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In recent years, the Chinese government has implemented various measures to crack down on bad faith trade mark filings, including amending the Trade Mark Law in 2019 to empower the China National Intellectual Property Administration.CNIPA”) To reject applications on the basis of bad faith without intent to use during substantive examination. In light of the 2019 amendment of the Trade Mark Law and other recent developments, the CNIPA has issued updated Guidelines for Trade Mark Examination and Review (“Guidelines”)17, to clarify the CNIPA’s examination approach under the current law. These updated Guidelines came into effect on 1 January 2022.
“Bad faith” under the 2019 amended Trade Mark Law
Prior to the 2019 amendment of the Trade Mark Law, the CNIPA could only consider bad faith arguments during opposition or invalidation proceedings, which placed the onus on brand owners to actively oppose or invalidate bad faith filings. This was the case even after the CNIPA had established an unofficial blacklist for trade mark squatters with a history of filing large numbers of copycat marks – the CNIPA did not have the power to automatically reject applications filed by blacklisted applicants during substantive examination, and could only do so if the marks were challenged by brand owners through opposition or invalidation proceedings. Article 4 of the amended Trade Mark Law introduced “filed in bad faith without intent to use” as a basis to reject applications during substantive examination (this ground can also be pleaded in opposition or invalidation proceedings).
The framing of a bad faith filing as an application filed “without intent to use” raised concerns amongst practitioners and brand owners, who worried that applications filed by legitimate businesses for defensive purposes might be caught by Article 4. It was also unclear what criteria would be used to determine whether an application should be rejected as being filed in bad faith without intent to use. In the updated Guidelines, the CNIPA has clarified its interpretation of “without intent to use” and elaborated on the factors to be considered when assessing whether an application should be rejected pursuant to Article 4.
The Guidelines set out 10 situations in which applications would be considered to be “filed in bad faith without intent to use” under Article 4 unless the applicant provides evidence to the contrary:
- the applicant files a large number of trade mark applications that clearly exceeds the applicant’s business needs without a genuine intention to use;
- the applicant copies, imitates or replicates a large number of trade marks that have attained a certain level of reputation or distinctiveness of multiple brand owners;
- the applicant repeatedly applies to register a particular brand owner’s well-known or distinctive trade mark;
- the applicant applies to register a large number of trade marks that are identical or similar to the trade names, abbreviations of trade names, e-commerce names, domain names, product names that are influential to a certain degree, packaging, decorations, advertising slogans that have become well known and distinctive, and designs;
- the applicant applies to register a large number of trade marks that are identical or similar to the names of famous persons, literary works or characters, well-known and distinctive works of art, or other similar public cultural resources;
- the applicant applies to register a large number of trade marks that are identical or similar to the names of administrative divisions, mountains or rivers, tourist attractions or buildings;
- the applicant applies to register a large number of trade marks that are identical or similar to generic terms, industry technical terms, terms that directly refer to the quality, raw materials, function, weight, quantity of the designated goods or services that lack distinctiveness;
- the applicant applies to register a large number of trade marks and assigns them to multiple entities;
- with the intention of obtaining improper benefits, the applicant sells a large number of trade marks, imposes collaboration arrangements with earlier users or other parties, or demands the payment of exorbitant transfer fees, license fees or damages for infringement from other parties; and
- any other situation that can be regarded as bad faith filing behavior.
When assessing whether applications are filed in bad faith without intent to use, the CNIPA will consider not only the filing behavior of the applicant, but also the filing behavior of the applicant’s related parties.
The Guidelines also specifically set out two types of filing behavior that would not fall foul of Article 4:
- applications filed for defensive purposes that are identical or similar to the applicant’s existing trade marks; and
- applications filed for legitimate future business needs.
How many is too many?
Whilst the Guidelines do clarify certain aspects of the amended Trade Mark Law, such as whether defensive filings would be caught under Article 4, they also leave some important questions unanswered. For example, in the context of the 10 situations listed above, what is meant by “a large number of trade marks”? Would 50 trade marks be sufficient to impute bad faith filing behavior, or would the number need to be closer to 1000? The Guidelines only state that the threshold will depend on the specific facts of each case, such as the number of classes covered by the filings, the time period during which the filings were made, the business scope of the applicant, among many other factors. This is borne out by the real-life examples cited in the Guidelines – in one example around 20 trade mark applications (for names of famous people) was deemed sufficient to meet the bad faith threshold, whereas in most of the other examples applicants were found to have engaged in bad faith filing behavior after filing several hundred trade marks within a short period of time.
It is interesting to note that most of the real-life examples cited in the Guidelines involved substantial fact-finding before the CNIPA was able to determine that the behavior amounted to bad faith under Article 4. In several examples, the CNIPA looked into the applicant’s business scope, the applicant’s common shareholders and relationships with other entities and individuals, post-registration behavior (such as post-registration transfers to third parties) among other relevant factors before making a decision. Given the large volume of applications processed by the CNIPA, it would be unrealistic to expect examiners to proactively investigate the filing behavior of each applicant. In practice, unless the applicant has already been blacklisted, examiners are unlikely to reject applications based on Article 4 during substantive examination. Brand owners should therefore continue to monitor published trade marks and actively oppose bad faith applications. In cases where an applicant has engaged in behavior that clearly falls within the 10 situations set out in the Guidelines, brand owners can also write to the CNIPA to present the relevant facts and request that the applicant be blacklisted, in order to increase the likelihood that future filings made by the applicant will be rejected outright by examiners during substantive examination.
The author would like to thank Jackie LeungTrainee Solicitor at Mayer Brown, for her assistance with this article.
1. Original text can be found here: 商标 审查
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