CBL’s Introduction

Seeing your trademark stolen in China by squatters who apply to get intellectual property rights in your brand is very likely, but you can fight back. You have a legal avenue to ensure that the Trademark Office examiners evaluating the thief’s application was filed in bad faith, which can be done during the opposition period. Alternatively, you can file a non-use cancellation petition with the IP administration. You can also take further action in the court to file a lawsuit against these trademark squatters, gaining damages against them, and adding them to a blacklist under China’s social credit laws.

How to achieve this is described in a series of government guidance documents translated by CBL into English using the user-centered translation approach.

Contents

Evaluating Trademark Applications for Bad Faith

China Trademark Non-use Cancellations: Official Guide

Judges’ views on trademark theft

Sources

1.    Evaluating Trademark Applications for Bad Faith

This article by the China National IP Administration explains how trademark applications are examined under the examination guidelines and trademark application rules.

Background & Regulatory Intent

The examination criteria are intended to prevent registrants from filing a trademark in bad faith, by requiring examiners to make an intent to use determination under China Trademark Act §4(a). The criteria for examining these applications is provided under Trademark Application Integrity Rules, which  is focused on whether the registrant is acting in bad faith.  The Rules include specific definitions and applicability criteria, factors to assess, and incorporates administrative precedent.

Bad faith is not defined in the China Trademark Act itself. Based on the China IP Administration’s understanding of “bad faith” incorporated in the Rules, it encompasses two general practices. First, trademark squatting, involves filing applications to squat on established trademarks or public figures’ names, thus extorting value from a well-recognized name. Often they check to see if recently popular names or brands are unprotected by a trademark.

Second, the Rules identify practices associated with general no intent to use, such as when someone files for a large number of trademarks without ever using them. Examination guidelines automatically assume bad faith when an applicant files numerous trademark applications but has no commercial need to use the marks. Additionally, applications lacking intent to use are those where the applicant has no legitimate plan, preparations, or ability to use the marks at the time of filing.

There are two exceptions to this general no intent to use rule, which can allow applicants to register trademarks they don’t have a clear plan to use. Defensive registrations are allowed, if they are similar to your own trademark and meant to protect yourself from squatters. However, excessive defensive registration will be considered bad faith hoarding. You can also register a mark for a future planned business venture, and don’t need to plan on using the mark until then.

Proof of use is not required to file a trademark application, because in China trademark rights are gained through an application which is made before the mark is used in commerce. So long as the trademark application is filed in good faith, the Trademark Office will grant the trademark.

What is considered a bad faith?

In general, filing many marks, copying others, repeated applications, using famous names (celebrities, landmarks, etc.), and highly generic names, or suspicious patterns of activity can result in a bad faith determination by the China IP administration in the case context.  Overall, any patterns or practices identified by trademark practitioners as bad faith can fall under the rule.

The bad faith process is often addressed in oppositions or trademark trials, especially where the registrant has a history of suspicious practices. Significant evidence must be produced at a trademark trial for the China IP Administration to make a determination in these cases.

Further Reading: Application rules governing bad faith

 

2.    China Trademark Non-use Cancellations: Official Guide

Anyone may petition the China IP Administration to cancel a trademark that has not been used for three years without a valid excuse, online or by mail. (See China Trademark Act §49 and 66 of the Administrative Regulations §66). Petitioners may authorize a trademark representation agency registered with the Administration to file petitions on their behalf.

Along with the Petition, show that the trademark has not been used for three consecutive years by attaching documentary proof, such as online search results or market research reports. Include your ID showing an identification number and power of attorney to your trademark representation agent.

The petition must be typed and filled truthfully and under your signature, with a detailed address, which for an individual is your residential address, including the name of your trademark agency. Petitions for the cancellation of trademarks owned by joint registrants must authorize one owner to act on behalf of all owners.

If petitioning for the deletion of all or some of the classification of the goods associated with the trademark, the classifications must exactly match those for which the trademark is registered. If petitioning for the mark to be canceled in China, submit a statement describing three years’ consecutive nonuse with the described proof attached, and file it within the first three years of its publication. You must look up and verify trademark registration details before filing a petition.

Petitions for the cancellation of international trademarks registered pursuant to Trademark Act §49(a) may only be filed with the Administration in the first three years following the expiration of the international registration’s opposition period. Petitions for international trademark registrations still under review or involved in opposition proceedings after the expiration of the opposition period should be submitted during the first three years from when the Administration grants registration.

Parties who are dissatisfied with a cancellation decision may file a petition for review with the Administration within 15 days of receiving the cancellation decision.

The Administration will issue the petitioner a notice of acceptance for the petition and issue the trademark registrant a Notice to Provide Proof of Use of the Registered Mark once the petitioner pays the required fees. The Administration will review the proof of use documentation received from the trademark registrant, make a decision on whether to cancel the trademark registration and issue a written notice of the decision to both the trademark registrant, petitioner, and agent

As requirements change from time to time, please follow the instructions given to you by Administration.

