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A harder line on bad faith filing

Haiyu Li and Tingxi Huo of Chofn IP outline China’s efforts to combat bad faith trade mark filing

Trade mark piracy or bad faith filing in China has long posed a headache for legitimate trade mark owners. The third revision of China's Trade Mark Law in 2014 brought renewed impetus in the legislative, judicial and administrative organs to counter this. This article will examine the progress that's been made.

Legislative progress

The third revision of the Trade Mark Law brought the following positive changes:

Article 7 was established as a general principle of good faith, to be upheld for filing applications and the use of trade marks. This is the last resort for the authorities if other specific articles or rules cannot stop clear-cut bad faith filings.
In an opposition to the trade mark Betseyville and its Chinese characters (number 14989252), the Chinese Trade Mark Office (CTMO) found that the applicant for the opposed trade mark filed more than 900 applications, including many trade marks that were similar to others' prior used and creative trade marks, and more than 100 of them were opposed. The applicant's application for trade marks obviously exceeded the normal needs of a business, and the applicant failed to explain this anomaly reasonably. The CTMO thus concluded that the applicant possessed subjective malice in imitating and copying trade marks, thus violating the principle of good faith.
The revised Article 10.1.7 can forbid the use and registration of trade marks that are deceptive or likely to confuse the public. This article is mostly applicable to cases where the trade marks of the legitimate owners are very famous in their industries, while the disputed trade marks are applied for with respect to different industries.
Under this revised article, the CTMO refused the registration of the trade mark 帕诺兹 (Panoz in Chinese characters) and Panoz Abruzzi for a producer of lubricants. The registration was opposed by a world-renowned car maker, which sold sports cars under the brand name Panoz Abruzzi, and used the Chinese equivalent 帕诺兹 as its trade name in China, a name which enjoyed a certain recognition. Though the types of goods (lubricants and cars) were not the same, the trade mark application was rejected because of its propensity to confuse the public.
The revision of Article 15 is another highlight. Before the revision, Article 15 merely prohibited unauthorised filing of trade marks by the legitimate owners' agents or representatives. The new Article 15 has expanded the prohibition to include unauthorised filings by any party who acquired knowledge of the trade mark through prior contact with the owner.
There have been cases of trade mark agents using their professional knowledge to directly pirate others' trade marks in their own names. To combat this, Article 19 forbids trade mark agencies from applying for trade marks for themselves. The article limits trade mark agencies to providing IP-related legal services. While this change has been effective in preventing piracy committed by trade mark agents themselves, it has become an obstacle for trade mark agents who truly provide additional services (such as translation and training).
Article 44.1 is another important weapon for curbing bad faith filing. Under this article, a registered trade mark shall be declared invalid if its registration is obtained by deceptive or other improper means. "Other improper means" refers to behaviour that disturbs the general process of trade mark registration and goes against public interest. It's not applicable if the behaviour only damages the specific entity's civil right.

Judicial progress

In a recent case, the Beijing High People's Court made a landmark ruling by cancelling the disputed trade mark (Tai-Niang (in Chinese); On Wiridou (in Thai); Mae Ploy and device), as illustrated, on the basis of bad faith performed by the applicant Zeng Yuhang, even though the Court judged that the challenger's (Theppadungporn Coconut Company Limited) filed evidence was insufficient to support the challenger's own prior rights.

The disputed trade mark

The applicant filed the disputed trade mark in 2009 and the CTMO granted approval in 2010. The challenger requested cancellation of the disputed trade mark in 2013 by claiming to be the genuine owner of the trade mark, which is essentially the same trade mark without the two Chinese characters.

The cited trade mark

The challenger also registered the copyright of the drawing in Thailand in 2011. To support the copyright claim, the challenger filed the evidence of prior Thai trade mark registration, a declaration of copyright ownership, and certain evidence of prior use and publication.

The challenger also pointed out that the applicant is a habitual trade mark pirate, who had applied for 14 other famous trade marks, including Nestlé in Chinese, Lee Kum Kee in Chinese, and Heinz in Chinese.

Both the Trade Mark Review and Adjudication Board (TRAB) and the Beijing First Intermediate People's Court (the First Court) sustained the challenger's copyright claim and confirmed the applicant's bad faith.

Nevertheless, the First Court and TRAB only based their adjudication and ruling on the articles concerning the infringement of prior rights. The owner was dissatisfied with the ruling and appealed to the Beijing High People's Court, stating the following reasons:

1) the drawing claimed by the challenger does not enjoy copyright. The filed evidence is insufficient to prove the source of the copyright;

2) the date of copyright registration is later than that of application of the disputed trade mark;

3) it is unreasonable to presume bad faith in the absence of substantial evidence; and

4) the drawing and the disputed trademark are dissimilar.

After examination, the court found that the challenger's copyright could not be sustained, because its registration date was relatively recent and the challenger's declaration was unconvincing as it was unilaterally self-produced evidence. It rejected other prior use and publication evidence as proof of copyright ownership.

Despite this, however, it ruled that the applicant's trade mark should be cancelled due to his habitual bad faith, shown by his numerous prior applications for famous trade marks belonging to others.

While a habitual bad faith claim is often proposed in trade mark oppositions, the relevant authorities seldom entertain such claims. In this case, though, even though the final court refused the claim for prior copyright, it accepted the claim for bad faith because the applicant also tried to register famous trade marks belonging to many others.

Three of the 14 other trade marks, namely Nestlé in Chinese, Lee Kum Kee in Chinese, and Heinz in Chinese, are very well-known in China. This instance of bad faith could not be more obvious. If the Court refused to cancel the disputed trade mark simply because the challenger failed to file sufficient evidence like in many other cases, the challenger would have continued to suffer and the applicant would likely have been emboldened to pirate more brand names.

To the relief of this particular challenger, the Court went out of its way to acknowledge the applicant's bad faith, even though the challenger failed to file sufficient evidence to prove the status of the 14 other famous trade marks the applicant had tried to pirate. This dramatically lightens the challenger's burden of proof.

Due to China's fundamental first-to-file principle for trade mark registration, piracy is rampant. This landmark case represents a change in favour of victims of bad faith filings.

Number of opposition decisions56,54673,13743,526NIL*63,720
Opposition success rate17.1%11.31%17.28%NIL*27.54%
* To prepare for the implementation of the new Trademark Law, the Chinese Trademark Office made no decisions on oppositions in 2014

Administrative proceedings

Under the revised Trade Mark Law, the CTMO has made more decisions in favour of opponents since 2014. The success rate of oppositions has increased by over 10%, as shown in the chart.

The grounds for opposition and invalidation vary substantially, but it is almost certain the majority of such cases were aimed at bad faith filing. The increased rate of successful opposition and invalidation will prove very helpful in curbing trade mark piracy in China.

Since December 2016, the TRAB randomly published part of its adjudications and will increase the number gradually. Its final goal is the instant publication of all its adjudications.

The progress highlighted in this article demonstrates China's determination to curb bad faith filing. Legitimate trade mark owners should take advantage of this development and feel more confident about protecting their trade marks in China.

Haiyu Li
Haiyu Li is a trade mark attorney, attorney at law and partner of Chofn IP. She graduated from China Foreign Affairs University with a bachelor's degree in law in 2010 and is studying for a master’s degree at Renmin University of China. She is experienced in prosecuting and enforcing trade marks, copyright and domain names.

Tingxi Huo
Tingxi Huo is a trade mark attorney and partner of Chofn IP. He graduated from Henan University and studied law at the China University of Political Science and Law. He is a member of the MARQUES China Team and the INTA Enforcement Committee 2014-2015, Building Bridge Committee 2016-2017.

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