On 13 January 2023, the China National Intellectual Property Administration (CNIPA) issued a draft amendment to the Trade Mark Law with the goal of strengthening the regulations relating to bad faith trade mark registration. The draft is open for public comment until 27 February 2023.
Bad faith trade mark squatters have plagued the China trade mark registration system for many years. China continues to up the ante in the fight against bad faith squatters and these new amendments seek to codify landmark court rulings (i.e. trade mark hijacking attracts tortious liability and constitutes unfair competition), incorporate best practices, as well as reinforce regulations against these squatters. Interestingly, a mechanism to transfer squatted trade marks to their rightful owners has been proposed. Other amendments aim to remove bad faith or unused registrations from the trade mark register by prohibiting duplicate applications and implementing a proof of use requirement every five years.
Overall, the changes could positively impact the integrity of the trade mark registration system, reduce the administrative burden on the CNIPA, and save brand owners time, effort, and resources. Brand owners would have to adjust their trade mark filing and portfolio management strategy especially in maintaining a database of evidence to prove use of their registered marks.
The key points from the proposed amendments include:
1. Increased Regulation over Bad Faith Trade Marks
Article 22 clarifies the specific circumstances which constitute trade mark applications made in bad faith, including:
- applying for a large number of trade marks without any intent to use;
- applying for trade mark registration by deception or other improper means;
- applying for trade marks which are detrimental to the national interests, public interests or having other significant adverse effects;
- intentionally damaging the legitimate rights or interests of others, or to obtain illegitimate benefits in violation of the trade mark law; and
- other bad faith behaviours when applying to register trade marks.
The establishment of a mandatory transfer mechanism allowing brand owners to request the transfer of bad faith registrations back to them in invalidation proceedings has been proposed (Article 45). Oftentimes, a brand owner is compelled to repeatedly file applications for its own mark whilst awaiting the outcome of actions taken against the bad faith registration and other prior rights. Allowing a transfer would grant the brand owner certainty in obtaining a trade mark registration and save considerable time and resources.
The draft further clarifies that the applicant shall bear legal liability for infringement after a bad faith registration is declared invalid (Article 48); increases the amount of fines for bad faith trade mark registration to a maximum of RMB 250,000 (Article 67); and stipulates that compensation should be awarded for losses caused by bad faith applications in civil proceedings while criminal liability could arise in cases where the national or public interests are being harmed (Article 83).
2. Requirement to Use Registered Trade Marks
The China trade mark register is burdened with mass bad faith applications and defensive filings by brand owners. A new requirement that the applicant ‘uses or is commitment to use’ has been added to the application process (Article 5). Moreover, the draft introduces a US styled system requiring registrants to file statements of use every five years after registration (Article 61).
3. Duplicate Trade Mark Registrations Prohibited
Trade mark registrants repeatedly apply to register the same trade mark for the same goods for different reasons – some are legitimate whereas others are with malicious intent. The proposed amendments prohibit such duplicate applications (Article 14) as well as stipulate that a trade mark application cannot be identical to a prior trade mark for the same goods applied or registered by the applicant, or one which has been removed, cancelled, or invalidated within one year of the application date (Article 21).
These new articles aim to reduce the number of bad faith or defensive applications and prevent the immediate re-filing of bad faith applications once they have been invalidated. Nevertheless, there could be legitimate circumstances where re-filings are required which may be inadvertently caught out by this amendment.
4. Broadening the protection afforded to well-known Trade Marks
When determining whether a trade mark is well-known, two new factors can be considered: ‘the status of the domestic and overseas applications and registrations of the trade mark’ and ‘the value of the trade mark’ (Article 10). The concept of dilution has been introduced through the proposal to grant broader protection to well-known trade marks. The use and registration of a trade mark shall be prohibited if it is a reproduction, imitation or translation of a well-known trade mark which is very familiar to the general public, such that a sufficient association with that well-known trade mark is established in the minds of the relevant public, thereby reducing the distinctiveness or improperly exploiting the reputation of the well-known trade mark (Article 18).
Rouse intends to submit comments to the proposed amendments to the CNIPA. Should you wish to contribute your views or discuss the changes with us, please contact us.
