The third amendment to Trademark Law has recently been promulgated and will be implemented since May 1, 2014. Among other things, one of its significances is its combating against trademark squatting. Since current Trademark Law lack of enough measures against squatting (i.e. “by illegitimate means, register preemptively a trademark that is already in use by another person and has certain influence” specified in Article 31of current Trademark Law make it almost impossible for a plaintiff to prove its case), the rampant trademark squatting has not been successfully contained. As such, the recent amendment to Trademark Law lays out the following measures:

  • Introduced the principle of good faith as a basic principle for registration and usage of trademarks (see Article 7), which illegalizes trademark squatting in general. In addition, this principle can be incited as a catch-all provision to deal with atypical trademark squatting acts which are not clearly specified in the Trademark Law.
  • Extended the scope of certain business relationships in which trademark squatting is absolutely prohibited. Such relationships are no longer limited to commercial agency relationships, but have been expanded to include contractual, transactional as well as other relationships in connection with business dealings (see Article 15). The plaintiff in any of the above relationships only needs to prove that the squatter knows the plaintiff’s prior existing trademark for recognition of trademark squatting, which will significantly relieve the plaintiff of its burden of proof.
  • Introduced strict limits on trademark agencies (see Article 19), including 1) If the trademark agency knows or should have known the trademark to be filed is for trademark squatting, it may not accept such entrustment; and 2) a trademark agency may not file for itself for registration of any trademarks other than the trademark agency service trademarks, in order to prevent trademark squatting.
  • Prescribed the timeline for both procedures of hearing and reexamination of trademark opposition as twelve months, and an extension of an additional six months can be obtained after competent approval (see Article 35), so as to provide a clear expectation for relevant parties as to when the conclusive decision for the dispute will be made.

In conclusion, the recent amendment to Trademark Law provides multi-layered, clear cut legal basis for the crackdown of trademark squatting, which will definitely improve the status quo. However, this does not necessarily mean trademark squatting activities will be eliminated ever since, and it is advisable for market players to strengthen their trademark management, file for trademark registration as soon as possible, and establish effective trademark monitoring mechanism etc., so as to protect its trademark rights.