China: Bad Faith Registration: What China's New Trademark Law Will Change To Protect IPR Owners

Last Updated: 31 May 2014
Article by Wang Zhengzhi

Maliciously registering a trademark ("in bad faith") refers to the attempted registration of a trademark through illegitimate means, during which time the applicant violates the law by improperly using a previously registered trademark, or, in the case of a trademark office, registers the mark under their own name and sends that trademark to the China Trademark Office (CTMO) for registration. A registered trademark should be afforded intellectual property protection by the CTMO under the rightful owner's name and any applications should be done in good faith.

Registering a trademark in bad faith is a violation of the principle of good faith; a new principle now protected by China's most recent amendments to the Trademark Law. This phenomenon is becoming more widespread, Chinese time honored brands and even corporate logos are frequently being registered overseas, it therefore should be said that the international trademark community needs to work together to face such challenges including bad faith registration.

To determine if there is a registration made in bad faith, it requires the following elements:

A. If the applicant seeks to register the mark, it may be difficult to determine if this act is actually done in bad faith. A bad faith applicant is not actually using the mark for the properly intended usage; rather they are using the intellectual property of others for their personal gain by filing a bad faith application. This behavior in and of itself is intended to occupy the fruits of labor or intellectual achievements of others. If this type of mark is registered, it is no different from theft. How can we identify the registration made in bad faith from one that establishes legitimate interests? First, see that if registration is successful, the mark is used on the applicant's goods or services and see whether those goods and services are registered with said mark are similar to or the same as another's. Secondly, one should know if the registrant transferred the trademark rights to a second party, or they bought a license to use the mark. Third, ask if a registered trademark owner made the direct infringement complaint, and if so, did they request reimbursement? If the bad faith applicants have registered trademarks not primarily for their own use, and do not own the products or services associated with that mark, or, if they have not purchased a trademark license or failed to request compensation for infringement of the trademark, then it can be accurately assumed that this applicant's actions were intended to register a mark in bad faith.

B. If the applicant has registered through unfair means; this behavior can be explained through the aforementioned elements. Through improper means, the applicant registered a trademark in an unlawful manner, concealing relevant facts in their trademark application and other related materials, thereby falsely reporting information within their application.

C. If registration is successful, the results of bad faith registration can be more easily determined; it will eventually constitute a bad faith registration if objections are filed. If there is a procedure of objection, these bad faith applicants will inevitably be found to have applied for the trademark rights of others. In this case, objections will certainly be raised, leading to the unsuccessful registration of the mark, which is then called "attempted bad faith registration".

From May 1st, 2014 onwards, implementations of the newly amended trademark law, in regards to bad faith registration, will intend to make a difference in the following five areas:

1. It first states that "having knowledge of the presence of another's trademark", is taken from the "other relationships" concept in the new trademark law. Under certain business relationships, the scope of absolute prohibition of the opposing party can be found under bad faith provisions which is expanded to include contracts, business relationships or otherwise. This provision no longer limits these relationships to those between commercial agencies. The presence of the aforementioned relationships are only required to prove that bad faith registrants registered the mark "knowing that there was a presence of another mark", again found under the bad faith registration section, this greatly reduces the pressure of the burden of proof for opposing parties.

"Other Relationships" further expands the scope of the original trademark laws about agents, representatives, investment relationships, the licensing process, general business dealings with other company employees, shareholders and opportunities to gather business information. In basic summary, this could include any subject having contact with the opposing party. This will provide a more defined legal basis to resolve such disputes in the future. Of course, "other relationships", whether contractual or not, should still be listed under Article 15, as business relationships involving trademarks deal with the nature of identity, and refer to an obvious link between the parties which has not necessarily been defined by a contract.

2. It strictly limits the behavior of trademark agencies. It reduces the agency's ability to implement applications in bad faith, and increases penalties while it also allows for possible criminal prosecution of said agencies (see Articles 19 and 68).

3. It determines the new trademark oppositional procedures for examination and reexamination under article 35. 1These are generally to be concluded in 12 months or less, and in special circumstances, the approval may be extended another 6 months to enable parties to dispute the results of a trademark decision if they are unclear of their expectations in the application procedure.

4. The principle of good faith now applies to the most basic process of the registration of a trademark. Article 7 shows that this principle can be used as a fallback to determine bad faith registration behavior, and the law clearly stipulates the treatment of such behavior.

5. For a more general definition of "bad faith", the trademark law introduces a new system of punitive damages, which punish bad faith trademark infringement, and in serious cases, can allow compensation to be three times the amount of normal compensation (more than double the previous laws' compensation maximum), which will be determined in accordance with malicious or "bad faith" behavior as mentioned above.

1. What is TMCH?

Trademark Clearinghouse is a company that helps trademark owners protect their new Top Level Domains (TLDs). TMCH is not a trademark office itself, they are a centralized database of verified and registered trademarks, which are connected to over 1,000 TLDs and will soon launch on the Internet.

The Trademark Clearinghouse consists of two primary functions: (i) the authentication of contact information and verification of Trademark Records and (ii) the storage of such Trademark Records in a database in order to provide information to the new generic top--‐ level domains (gTLDs) registries to support the providing of Notification of Registered Name (NORN).

2. Why should we register with them?

You should register with TMCH because they have the largest and most comprehensive database for registered trademarks in relation to TLDs. They are attempting to protect trademark owner's preliminary rights when applying for TLDs, as trademark owners should be given the first chance to register their rightful trademark's TLD before anyone else.

3. How do they protect me?

TMCH allows for companies to protect their brand names by giving them at least 30 days before a TLD is offered to the general public for the rightful trademark owner to safeguard their domain name that matches their trademark. TMCH also provides a notification service called "Trademark Claims", which notifies trademark holders and domain name registrants of possible infringement. Registrants and rights holders will receive a warning notice when attempting to register a domain name that matches a trademark already in the TMCH database. If after they receive the notice, the trademark holder continues to register the name, the mark's associated person or company will receive a notification of the domain name registration and action can be taken from there.

4. What is sunrise?

"Sunrise" is the period of time during which a trademark owner can pre--‐register their rightful domain name so that they can register the mark before the TLD becomes open to the public. This is a minimum of 30 days. All new gTLDs are given a "sunrise" if they have a verified and registered trademark.

5. Principles of the TMCH?

The TMCH intends to help trademark owners protect what is rightfully theirs, in terms of TLDs. They create a database for trademark owners to use to prevent infringement of their IP rights, while also giving those who properly register and use their marks an advantage over the public to register their mark as a TLD.

6. How many years will my trademark be protected under TMCH?

Trademark holders and agents who wish to use TMCH can decide upon a 1, 3 or 5--‐year protection plan, and can be renewed each time after expiration.

7. UDRP and URS; how do these policies relate to TMCH?

The Uniform Domain Name Dispute Resolution (UDRP) policy was established by the Internet Corporation for Assigned Names and Numbers (ICANN) in order to resolve disputes about Internet domain names. This UDRP was set in place to prevent consumers from being misled when trademarks were used as domain names without trademark owners' consent. The policy intends to establish a "mandatory administrative procedure concerning abusive registrations". This policy is at the very core of what TMCH intends to help set in place, a system which protects rightful trademark owners from having their mark registered as domain names without their consent.

The Uniform Rapid Suspension (system), or URS, was designed to provide trademark owners with a quick and low--‐cost process to remove infringing websites. It was created by ICANN to help cut down on Internet trademark infringement cases and to help stop cybersquatting on TLDs. URS provides clear procedures to deal with obvious cases of infringement. It is a required rights protection mechanism that ICANN uses before any new gTLDs can be opened on the Internet. TMCH uses the URS system to determine if trademark owners are being infringed upon, and it helps the TMCH to send warnings to their clients about the possible infringement of their marks based on cases that come from the URS system.

8. What is DPML services' relation to "Donuts"?

Trademark rights holders can block their trademark from being registered as a second level domain name (SLD) by going through Donuts (who is a specialist retailer for SLDs) to request a Domains Protected Marks List (DPML) application. Before a DPML application can be sent in, the mark must first be registered with the TMCH and have a signed mark data (SMD) file, which is a sort of password for the trademark.

SLDs are a sort of string of characters that the trademark owner wishes to protect and block from usage, if they request a DPML application. For example, if the trademark is "Google", owned by Google, Inc., and someone else wishes to register the mark "Gooogle", Google Inc. can purchase a DPML blocker application to cover the label "Gooogle" because it still contains their original trademarked "Google" within the string of characters. Brand owners, once their SLD is accepted into the DPML, will be allowing all Donuts SLDs to block this brand name from registration for a period of five or ten years.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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