Introduction
Bad faith trademark applications are a problem in any first to file jurisdiction, including China. A bad faith trademark application is one where the objective is to improperly acquire the brand recognition and benefit of another party, or to prevent another party from registering their trademark, and so to gain a commercial advantage.
The problem is particularly acute in “first to file jurisdictions” like China because there is usually no enquiry into actual or intended usage in the trademark registration process.
China is a jurisdiction where registering a known trademark has been very profitable and there are many reported instances involving high profile brands.
Trademark registration policies in China have traditionally required such a high level of proof of bad faith that it was extremely difficult to establish. Not impossible, we have had many successes where our client has had the level of proof needed, but very difficult.
China’s bad faith regulatory changes
China has clarified the need for trademark applications to be bona fide for commercial purposes. In 2019 new provision were added to the Trademark Law, among them: “A trademark application that is malicious and not filed for the purpose of use shall be rejected.” Later that year this was amplified by Regulations. In 2021, the China National Intellectual Property Administration (“CNIPA”) announced that it was cracking down on bad faith registrations.
Taken together it is clear that there is an official intention to regulate trademark registration and bring a commercial requirement into China’s first to file regime.
The official message is clear, but opportunists will still try to get their profits. The real message for foreign applicants and registrants is to take action in China.
Recent practical examples of bad faith
Derek’s* case
Derek told a home country friend about his China problems. As it happens, she was a professional colleague and referred him to us.
Derek’s China problem was not uncommon. He found that an OEM he had dealings with had applied to register “his” trademarks in China. He had engaged a China trademark agent to object during the gazettal period, but that had failed, and the trademarks proceeded to registration.
We asked him to send all the documents that he had, reviewed them when received, and came back to him with our recommendations and our fee. His initial reaction? “The other agent was cheaper!”
We explained what needed to be done for a successful case and he agreed to proceed with an action at the CNIPA to invalidate the trademarks.
We examined Derek’s materials in detail and found that the failed objection application lacked focus and that crucial evidence to support his case had not been fully translated into Chinese.
Our invalidation case was built around the relationship between Derek and the OEM and prior use of his trademarks in China:
- Evidence of the dealings between Derek and the OEM including their signed MOU; Derek’s purchase orders; OEM’s commercial invoices to Derek; and related email correspondence.
- Secondary evidence showing Derek’s prior use of his trademarks before the OEM trademark application; documents showing Derek’s participation in exhibitions in China; purchase orders placed by Derek with other suppliers; bills of lading; and related commercial documents.
The CNIPA accepted our submission that the evidence proved that Derek and OEM were business contacts; OEM was aware of Derek’s trademarks at the time they applied to register identical trademarks to Derek’s on the same and similar goods; and there had been genuine prior use of the relevant trademarks by Derek within China.
We have received the formal notice of invalidation from the CNIPA.
Maria’s* case
Maria’s company is a global supplier of goods to the fitness and martial arts community. They have valid China trademarks for certain goods in Classes 28 and 25.
Maria changed to a new China distributor for her goods. She later found that a company associated with her former distributor (“Applicant”) had applied to register her trademarks in Classes 9 and 35, which were not similar goods or services to the Classes 28 and 25 covered by Maria’s registration.
Maria was referred to us near the beginning of the gazettal period for the Applicant’s trademarks. Maria had ample evidence and we assisted her to raise an objection with the CNIPA.
Our submission included evidence of:
- The previous distribution relationship, including Maria’s documents authorising the previous distributor
- The relationship between the previous distributor and the Applicant. This included company searches which revealed that the same individuals were the senior management of the previous distributor and the Applicant.
- The Applicant had also applied to register many other famous brands in addition to Maria’s, showing that their intention was to benefit from the branding and reputation of others.
The CNIPA accepted our submissions and we have received the official notice that the objection was successful.
Commentary
The changes to China’s trademark regime are very welcome and recent experience suggests that they are being implemented.
Derek’s case is conventional and the successful submissions showing bad faith reflect that.
Derek’s experience confirms that price is not everything in trademark work – value is the key. It also confirms, yet again, the importance of translation for China work. Good Chinese translation is important in China. Putting untranslated material before a Chinese court or tribunal is an exercise in futility. In China, as a general rule, if it is not in Chinese it is not there.
Maria’s case was more challenging to show bad faith and the evidentiary burden was higher. Without being able to show the close management link between the previous distributor and the Applicant it would have been much more difficult to succeed. The expense of searches was warranted. Similarly, being able to show that Maria’s experience was not isolated but part of an apparent scheme to register foreign trademarks as their own was important.
As anywhere, successful cases are founded on understanding the law, attention to detail, and admissible, relevant evidence.
Take-aways
- China has clearly signalled that it is cracking down on bad faith trademark applications.
- Foreign applicants and trademark owners should take action in China to protect their interests.
- Contested matters in China are run on documentary evidence. It may take time and effort to gather it, but it is essential for success.
- Good translation is important in the presentation of a case.
- Cheap is not always confined to price and is a poor indicator of value.
*Names changed to maintain confidentiality
WEI Xin & ZHAO Wei
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