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Cracking Down on Malicious Trademark Registrations
A legislative, administrative, and judicial approach is paying dividends for rights holders in China concerned with bad faith trademark filings, say Michael Fu and Yang Luo.
“China has been conducting a nationwide campaign, known as ‘Blue Sky,’ to punish agents who have conducted malicious squatting and stop their trademark agency businesses in severe cases.”
Yang Lao (pictured) and Michael Fu, Chang Tsi (China)
Malicious trademark registrations have been a problem in China for many years. This happens mainly because in China the principle of first-to-file is applicable and the costs of trademark registration are relatively low. To enhance trademark protection and create a friendly business environment, China has been taking multiple measures in terms of legislative, administrative, and judicial protection to crack down on malicious trademark registrations.
Tighter Controls on Bad Practice
From the perspective of legislation, in 2019, China amended its Trademark Law for the fourth time. In particular, a comprehensive system to combat malicious squatting and hoarding of trademarks has been established.
That “malicious applications not intended for use shall be refused” is newly added in Article 4. Article 19 increases the obligations of trademark agents to review applications and stipulates that agents may not accept malicious applications to register trademarks not intended for use. Articles 33 and 44 together provide for this circumstance as a reason for filing an opposition or invalidation. Meanwhile, the revised Trademark Law stipulates punishments for trademark agents who violate the amended Article 68.
Based on the amended Trademark Law, China’s National Intellectual Property Administration (CNIPA) issued Several Provisions on Regulating the Application for Registration of Trademarks and Special Action Plan for Cracking Down on Malicious Trademark Registration on October 11, 2019, and March 15, 2021, respectively, to further provide the authorities guidelines on how to curb malicious squatting and hoarding of trademarks.
Additionally, in 2022, CNIPA also amended the Guide on Trademark Examination and Adjudication to make sure that procedures for trademark examination and adjudication are in line with the current Trademark Law. How to understand and apply the above articles is explicitly explained therein and some typical cases are introduced in detail.
“The authorities have also boosted publicity and education around cracking down on malicious trademark registration by releasing typical cases and exposing infringers”
Yang Lao and Michael Fu (pictured), Chang Tsi (China)
Raising Awareness
Regarding administrative protection, the authorities in China have increased their efforts to identify malicious trademark registration cases. Meanwhile, in accordance with Article 4 of the amended Trademark Law, examiners are entitled to refuse malicious trademark applications directly and proactively and rights owners do not need to file oppositions against such applications after they are published. Furthermore, entities who filed for malicious trademarks in extremely bad faith will now likely be recorded in the List of Entities with Seriously Illegal and Dishonest Acts.
In addition, during the past few years, China has been conducting a nationwide campaign, known as “Blue Sky,” to punish agents who have conducted malicious squatting and stop their trademark agency businesses in severe cases.
Moreover, the authorities have also boosted publicity and education around cracking down on malicious trademark registration by releasing typical cases and exposing infringers.
All these measures have turned out to be very effective. Statistics released by the State Council Information Office of the People’s Republic of China showed that there were 482,000 malicious trademark applications refused in 2021. Among them, 1,111 squatting applications such as “¥™红婵 (Quan Hongchan in Chinese)” were refused via quick examination procedures. Some 1,635 registrations were invalidated by ex officio actions proactively initiated by CNIPA.
Through the “Blue Sky” special rectification campaign, in 2021, 23,000 agents in China completed their self-inspection and submitted the corresponding reports. In the same year, 130 agents were punished for acting for malicious squatters and three agents had their trademark businesses stopped altogether. Around 2,070,000 suspected online transactions concerning malicious trademarks were removed from platforms.
Backed Up in Court
From the perspective of judicial protection, there have been more and more cases in recent years where the owners’ rights have been protected, and where courts have dismissed untenable claims made by squatters. First, malicious trademark registrations which have not been put into actual commercial use but applied for the purpose of obtaining illegal profits have not been protected in trademark lawsuits, such as Ambitmicro Technology Limited v. Ambiq Micro, Inc & Fujitsu Semiconductor (Shanghai)Co, Ltd.
Second, malicious squatting and abuse of trademark prosecution actions can be regarded as unfair competition, such as in BRITA GMBH & BRITA China Co, Ltd v. Shanghai Kangdian Industrial Co, Ltd.
Third, for malicious trademark registrations which are invalid during civil litigation, more courts have identified that the use of such registrations during their valid period shall also be recognized as infringing use, such as Cadbury UK Limited v. Yi Kou Lian (Xiamen) Food Co, Ltd & Beijing Hui Fu Yuan Food Trade Co, Ltd. This further enhances the protection of the rights of genuine rights owners.
Michael Fu is a partner at Chang Tsi in China. He can be contacted at michaelfu@changtsi.com
Yang Luo is an attorney at law at Chang Tsi in China. She can be contacted at yangluo@changtsi.com
Footage used under license from Adobe Stock / sborisov
Saturday, April 30, 2022
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