident? It will be attributed to the amendment of Article 4 of the China Trademark Law in 2019, which is the 4th amendment of the China Trademark Law.
According to Article 4 of China Trademark Law, any natural person, legal person or other organization that needs to obtain the exclusive right to use a trademark for its goods or services during production and business operations shall apply for trademark registration with the Trademark Office. The malicious trademark registration application not for the purpose of use shall be rejected.
Article 4 clearly stipulates that malicious trademark applications without the purpose of use shall be rejected by the CNIPA. It has also been the legal basis for initiating an opposition action or an invalidation action according to the China Trademark Law. The 4th amendment of the China Trademark Law has undoubtedly laid a solid legal foundation for effectively cracking down on malicious trademark applications from general provisions to specific provisions. During the trademark law amendments, China is always striving to combat the trademark filings in bad faith. However, compared with the previous amendment, the 4th amendment first grants the examiners the legal basis or article in rejecting a bad faith trademark application during the substantial examination of a new trademark application. The new trademark law provides a clear legal basis for the regulation of malicious trademark registration and there is now a comprehensive mechanism for combating bad faith trademark filings or hoardings in the whole trademark lifecycle. Namely, a bad faith trademark application could be rejected as early as in the substantial examination stage, not allowed for registration after the preliminary publication, declared invalid after registration, cancelled for non-use three years after registration, and investigated for civil liability for trademark infringement.
In order to facilitate the implementation of the amended Article 4 of China Trademark Law, the State Administration of Market Regulation and the Beijing High People’s Court have issued relevant documents, which provide a very clear guideline and way in applying for Article 4.
State Administration of Market Regulation issued Some Provisions on Regulating Trademark Application for Registration which went into effect on December 1, 2019. Article 8 of it clearly states that the following factors could be comprehensively taken into consideration by the relevant trademark registration department in determining whether the trademark registration application is in violation of Article 4 of the Trademark Law: (1) the amount of registered trademarks applied for by the applicant or the natural person, legal person or other organization associated with the applicant, the classes designated, the trademark transaction situation, etc; (2) The industry and business operation status of the applicant; (3) The applicant has been determined by an effective administrative decision or ruling or judicial judgment to have engaged in malicious trademark filings or trademark infringement against others’ exclusive trademark rights; (4) The trademark applied for is same as or similar to the others’ trademark with certain reputation; (5) The trademark applied for registration is same as or similar to the name of a well-known person, company trade name, abbreviation of trade name, or other business logos; (6) other factors.
The Guidelines for the Trial of Trademark Right Granting and Verification Cases issued by Beijing High People’s Court also lists various circumstances in applying Article 4 of the China Trademark Law. It states that if any trademark applicant obviously lacks the true intention of use and is under any of the following circumstances, this applicant may be determined to violate the provisions of Article 4 of the Trademark Law: (1) applying for registration of the trademark identical with or similar to that of various subjects with certain popularity or higher distinctiveness, which is regarded as a serious circumstance; (2) applying for registration of the trademark identical with or similar to that of the same subject with certain popularity or higher distinctiveness, which is regarded as a serious circumstance; (3) applying for registration of the trademark identical with or similar to any other commercial signs other than trademarks of others, which is regarded as a serious circumstance; (4) applying for registration of the trademark identical with or similar to any name of place, scenic spot, building and others with certain popularity, which is regarded as a serious circumstance; (5) applying for registration of a large number of trademarks without good reasons. If the trademark applicant above claims that he has the true intention of use, but fails to present the relevant evidence, this claim shall not be supported.
Whether a trademark application is an instance of bad faith filing or hoarding involves much investigation. As an interested party, the real trademark owner may already have held evidence or may be more capable of presenting evidence to show the bad faith of the trademark applicant. We usually suggest filing a written request for “ex officio refusal” against pending trademarks once they are filed, before they are published, presenting sufficient evidence showing the bad faith. It will assist the CNIPA examiners in assessing the bad faith of the trademark applicant and whether it is appropriate to reject the trademark application by adopting Article 4 during the substantial examination stage. If the CNIPA supports our claim, the trademark will be rejected during the substantial examination stage.
For Article 4 of China Trademark Law, there are two key points, one is malicious filings and the other is not for real use. I understand that the key point is the bad faith of the applicant and the factor of not for real use is an important factor that should be taken into consideration. From this aspect, the defensive trademark registration in good faith shall not be rejected based on Article 4 while the free riding trademark applications will be rejected even if the applicant has the intention to use the mark. Therefore, defensive trademark registrations are still recommendable at current stage. Defensive trademark registrations often save a significant amount of time and money down the road – with defensive registrations in place, the real trademark owner can avoid the hassle of constantly filing opposition actions against approved marks; the CNIPA will not even approve any mark that is similar in the first place.
Thanks to the 4th amendment of Article 4 of China Trademark Law, we believe there will be less and less malicious trademark filings and hoardings.