In the context of China strengthening its intellectual property (IP) rights protection mechanisms, the Chinese administrative and judicial authorities have been granting stronger protection to different types of IP rights in specific cases. As far as trademark protection is concerned, the China National Intellectual Property Administration (CNIPA) and the Chinese courts have both made meaningful decisions in protecting well-known trademarks.
To balance the legal rights and interests of rights owners and the protection of Chinese consumers (provided through administrative authorities’ acts), the China Trademark Law sets strict requirements to raise the threshold for initiating an invalidation against a registered trademark.
Article 45 of the China Trademark Law provides that the owner of a well-known trademark shall not be subject to the limit of five years on requests for revocation due to a bad faith registration. In other words, if a trademark has been in registration for more than five years, two requirements should be met to successfully attack it: first, the prior trademark claimed for protection should be well-known before the filing date of the disputed trademark; and second, the registrant of the attacked trademark acted in bad faith.
In practice, the bad faith factor should be considered separately to decide whether the invalidation requests to attack the trademarks registered over five years should be accepted.
What Is Bad Faith?
Although not defined by the China Trademark Law, “bad faith registration” is clarified through judicial interpretations and guidelines.
According to Article 25 of the “Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Administrative Cases Concerning Trademark Right Authorization and Confirmation,” when deciding “bad faith registration over a well-known trademark,” reputation of the cited trademark, reasons for registering the disputed trademark, and usage of the disputed trademark should be minutely analyzed to judge the subjective intent of the registrant.
Where the cited trademark is famous and there is no justifiable reason for registering the disputed trademark, the courts can infer it as a “bad faith registration” in the language of Article 45.1 of the Trademark Law.
In April 2019, the Beijing High People’s Court issued “Guidelines for the Trial of Trademark Right Granting and Verification Cases,” in which factors for determining bad faith registration also are specified. The factors include:
- High degree of similarity of the disputed trademark and the prior well-known trademark;
- The prior well-known trademark enjoys strong distinctiveness and high reputation;
- The owners of the disputed trademark and the well-known trademark had transactions or business collaborations;
- Business locations of the two sides are close;
- Since registration of the disputed trademark, acts that take advantage of the reputation of the well-known trademark have been conducted; and
- The owner of the disputed trademark filed several others’ strong trademarks.
The above judicial interpretations and guidelines to a certain extent explain in what situations a registered trademark will be determined as being obtained in bad faith and guide the examining authorities in deciding specific cases. Although in practice controversies remain about determinations on bad faith, the guidelines have been widely interpreted to have decreased the number of bad faith registrations over the five-year limit.
In the meantime, with the improved legislation and practices on trademark protection, the CNIPA and the Chinese courts are more inclined to realize substantive justice in individual cases by granting protection to the alleged well-known trademarks.
On August 3, 2021, in the recently concluded administrative litigation Bulgari Spa v. The CNIPA & CAI Qing He, the Beijing High People’s Court affirmed the original judgment of the Beijing Intellectual Property Court, overruling the disputed decision on January 10, 2019, made by the Trademark Review and Adjudication Board (TRAB), and decided the disputed trademark Reg. No. 6085778 should be canceled.
In requesting well-known trademark protection for its registered trademark Reg. No. 3811212, Bulgari lodged the invalidation request against the disputed trademark in 2017, which by then had been in registration for more than five years.
Cai Qing He, the registrant, submitted proof showing his use of the attacked trademark on the services relating to the operation of his “BAO GE LI music café” (“BULGARI music café” in Chinese). The registrant contended that the subject trademark had been in continuous use and obtained a certain reputation which could be distinguished from the cited trademark. He convinced the TRAB that, before the filing date of the disputed trademark, Bulgari’s cited trademark hadn’t become well-known, and since the invalidation was initiated five years after the registration of the subject trademark, Bulgari’s claim for cross-class trademark protection had not been justified.
The Beijing IP Court and Beijing High Court both decided that the cited trademark had become well-known among Chinese consumers before the filing date of the disputed trademark. The courts further commented that a high degree of similarities of the compared marks could not be explained as a coincidence and that Mr. Cai had bad faith in registering the subject trademark and other infringing trademarks afterwards.
The invalidation request could be filed despite the five years’ limitation. Being used in relation to services such as “café; bar services,” the disputed trademark would readily cause the relevant consumers’ false connection with Bulgari’s cited mark and unduly utilize the fame of the cited mark built by Bulgari. In this case, the courts considered that the registrant’s other filings, which included marks similar to Bulgari’s trademark, further attested his bad faith.
