Ye Cai November 21 2022 Bad-faith trademark squatting case spotlights role of agents Wanhuida Intellectual Property | Intellectual Property - China Ye Cai Intellectual Property FactsDecisionCommentIn April 2022, in the Emerson case – relating to the reimbursement of expenses in trademark administrative actions – the Fujian High People's Court confirmed the liability of the agency, Xin Jun Intellectual Property Co, Ltd (Xing Jun), which accounted for 47 of the 48 contested trademarks.FactsOn 25 December 2015, in opposition review cases against the applicant's four IN-SINK-ERATOR trademarks, the Beijing High Court issued second-instance judgments affirming the applicant's bad faith for trademark squatting.Xing Jun continued to represent the applicant in various trademark matters until Emerson initiated its civil case on 5 March 2020. The Xiamen Intermediate Court's first-instance judgment held that Xing Jun was jointly liable for 640,000 yuan (approximately $98,000) or 40% of the entire damage to the plaintiff.Dissatisfied with the ruling, Xing Jun appealed, contesting in its petition that:the applicant's trademark filings did not infringe Emerson's rights;there was no proof that Xing Jun had been aware that the applicant intended to engage in trademark squatting and did not intend to use the trademarks commercially; andXing Jun had not earned profits and had charged only minimal agent fees.DecisionThe Court upheld the first-instance judgment,(1) emphasising the agency's obligation to abide by the good-faith doctrine and restricting it from representing bad-faith trademark filers under the Trademark Law. Xing Jun's behaviour, including continuing to represent the applicant, was deemed as assisting the applicant's infringement.CommentThe current Trademark Law constrains the obligation of trademark agencies in article 19 and stipulates the consequences of failing to abide by article 68, in order to regulate trademark agencies' activities and curb bad-faith trademark filings and squatting. Apparently, this case accomplished this mission to a certain extent. It is believed to have had an intimidating effect on agencies.In the meantime, the Court's ruling imposes an obligation on trademark agencies to undertake cautious due diligence before accepting a case. Where no public blacklist of bad-faith applicants is available, trademark agencies should pay more attention when accepting instructions, particularly in balancing a client's benefits and professional restrictions.For further information on this topic please contact Ye Cai at Wanhuida Intellectual Property by telephone (+86 10 6892 1000) or email ([email protected]). The Wanhuida Intellectual Property website can be accessed at www.wanhuida.com.An earlier version of this article was published by INTA bulletin.Endnotes(1) 2020 Min 02 Minchu No. 149.