Introduction

Trademark filing in China has increased dramatically in recent years. Statistics show that the number of filings reached a staggering 5.748 million in 2017, giving rise to a surge in trademark administrative litigations. Data released by the Beijing Intellectual Property Court in 2016 shows that bad-faith filings and registrations account for 30% of all trademark-related administrative suits, making them a major concern for brand owners.

In response to this situation, the China Trademark Office (CTMO), the Trademark Review and Adjudication Board (TRAB) and the judiciary have increased their efforts to reduce bad-faith filings. Examiners and judges are becoming more open minded both in recognising evidence and applying the law.

The following case law reveals how brand owners could be more strategic in fighting bad-faith filing under the existing trademark legislative framework.

Application of good-faith principle

Article 7 of the Trademark Law 2013 introduces good faith as a general principle, providing that "the application for registration and the use of a trade mark shall be made in good faith". Although the principle is customarily perceived to be a general principle whose application can be found in numerous articles, its direct citation is rather unusual.

In one case, the CTMO rejected the applicant's trademark by applying both Article 30 (use of a similar mark on similar goods) and Article 7 (the good-faith principle) of the Trademark Law.

Facts Moen Incorporated, which owned the MOEN mark and its corresponding Chinese mark (??) in China, filed an opposition against the application to register the Chinese mark ????. The application was submitted by an individual whose store had been raided for its sale of fake Moen products and the fact that it had been free-riding on Moen's reputation.

Decision The CTMO ascertained that the administrative decision corroborated the fact that coercive measures had been imposed on the opposed party for selling fake Moen products. The opposed party had been fully aware of the reputation of the opponent's sanitary and bath products, but had:

  • altered the first character of Moen's Chinese trademark without changing the pronunciation;
  • combined it with the Chinese character of impression; and
  • filed the mark for goods that were closely related to Moen's products.

Thus, the CTMO held that the applicant had exhibited bad faith in copying and imitating the MOEN trademark. The CTMO cited Moen's earlier trademarks and the good-faith principle to reject the opposed mark for all designated goods.

From this case, it is clear that administrative action can help to preserve evidence of a trademark squatter's prior offences.

Pre-emptive filing by agent or representative

Article 15.1 of the Trademark Law prohibits an agent or representative from pre-emptively registering a trademark of the party being represented. The Supreme People's Court further specified in Article 15.3 of the Judicial Interpretation on Several Issues on the Trial of Administrative Litigation relating to Granting and Affirming Trademark Rights that where an applicant's filing could be presumed to be the result of bad-faith collusion with an agent or representative with whom the applicant has a "specific personal status relationship", Article 15.1 of the law should apply.

The case explored below is an exemplary application of the Supreme People's Court's judicial interpretation.

Facts Societe Viticole Henri Lurton (Henri Lurton) owns the French winery Chateau Brane-Cantenac, which registered the BRANE CANTENAC mark in France. In 2014 Fujian Lucky Horse Group registered the BRANE CANTENAC mark for wines in China. Henri Lurton applied for a declaration of invalidation for the latter mark.

Decision An in-depth investigation found that the associated company of Fujian Lucky Horse had, without making direct contact with Henri Lurton, sold Brane-Cantenac wine to Shanghai Lucky Horse. Shanghai Lucky Horse had received an investment from a shareholder of Fujian Lucky Horse and the senior management of the two companies was the same. The Beijing IP Court presumed that Fujian Lucky Horse should have known that Henri Lurton owned the BRANE-CANTENAC mark.

The court also recognised the reputation of Chateau Brane-Cantenac and ascertained that Fujian Lucky Horse's registration and its use of the disputed trademark would confuse consumers. The Beijing Higher Court upheld the IP court's decision.

From this case, it is clear that a thorough investigation can help to unravel a trademark squatter's true identity.

High-volume filings of famous trademarks

Article 44.1 of the Trademark Law concerns bad-faith filing through fraud or other unfair means, including high-volume filings or registrations of other parties' famous trademarks (either one famous mark in several classes or several famous marks in different classes).

The case below is a 12-year legal wrangle between a brand owner and a cunning squatter that attempted to conceal its bad-faith filing through multiple assignments.

Facts AKRIS PRET-A-PORTER AG (AKRIS AG), a famous Swiss fashion house, filed an opposition against the A-K-R-I-S- mark filed by France Benny International Enterprise Group Co, Limited. Following opposition proceedings, an opposition review and first and second-instance trials, the TRAB – which had been ordered by the appeal court to reconsider the opposition review decision – rejected the application for the opposed trademark. The applicant of the opposed trademark then brought an action before the Beijing IP Court.

The opposed mark had been assigned twice during the previous proceedings:

  • from France Benny International to Gu Bai Tools; and
  • from Gu Bai Tools to AKRIS (Hong Kong) Limited.

Clearly, the original owner of the opposed trademark had deliberately assigned the mark several times in an attempt to conceal the pre-emptively filed trademark and clear itself of "filing massive preemptive trademark registrations".

Decision The Beijing IP Court held that registering a trademark which is purportedly not for use and obtaining a high-volume of registrations of prior reputable or original trademarks constitute "acquiring the registration of a trade mark by any other unfair means", as provided for in Article 44.1 of the Trademark Law. This is because such acts:

  • disrupt the trademark registration procedure;
  • damage public benefits; and
  • misappropriate public resources.

In this case, the assignors and assignees of the opposed mark were interested parties, without any proper cause to justify the frequent assignment acts. Therefore, the assignment of the opposed mark did not alter the fact that the mark had been filed in bad faith. The Beijing IP Court maintained the TRAB's decision of disapproval.

It is clear from this case that a simple check of a trademark squatter's marks can help a brand owner to uncover more evidence.

For further information on this topic please contact Haiyan Ren or Yongjian Lei at Wanhuida Peksung by telephone (+86 10 6892 1000) or email (renhaiyan@wanhuida.com or leiyongjian@wanhuida.com). The Wanhuida Peksung website can be accessed at www.wanhuida.com and www.peksung.com.

An earlier version of this article was first published in Asialaw Leading Lawyers 2018.

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