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In recent years, the Chinese government has implemented various measures to crack down on bad faith trademark filings, including amending the Trademark Law in 2019 to empower China’s National Intellectual Property Administration (“CNIPA”) to dismiss claims on the basis of bad faith without intent to use during substantive review. In light of the 2019 Amendment to the Trademark Law and other recent developments, the CNIPA has issued updated guidelines for the examination and revision of trademarks (“Guidelines”)17, to clarify the CNIPA’s examination process within the framework of the law in force. These updated guidelines came into effect on January 1, 2022.
“Bad faith” under the amended Trade Marks Act 2019
Prior to the 2019 amendment to the Trademark Law, CNIPA could only consider bad faith arguments in opposition or invalidation proceedings, which required trademark owners to actively oppose or invalidate bad faith filings. This was the case even after the CNIPA established an unofficial blacklist for trademark squatters with a history of filing a large number of copycat trademarks – the CNIPA had no authority to automatically reject applications filed by blacklisted applicants during substantive examination, and could only do so if the trademarks were challenged by trademark owners through opposition or invalidation proceedings. Section 4 of the amended Trademarks Act introduced “filed in bad faith without intention to use it” as a basis for rejecting applications during substantive examination (this ground may also be invoked in opposition or invalidation proceedings).
The definition of a bad faith filing as an application filed “without intention to use” has raised concerns among practitioners and trademark owners, who feared that applications filed by legitimate companies for defensive purposes could be targeted. by Article 4. It was also not clear what criteria would be used to determine whether an application should be rejected because it was filed in bad faith without intention of use. In the updated Guidelines, the CNIPA has clarified its interpretation of “without intention to use” and clarified the factors to be considered in determining whether an application should be rejected under Article 4.
The Guidelines set out 10 situations in which applications would be considered “filed in bad faith without intention to use” under Article 4, unless the applicant provides evidence to the contrary:
- the applicant files a large number of trademark applications that clearly exceed the applicant’s business needs with no real intention to use;
- the applicant copies, imitates or reproduces a large number of marks which have reached a certain level of reputation or distinctiveness of several trademark holders;
- the applicant repeatedly applies for registration of a well-known or distinctive mark of a particular mark owner;
- the applicant requests the registration of a large number of marks identical or similar to trade names, abbreviations of trade names, e-commerce names, domain names, names of products with a certain influence, packaging, decorations, advertising slogans which are become well known and distinctive, and designs;
- the applicant applies for the registration of a large number of marks identical or similar to the names of famous people, literary works or characters, known and distinctive works of art or other similar public cultural resources;
- the applicant applies for the registration of a large number of identical or similar marks in the names of administrative divisions, mountains or rivers, tourist attractions or buildings;
- the applicant requests the registration of a large number of marks which are identical or similar to generic terms, industrial technical terms, terms making direct reference to the quality, raw materials, function, weight, quantity of designated goods or services that are non-distinctive;
- the applicant applies for the registration of a large number of marks and assigns them to several entities;
- with the intention of obtaining improper advantages, the plaintiff sells a large number of marks, imposes collaboration agreements with prior users or other parties, or demands the payment of exorbitant transfer fees, license fees or damages for infringement by other parties; and
- any other situation that may be considered bad faith filing behavior.
When assessing whether applications are filed in bad faith without intent to use, CNIPA will consider not only the filing behavior of the applicant, but also the filing behavior of related parties of the applicant.
The Guidelines also specifically set out two types of deposit behavior which not violates Article 4:
- applications filed for defensive purposes that are identical or similar to the applicant’s existing marks; and
- requests filed for legitimate future business purposes.
How much is too much?
While the guidelines clarify some aspects of the amended trademark law, such as whether defensive filings would fall under section 4, they also leave some important questions unanswered. For example, in the context of the 10 situations listed above, what is meant by “a large number of brands”? Would 50 marks be sufficient to impute bad faith filing behavior, or should the number be closer to 1000? The guidelines only state that the threshold will depend on the specific facts of each case, such as the number of classes covered by the filings, the period during which the filings were made, the plaintiff’s field of activity, among many other factors. This is confirmed by the concrete examples cited in the guidelines – in one example around 20 trademark applications (for names of famous people) were deemed sufficient to reach the bad faith threshold, whereas in most of the other examples , the plaintiffs were found to have engaged in bad faith filing behavior after filing several hundred trademarks in a short period of time.
Interestingly, most of the concrete examples cited in the Guidelines involved substantial fact-finding before the CNIPA could determine that the behavior amounted to bad faith within the meaning of Article 4. In several examples, the CNIPA considered the applicant’s scope of business, common shareholders and relationships with other entities and individuals, post-registration behavior (such as post-registration transfers to third parties) between other relevant factors before making a decision. Given the large volume of applications processed by CNIPA, it would be unrealistic to expect examiners to proactively investigate each applicant’s filing behavior. In practice, unless the applicant has already been blacklisted, examiners are unlikely to reject Article 4 applications on substantive examination. Trademark owners should therefore continue to monitor published marks and actively oppose bad faith claims. In cases where a candidate has engaged in behavior that clearly falls under the 10 situations set out in the Guidelines, brand owners can also write to CNIPA to present the relevant facts and request that the candidate be blacklisted, in order to increase the likelihood that subsequent filings made by the applicant will be rejected outright by examiners in substantive examination.
The author would like to thank Jackie Leungtrainee lawyer at Mayer Brown, for her help with this article.
1. The original text can be found here: 《商标审查审理 指南》
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