3.    Judges’ views on trademark theft

Trademark trolling and theft is common in China, and has extended even to well-known names such as those for internet content creators, and trademark thieves have established a sophisticated economy where stolen trademarks are bought and sold. Below, we will describe how the law and precedents have dealt with the issue to provide you with solutions.

Prior rights protect against trademark theft in China

A streaming platform content creator “Xiaoguan” used the stage name for 20 years until one day he was sent a cease and desist claiming that the trademark had already been registered; his accounts on several platforms were frozen due to the dispute.  An investigation revealed that 44 trademark applications were made for the “Xiaoguan” by the company.

Fortunately, under the law, names that have achieved a certain level of recognition are protected under the Chinese Civil Code §1017 of others’ use could cause confusion. Examples of protected types of names include business names, aliases, and abbreviations, but as we’ll see below, a lot more is covered.

Further, the Supreme Court Trademark Administrative Case Rules §20 provide that well known names used to refer to someone are entitled to protection from the courts. These laws make clear that a trademark applicant may not impair the prior rights of another party to continue using a name, even if it’s not a person’s real name. The China Trademark Trial & Appeal Board must hold for a trademark opposition made by someone who has used a name for a long period of time and obtained significant commercial recognition among the consuming public, and that trademark would confuse the consuming public.

Case study

The host of a children’s program used a fictitious cartoon character name for over 20 years when one day in 2013, and education company registered a trademark for that name under the goods/services classification “education and training.” The host then filed with the Board to make an opposition. The China IP Administration in 2018 invalidated the trademark registration. Dissatisfied with the decision, the education company appealed to the courts claiming that the name was merely the name of a character, not a protectable stage name, and furthermore the name as it is used does not extend into the education classification.

Rejecting the education company’s claim, the court held that the education company violated the prior right to protection of the character’s name, because consuming public had long identified the rights holder by that name. The court pointed out that the name was both of a third party’s cartoon character but also has characteristics of a stage name and is very well known, therefore registering a trademark impaired the third party’s rights.

An infringer in this kind of case is also liable for regulatory penalty. China’s social credit regulations impose blacklisting and credit penalties for parties who register a trademark in bad faith. The Trademark Application Integrity Rules §12-13 provide for a fine that is treble the amount of unlawful income up to a maximum of ¥30,000, and trademark agents can be fined up to ¥100,000, and directors of trademark agencies and implicated managers may be banned from the industry.

Businesses applying for trademarks therefore must act in good faith, ethically, and reasonably; trademark squatting, trolling, or theft will not be tolerated in China.

How to fight back against China trademark theft

File an opposition with the China Trademark Office if you see a trademark published in the official gazette that you believe is trying to steal your intellectual property rights. You have the right under Trademark Act §3 to file an opposition on grounds of §32 violations within three months of the initial publication in the Gazette, but if you are late and the trademark has been registered, you can file a claim with the Trademark Trial and Appeal Board for cancellation of the mark. The victim may also apply to register that trademark after the existing one has been canceled, but review may be deferred at the agency’s discretion.

The trademark registrant or interested party is also entitled to file a lawsuit against the infringer to require they cease and desist, pay damages, and take steps to eliminate the harm caused by their activity.

Proactively protecting yourself from these schemes is essential because China is a first to file trademark jurisdiction; content creators and influencers are vulnerable to trademark theft because they get a lot of traffic and therefore business value by being able to market products.  Complete trademark registration as soon as feasible because at that point it will be very inexpensive, and also register defensive trademarks to create a “Great Firewall” to protect yourself in China from bad actors.

Periodically check for possible bad faith registrations of your intellectual property so you can file an opposition in time. Protect yourself from cancellation by documenting how you are using the trademark, and if you are targeted by a trademark thief, collect evidence that they are not using the trademark so you can petition for their cancellation.

Sources

The law described in these articles derives heavily from the Trademark Application Integrity Rules (a 5 minute read). Familiarizing yourself with these rules will enable you to better use trademark law to your advantage in China.

These articles were translated the User Centered Translation approach from the following government publications. Significant formatting changes and some abbreviations and abridgements were made, and these can be seen using translation software.

1. 国家知识产权局商标局: “《商标审查审理指南》重点问题一问一答——不以使用为目的的恶意商标注册申请的审查审理” (https://www.cnipa.gov.cn/art/2022/2/8/art_66_173092.html)
2. 国家知识产权局商标局: “申请撤销连续三年不使用注册商标” (https://sbj.cnipa.gov.cn/sbj/sbsq/sqzn/202303/t20230330_26201.html)
3. 恶意抢注网红姓名商标，涉及这些法律问题 (https://bjhdfy.bjcourt.gov.cn/article/detail/2024/04/id/7921106.shtml)