Malicious applications to register trademarks have long been a significant issue for trademark rights holders in China. Unlike in some countries where trademark rights are based on use, in China, these rights are primarily derived from registration. This makes the problem of malicious applications for trademark registration more challenging. This article explores three strategies to address malicious trademark applications in China, covering conventional practice, less commonly used approaches and emerging judicial methods that have proven effective for right holders.
I. Opposition and Invalidation
To combat trademark squatting, the conventional practice is for the prior right holder to initiate opposition or invalidation proceedings to prevent the squatted trademark from being registered or to declare the registration invalid. Given that China's trademark rights are primarily acquired through registration, the prior right holder has to bear a heavier burden of proof in the trademark opposition or invalidation proceedings, which incurs significant time and financial costs. Moreover, the infringer can repeatedly apply for the same or similar trademark as the right holder's trademark with minimal economic investment, necessitating the prior right holder to initiate new trademark opposition or invalidation proceedings to combat this behavior. This trademark squatting trend has caused heavier burdens to the prior right holder and has led to a substantial depletion of trademark examination and judicial resources.
II. Administrative Penalties
According to Chinese laws and regulations, in the event of a malicious trademark registration application, the Market Supervision Administration at or above the county level where the applicant is located or where the offense occurs may impose administrative penalties, such as a warning and a fine of up to RMB 30,000 yuan, depending on the circumstances. In practice, the imposition of administrative penalties on malicious trademark applications is relatively rare, typically targeting cases where such registrations significantly harm the public interest, such as appropriating the names of Olympic athletes.
III. Civil Litigation
Our firm has achieved a success in a civil litigation case against malicious trademark applications before the Tianjin High Court by utilizing antiunfair competition laws. This case was recognized by the Supreme Court in China on April 22, 2024 as one of China's 50 typical IP cases in 2023. In this case, the plaintiff and its affiliates had applied for the registration of 32 trademarks identical or similar to the plaintiff's trademark, which enjoys a high reputation and strong distinctiveness, in multiple classes since 2018. This excessive registration exceeded normal production and business needs. Apart from appropriating the trademarks, the defendant also imitated the plaintiff's business name and domain name, engaged in misleading advertising, and extensively imitated the plaintiff's operations. The Court of Second Instance changed the judgment of the first instance to hold that the defendant's malicious trademark applications, as part of a comprehensive infringement, violated the principles of honesty and credit, disrupted normal trademark registration processes, disturbed fair market competition, and harmed the lawful rights and interests of the plaintiff, constituting unfair competition act as per Article 2 of the AntiUnfair Competition Law in China. Considering relevant factors including the plaintiff's costs of defending its rights over the years to stop the defendant's malicious trademark applications, the Court decided to award the plaintiff a full compensation of RMB 500,000 yuan for the economic damages and reasonable expense.
On a related note, another case selected as one of China's top 10 IP cases in 2023 by the Supreme Court in China on April 22, 2024 also pertains to regulating the malicious trademark applications through anti-unfair competition law. This case was adjudicated by the Wenzhou Intermediate Court in Zhejiang province. In this case, the evidence demonstrated that 'Little Love Classmate', after widespread publicity and usage, had gained significant influence as a name of wake-up words, a name of an AI voice interaction engine, and a product name for a smart speaker equipped with the AI voice interaction engine. The defendant applied for the registration of 66 trademarks across 21 classes that were identical or similar to the plaintiff's reputed wake-up words 'Little Love Classmate'and even sent a cease-and-desist letter to the plaintiff's affiliated company, which violated the principle of honesty and good faith, disturbed the order of fair competition in the market, and harmed the legitimate rights and interests of the right holder, and constituted an act of unfair competition regulated under Article 2 of the Anti-Unfair Competition Law in China.
The Supreme People's Court in China has recognized cases of regulating malicious trademark applications through the antiunfair competition law as both one of China's 50 typical IP cases and one of China's top 10 IP cases for 2024 Intellectual Property Awareness Week. This acknowledgment not only validates the lower courts' approach to addressing malicious trademark applications through anti-unfair competition law but also underscores Chinese courts' dedication to enhancing intellectual property protection and fostering a conducive business environment.
In conclusion, when confronted with instances of bulk or continuous malicious trademark applications, right holders may opt to pursue civil litigation under antiunfair competition law to secure an injunction from Chinese courts against such malicious trademark applications in China.
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