Expanding the toolbox in combating trademark squatting in China – An update on China’s actions against bad faith trademark applications under the Amended Trademark Law

Please refer to our article here for our previous analysis on the background and cases

We have also seen some encouraging results in oppositions and invalidations relying on the amended Article 4. The determination to tackle trademark squatting continues with the issuance of the Trademark Examination and Trial Guide (《商标审查审理指南》) (“Trademark Guide”) which has been effective from 1 January 2022 and the Draft Amendment to the PRC Trademark Law (《中华人民共和国商标法修订草案（征求意见稿）》) (“Draft Law”) which was issued on 13 January 2023 for public consultations and comments. The Draft Law made some significant changes on various issues, including on bad faith filings and trademark hoarding without intent to use, etc.

Please refer to our article here for our comments on the Draft Law

Effect of the amended Article 4 in trademark opposition and invalidation cases

As part of the overarching efforts to combat bad faith trademark squatting, the CNIPA has actively relied on the amended Article 4 to refuse bad faith applications at the application examination stage since the implementation of the new law. The CNIPA will now act as a gatekeeper in the examination process for applications which appear to be bad faith filings. Specifically, CNIPA will issue a notice of examination in the following circumstances:-

• the applicant is obviously not related to a well-known brand;
• a brand owner does not have any prior rights in the targeted classes; and
• a large number of classes filed simultaneously when it does not appear to be supported by commercial needs.

There is now a higher possibility that such applications will be refused if the CNIPA is satisfied that factors indicating bad faith are met.  The Trademark Guide goes on to elaborate scenarios of bad faith under Article 4 in relation to the 3 circumstances mentioned above.  Over the past year, we have seen CNIPA increasingly raise such objections on applications covering large number of classes.  However, the good news is that if reasonable commercial explanations can be provided for the broad coverage, these objections can be overcome.

Then and Now

Before the amended Article 4, the most relevant and commonly used legal ground to remove a bad faith filing was Article 44. It states that if a trademark registration was acquired by fraud or any other improper means, the Trademark Office shall declare the registered trademark invalid. The amended Article 4 now gives brand owners an additional ground to remove bad faith filings from the register. We have selected 2 cases to demonstrate the effect of the amended Article 4 below as examples.

1. Invalidation against “津舒哒 (JIN-SHU-DA)”

   An invalidation was filed against the trademark “津舒哒 (JIN-SHU-DA)” in Class 5 (Registration No. 26904153) by BIOFARMA, a French pharmaceutical company. The subject mark was filed in October 2017 and registered in January 2020. BIOFARMA argued that (1) the subject mark and BIOFARMA’s prior registration in China for “泰舒达 (TAI-SHU-DA)” (the Chinese version of the drug name “Trastal”) in Class 5 constitute similar marks covering similar goods; and (2) the subject mark was filed in bad faith. In addition to supporting the first ground, the CNIPA found that: 

   1. the registrant of the subject mark has filed more than 450 marks including 288 marks in Class 5 filed from August to December 2017;
   2. some of the registrant’s marks have been refused or declared invalid by the CNIPA;
   3. many marks filed by this registrant are similar to those of other famous pharmaceutical brands;
   4. the registered business scope of this registrant is unrelated to Class 5 goods (i.e. pharmaceuticals); and
   5. this registrant and its trademark agency are related companies and some marks filed by the registrant are on sale on trademark transfer platforms.

   As a result, the CNIPA decided that the subject mark “津舒哒 (JIN-SHU-DA)” was filed in bad faith without intent to use. The registration was declared invalid based on the amended Article 4.

   It is worth noting that this invalidation case was included as one of the five Typical Cases of Trademark Review Cases of 2020 published by the CNIPA. Further, among the five Typical Cases of Trademark Opposition of 2020 published by the CNIPA, there is another opposition case decided based on the amended Article 4.  Publication of these two cases in the Typical Cases in 2020 by the CNIPA demonstrates that the CNIPA has attached importance to the new law and is actively applying the amended Article 4 in opposition and invalidation proceedings.

2. Opposition against “抖题 (DOU-TI)”

This case involved the Opposed Mark “抖题 (DOU-TI)” in Class 9 (Application No. 48509755) which was filed on 20 July 2020 and published on 13 December 2020. The Opponent was 北京字节跳动科技有限公司 (Beijing Byte Dance Technology Co., Ltd.).

The CNIPA considered that: 1) the Opposed Mark is not similar to the Opponent’s “抖音 (DOU-YIN)” and “抖 (DOU)” marks; 2) the evidence submitted by the Opponent was not sufficient to support that “抖音 (DOU-YIN)” should be protected as a well-known trademark. Nevertheless, considering that the Applicant and its related companies have filed a large number of marks in several classes in China, among which many marks incorporate the Chinese character “抖 (DOU)”, the CNIPA decided that the Opposed Mark “抖题 (DOU-TI)” was filed in bad faith without intent to use and that it shall not be approved for registration pursuant to the amended Article 4.

Comments

The past filing track records of the alleged bad faith filer and whether there is a connection between its business scope and the goods/services covered by the applied-for mark appear to remain important considerations in finding bad faith. With the number of filings being a decisive factor when finding bad faith on the part of the applicant, we expect to see that trademark squatters will not be using one single entity as applicant for their filings. Squatting would therefore be less lucrative for them if they have to set up multiple entities to file the trademarks or have the applications filed in the name of different individuals. We will continue to monitor the CNIPA and courts interpretation of Article 4 as well as the consultation of the Draft Law to see how China will continue to combat bad faith trademark filings. We look forward to seeing results in the CNIPA’s initiatives in combating bad faith trademark filings and actively protecting brand owners’ rights in China which would in turn encourage brand owners to do business in China.