The revision of the Chinese Trademark Law in 2019 is a milestone and the revised Article 4 has grabbed the attention of many commenters: “A bad faith application for trademark registration for a purpose other than use shall be rejected”.
The law does not provide a precise definition of “for a purpose other than use” though. In this essay, we will briefly introduce few cases of implementation of the revised Article 4 in substantive trademark examination in order to shade some lights on the definition.
Based on the interests being infringed, malicious trademark applications can be divided into two types: one includes applications which have the core feature of free-riding of other brand's goodwill, rights and legitimate interests; the other refers to trademark applications which are not for the purpose of use.
The below Beijing Higher People's Court's judgement explained that when examining the registrability of a trademark, both the applied trademark itself and the trademark applicant's profile could be considered.
On April 25, 2019, “Shunxing Business” filed an application for “真龍 (meaning: real dragon)” and the China National Intellectual Property Administration (CNIPA) decided to reject the application because “Shunxing Business” has repeatedly filed applications that are similar to other famous trademarks.
There are in total 42 trademarks in name of the applicant and among these there are 37 trademarks filed in class 32. Many applications can be easily classified as copycats of famous baijiu products, such as “old village head” and the applied “real dragon”, however they are filed on products different from baijiu, not over similar goods or services. The CNIPA held that such kind of applications belongs to a malicious trademark application that is not for the purpose of use.
Being dissatisfied with the decision, “Shunxing Business” appealed the case to the CNIPA at first and then all the way up to the Beijing Higher People's Court. Shunxing Business claimed that its application is not in violation of Article 4 of the Trademark Law because it intends to use the applied trademark. The applicant has provided evidence such as order forms and shipping orders. However, the court found that the evidence is without corresponding invoices and part of the evidence is formed after the application of the review of refusal, and thus cannot prove the use of the trademark. Additionally, “Shunxing Business” did not provide a proper and persuasive explanation for its repeated application. Thus, the court decided that the trademark application has constituted the situation stipulated by Article 4.
Beside filing multiple imitations of prior famous trademarks, there are other situations that can be considered as not for the purpose of use. At the end of 2021, the CNIPA has published a guidance with a detailed interpretation for “for a purpose other than use”. For example, one of the element considered in such guidance is the basic business status of the applicant.
One update worth attention is that the CNIPA now plays a much more active role during the substantive examination period. Before the revision of the trademark law the substantive examination was mainly based on the trademark itself but not the applicant.
However, the CNIPA can now during the examination weights the length of existence of the applicant, paid-up registered capital, business area, etc. For instance, in one refusal notification for trademark T5 (No. 57397847), the CNIPA has noticed that the applicant and its affiliated companies have filed a large number of trademarks which are obviously beyond the needs of normal business activities. Such applications were deemed not for the purpose of use and rejected.
Due to the large volume of the trademark applications in China, it is unlikely that the CNIPA will check every applicant's affiliated company or their registration information, but it is very likely that the CNIPA will check those companies who are already on the blacklist. The blacklist is a system that the CNIPA claims to build years ago but is still not available to the public.
However, based on practice, the system should exist but for internal use. The above two cases show that when assessing “not for the purpose of use”, authorities tend to give an overall assessment of the trademark application status, regardless of the total amount of applications as filed.
The CNIPA has also provided two exceptions that should not be regulated by Article 4. One is that the applicant applies for a trademark that is identical or similar to its registered trademark for defensive purposes. For example, Coca Cola has filed trademark applications not only in Class 32 for soft drinks but also in some other classes such as Class 5 for products like disinfectants.
The other exception is that the applicant applies for a trademark in advance for a future business with realistic expectations to use the trademark. For example, in a review of refusal case against the trademark “aurobay” (No. 53012724), the CNIPA initially decided to reject the trademark application because the CNIPA believe that the trademark was filed in bad faith.
However, in the appeal procedure, the applicant argued that the trademark is its English tradename, and was filed based on real business demand. The applicant has filed an introduction of its official website, media reports, and a list of “aurobay” trademark application information to the CNIPA proving that the trademark application does not belong to bad faith application. After reviewing, the CNIPA decided that the submitted evidence can prove that the application does not constitute an instance in violation of Article 4.1 of the trademark law, and should be approved for publication.
In sum, the court and CNIPA are becoming stricter over bad faith applications year by year. It is safe to predict that the CNIPA will give significant weight to the bad faith applications in the future. This trend is obviously in favour of trademark rights owners in safeguarding their rights in China. Provided the CNIPA missed the bad faith of a trademark applicant and approved the publication of the trademark, the legitimate trademark owner can still file evidence showing the applicant's bad faith in the later opposition or invalidation procedure.
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