China: New amendments to the China Trade Mark Law to curb bad-faith filings

Last Updated: 16 September 2019
Article by Joerg Sosna

China has long been a hotbed for trade mark piracy. China's first-to-file system, together with its complicated trade mark classification, has attracted numerous trade mark squatters to initiate malicious filings with the aim to free-ride on the goodwill of famous brand names. Unfortunately, the existing trade mark laws and regulations are far from effective in coping with this phenomenon. Under the current practice, one of the more effective ways to remove such registrations is to wait three years from the actual registration date, and file a non-use cancellation. However, if the registration is not yet vulnerable to attack for non-use or the non-use action is defended, famous brand owners would encounter substantial obstacles if looking to expand into China, with many eventually having to buy back their trade marks from trade mark squatters for a substantial sum.

With the aim of improving the business environment, the Standing Committee of the National People's Congress ("NPCSC") announced a decision on 23 April 2019 to introduce a series of amendments to the China Trade Mark Law, to take effect on 1 November 2019. To curb the notorious practice of bad faith filing, the NPCSC has introduced the 'intent to use' requirement to the China Trade Mark Law.

'Intent to use'

The revised Article 4 of the China Trade Mark Law stipulates that "Natural persons, legal persons or any other organizations that need to obtain exclusive rights to use a trade mark for their commodities or services in the course of their manufacturing and business activities shall apply for the registration of the trade mark with the Trade Mark Office. Any application for trade mark registration that is malicious and is not filed for the purpose of use shall be rejected." By the virtue of Article 33 and Article 44, "intent to use" will become a ground for opposition and invalidation, whilst "malicious filing" seems to be vague, the draft regulation, namely "Several Provisions on Regulating the Application for Registration of Trademarks", which was published in February 2019 by the China National Intellectual Property Administration ("CNIPA") provides some insights including eight criteria to identify "abnormal applications", which are summarised below:

  • marks that freeride on the goodwill of others or those that copy marks which are widely recognised by the relevant public;
  • pre-emptive filings for marks that enjoy a certain degree of influence;
  • marks that are identical or similar to those of others and where the applicant knows or should have known of the other's prior rights;
  • repeatedly filing with a clearly improper purpose;
  • marks that are filed without a real intent to use;
  • marks filed in large numbers within a short period of time that exceeds reasonable limits;
  • filings that violate the principle of good faith; and
  • parties acting as trade mark agents in the aforementioned situations.

Liability of Trade Mark Agencies

Apart from the above, the revision also targets trade mark agencies that assist in bad-faith applications. After revision, Article 19 of the Trademark Law will hold trade mark agencies liable for accepting instructions if they have actual or constructive knowledge that their clients are filing without intent to use or in bad faith. Furthermore, Article 68 sets forth the legal basis that penalties, including administrative and judicial penalties, would be imposed on trade mark agencies if they violate the law.

Implications for brand owners

At first glance, it is questionable if China's trade mark registration system has transformed from "first-to-file" to "first-to-use" by the introduction of "intent to use" such that applications will be refused if they fail to show intent to use. Some expressed their concern on whether defensive trade mark applications will be blocked, leaving genuine brand owners in an even more difficult position when attempting to protect their brand names. Whilst the revision to the Trade Mark Law empowers CNIPA to request evidence from applicants of abnormal filings, filing evidence of use / intent to use is not mandatory at the time of filing. This power is only discretionary and the applicants will only be required to provide evidence upon request. Whilst the amendment does not change the "first-to-file" system, its practical effects will be to provide a clearer statutory ground for brand owners to rely on. Under the current law, in case of bad faith filing, oppositions, invalidations and lawsuits usually rest on Articles 7, 10 and 44 of the Trade Mark Law. However, the definitions of the existing laws are considered by trade mark practitioners to be vague and may lead to inconsistent decisions. While some commented that the new law is still unclear, for example, how much evidence should suffice to show intent to use and what constitutes a "certain degree of influence", the amendments to the existing law are at least a step-up in efforts by the authorities to clarify the law, although substantive guidelines are yet to be rolled out. Indeed, it is difficult for the authorities to set a hardline on such substantive matters. Influence, goodwill and bad faith are abstract concepts that require evaluation on a case-by-case basis. The somewhat "unclear" laws may in fact provide more flexibility for the authorities to exercise discretion and keep their decisions up-to-date.

Back in March 2019, the American Intellectual Property Law Association ("AIPLA") in their letter to the CNIPA.1expressed their concern that defensive trade mark applications, used by overseas brand owners to widen the scope of protection for their trade marks in China, would be blocked as a result of the Trade Mark Law revision. On interpretation of the terms, the revisions focus on bad-faith purpose in addition to "without intent to use", rather than targeting all applications that are "without intent to use", and they do not explicitly prohibit defensive trade mark applications. The wording of the new terms as a whole are suggestive that the lawmakers have no intention to ban defensive trade mark applications. In the long run, if the new law is successful in combating bad faith filings, brand owners could significantly reduce their filing costs as they are not required to file and maintain the trade marks for purely defensive purposes.

The latest review and revision of the China Trade Mark Law reflects the Chinese authorities' endeavour to remediate the difficulties brand owners are facing in China. Laws and regulations, especially on intellectual property, require timely adaptation to the ever-changing social and business environment. Although the effectiveness of the revisions remains to be seen, they are a reassuring sign that the authorities have become more proactive in strengthening trade mark protection.

Footnote

1 A. (2019, March 13). AIPLA Comments on Certain Stipulations on Regulating Behavior of Application for Trademarks (Draft) of CNIPA: https://www.aipla.org/docs/default-source/advocacy/aipla-comments-on-cnipa-draft-stipulations-on-bad-faith-trademark-applications-2018march13.pdf?sfvrsn=463020de_0

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Practice Guides
by Mondaq Advice Centres
Relevancy Powered by MondaqAI
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions