Introduction

China's Trademark Law, formally known as the, has undergone several amendments since its enactment in 1982, with the most recent significant revision in 2019. This law governs the registration, protection, and enforcement of trademarks in one of the world's largest markets, where over 7 million trademark applications were filed in 2023 alone, according to the China National Intellectual Property Administration (CNIPA). A key feature of the China's Trademark Law, formally known as the law People's Republic of China, is its "first-to-file" principle, which prioritizes the first applicant for registration, often leading to issues like bad-faith registrations or "trademark squatting." To address such abuses, Article 15 plays a crucial role by prohibiting unauthorized registrations based on specific relationships between the applicant and the prior trademark owner.

Article 15 is divided into two paragraphs, each targeting different scenarios of malicious registration. Paragraph 1 focuses on agent-principal relationships, while Paragraph 2 extends to broader business or contractual ties. These provisions aim to uphold the principle of good faith (Article 7) and prevent exploitation of confidential or privileged knowledge about another's trademark. This article explores the distinctions, requirements, and practical implications of these paragraphs, drawing on legal texts and case examples.

Paragraph 1 of Article 15: Focus on Agent or Representative Relationships

Paragraph 1 of Article 15 states: "Where an agent or representative applies for registration of the principal's trademark in his/her own name without authorization, and the principal raises an opposition, the registration shall not be granted and the use of the trademark shall be prohibited."  This provision is designed to prevent agents—such as distributors, attorneys, or representatives—from exploiting their fiduciary position to register the principal's trademark for personal gain.

The application requirements for Paragraph 1 are relatively straightforward but require clear evidence of the relationship:

1. Existence of an Agent-Principal Relationship: There must be a formal agency or representative arrangement, such as a distribution agreement, licensing contract, or representation in business dealings. This relationship doesn't need to be ongoing; even past agency suffices if it provided access to the trademark.

2. Unauthorized Application: The agent must have applied for the trademark without the principal's permission. The trademark in question must be identical or highly similar to the principal's mark, used on identical or similar goods/services.

3. Opposition or Invalidation Filed by the Principal: The principal must actively challenge the application during the opposition period (3 months after publication) or seek invalidation within 5 years post-registration (or indefinitely if bad faith is proven under Article 44).

For example, in the invalidation action against the mark "MYREVEST" under No. 61299548, the CNIPA applied Paragraph 1, invalidating the registration due to the clear agency relationship and lack of authorization. 

In this case, the applicant who filed invalidation action claimed that the disputed party was a former distributor of their MYREVEST brand, knowingly applied for registration of the identical trademark despite being aware that the applicant is the legitimate rights holder of the MYREVEST trademark.  Following the examination, the CNIPA determined that the evidence submitted by the applicant, including the agency authorization letter between the parties, as well as transaction records of goods, sufficiently proves that an agency and distribution relationship existed between the applicant and the disputed party prior to the filing date of the disputed trademark, and that a product purchase and sale relationship was established.  As a distributor who gained knowledge of the applicant’s trademark through commercial dealings and authorization, the disputed party was clearly aware, or should have been aware, of these facts.  Consequently, the disputed party constitutes an “agent” as referred to in Article 15, Paragraph 1 of the Trademark Law.  Furthermore, the disputed trademark is deemed similar to the applicant’s prior “MYREVEST” trademark.  Additionally, the goods designated for the disputed trademark, such as “cement mixtures; cement,” are closely related to the applicant’s primary business of cement and other building materials in terms of function, purpose, target consumers, and sales channels.  In conclusion, the disputed party’s act of applying for registration of the disputed trademark without the applicant’s authorization violates Article 15, Paragraph 1 of the Trademark Law.

Paragraph 2 of Article 15: Broader Protection against Business or Contractual Exploitation

Paragraph 2 expands the scope: "Where an application for trademark registration is filed for the same or similar goods with another's trademark that has been used prior to the application and the applicant knows the existence of the trademark due to contractual, business or other relations with the other person other than those prescribed in the preceding paragraph, if the other person raises an opposition, the registration shall not be granted."  

The application requirements for Paragraph 2 are more expansive but demand stronger evidentiary support:

1. Prior Use of the Trademark: The applicants who raise action must prove that they used the trademark over identical or similar goods before the disputed party's filing date. The prior user only needs to prove that the trademark has been used, without the need to demonstrate that the trademark has gained any reputation through use.

2. Knowledge through Specific Relationships: The disputed party must have known about the trademark due to "contractual, business, or other relations".  Common contractual and business relationships include buyer-seller relationships, commission processing relationships, franchising relationships, investment relationships, sponsorships, business relationships, and other commercial interactions.  Other relationships can include familial ties, subordinate relationships, or proximity of business addresses.  Evidence of these relationships can be provided through contracts, correspondence, transaction records, employment records, social insurance, medical insurance materials, household registration certificates, and other evidence that can demonstrate the existence of a specific relationship.

3. Similarity in Marks and Goods/Services: The applied-for mark must be identical or similar to the prior mark, on identical or similar goods/services, likely causing confusion.

4. Opposition or Invalidation by the Prior User: Similar to Paragraph 1, the prior user must file an opposition or invalidation request.

Paragraph 2 is broader, covering scenarios beyond formal agency, but requires demonstrating the relationship and knowledge, which can be evidentially demanding.

For example, in the invalidation action against the mark "" under No. 66206272, The CNIPA applied Paragraph 2 of Article 15, invalidating the registration due to the indirect business relationship between the applicant who filed invalidation action and the disputed party.

The applicant claimed that during the course of cooperation with the applicant’s wholly-owned subsidiary, the legal representative of the disputed party gained knowledge of the relationship between the applicant and its wholly-owned subsidiary, as well as certain trade secrets and brand plans of the applicant. Therefore, the disputed party’s application to register the disputed trademark falls under the circumstances stipulated in Article 15, Paragraph 2 of the Trademark Law.

Upon examination, the CNIPA found that the evidence submitted by the applicant demonstrates that a framework cooperation agreement had been established between the applicant’s wholly-owned subsidiary and the disputed party’s legal representative and its affiliated company. Additionally, the applicant had previously used the Chinese character mark “丹马优品” in connection with franchising services.  The text of the disputed trademark, is identical to the trademark previously used by the applicant; and the services designated for the disputed trademark, such as advertising, promotion, and commercial management of franchising, share certain commonalities with the applicant’s prior franchising services in terms of service content, purpose, and target audience. The use of the disputed trademark in these services is likely to cause confusion among consumers.  In the absence of contrary evidence to rebut these findings, the CNIPA concludes that the registration of the disputed trademark constitutes a preemptive registration by a party with a specific relationship to the applicant’s prior-used trademark, falling under the circumstances specified in Article 15, Paragraph 2 of the Trademark Law.

Conclusion

Article 15's two paragraphs form a robust defense against malicious registrations in China's first-to-file system.  Paragraph 1 protects against agent betrayal with streamlined requirements, while Paragraph 2 offers broader protection but demands more proof.  Together, they embody the law's commitment to good faith, helping businesses combat squatting.