As in the above case, many registrants of challenged trademarks submit evidence of use with the aim of trying to persuade the examining authorities that the disputed trademarks, through extensive use, could be distinguished from the cited prior well-known trademarks and therefore registrations should be maintained. However, in many cases the evidence submitted by the disputed mark owners rarely helped them to obtain a favorable outcome.
In contrast, the evidence collected by the holders of well-known trademarks helped the courts in determining the registrants’ bad faith, whether this evidence demonstrated the infringing usage of the disputed trademarks, highlighted questionable trademarks, or showed that the registrants have conducted acts of unfair competition.
Disputed Trademark′s Evidence of Use Shows Bad Faith
In the invalidation case, Budweiser Harbin Beer Co., Ltd. in 2019, the company lodged an invalidation request against the disputed trademark Reg. No. 3138083, registered in 2003 by Harbin Double Star Beer Limited Company. The CNIPA found Budweiser Harbin Beer had proven actual use, and the registrant had adopted the packaging design and the trademark similar with the well-known products, and considered that this should be taken into account in deciding bad faith.
In the litigation case TCL GROUP Co., Ltd. v. the TRAB, Guangzhou Jin Chao Electric Technologies Co., Ltd., TCL filed the invalidation request five years after the registration of the disputed trademark, Reg. No. 3702456. The TRAB decided the evidence of TCL was insufficient to prove the disputed trademark was filed in bad faith and rejected the invalidation request.
Dissatisfied with the invalidation decision, TCL pursued litigation before the Beijing IP Court. The courts of both instances overruled the TRAB’s invalidation decision and ruled in favor of TCL based on the evidence collected by TCL which showed the owner’s extensive and malicious use of the trademark. The court found that the disputed trademark was being used in a confusing way on television sets and was similar to the prior well-known trademark, which would easily lead to the relevant consumers’ false connection between TCL GROUP and the goods bearing the disputed trademark.
In another influential litigation case, Honda Motor Co., Ltd. v. TRAB, Jiangsu Ben Gang Investment Co., Ltd., the courts of both instances decided that the disputed trademark Reg. No. 3087232 was registered in bad faith. Jiangsu Ben Gang had been using the trademark “HAODA” alone or in a prominent way on motorbikes, which had been decided as infringement by the Chinese local administrations of industry and commerce. In direct competition with Honda Motor, Jiangsu Ben Gang should have known perfectly well about the prior well-known trademark, yet intentionally changed the trademark specimen in actual use into a more similar mark to the well-known trademark “HONDA.” The registrant’s bad faith was therefore obvious.
Filing to Register Other Questionable Trademarks Shows Bad Faith
In the above Budweiser Harbin Beer case, the CNIPA ascertained in the name of Harbin Double Star, there were more than 100 trademarks among which “哈啤” (Ha Beer) and “小哈啤” (Little Ha Beer) were imitations of the well-known mark (Ha Beer) owned by Budweiser Harbin Beer. The registrant’s knowledge about the prior well-known trademark could be inferred from the fact that both sides were located in Heilongjiang province. In the aforesaid Bulgari case, the registrant’s questionable trademarks filed afterwards also affected the courts’ decisions.
Conducting Other Unfair Competition Acts Shows Bad Faith
In another long-lasting litigation case, Hangzhou Ao Pu Electric Appliances Co., Ltd., v. TRAB, Yunnan Ao Pu Wei Ye Metal Building Materials Co., Ltd., and Zhejiang Modern New Energy Co., Ltd., the courts of first and second instances overruled the TRAB’s invalidation decision. The courts adjudicated that both the applicant of the disputed trademark Reg. No. 1737521 and Hangzhou Ao Pu were located close to each other in Zhejiang province, and were both providers of toiletry and bath products. It could be concluded that the applicant knew about the reputable prior mark “奥普” (Ao Pu). Yunnan Ao Pu Wei Ye’s evidence wasn’t cogent to prove that the disputed trademark could be distinguished from the prior well-known trademark among Chinese consumers.
To invalidate a trademark registration that was obtained more than five years ago, the right holder needs to prepare well and organize the evidence to prove that its prior trademark had become well-known on the designated goods or services in the Chinese market before the filing date of the concerned registration. Although the burden of proof on bad faith is borne by the mark’s prior owners, they need to show it by a preponderance of the evidence.
In each individual case, evidence of use either submitted by the owner of the contested trademark or collected by the prior mark proprietor, even after registration of the disputed trademark, may become useful in attesting the alleged bad faith if it shows the infringing use or unfair competition acts take advantage of the reputation of the well-known trademark.
To win such a case, other than by providing evidence of reputation for the prior trademark that is requested for protection, a thorough investigation into the businesses of a contested mark’s owner and the trademark’s usage is strongly recommended and, sometimes, vital.