Trade mark piracy has long been a serious problem in China. The China National Intellectual Property Administration (CNIPA) has made great efforts over the past few years to fight bad-faith applications, including by blacklisting more egregious trade mark pirates and sua sponte rejecting more obvious bad-faith applications.

The threat of piracy remains, however, making it important for brand owners to understand the tools at their disposal to fight bad-faith trade marks. Yunze LIAN of the MARQUES China Team provides a guide.

Chinese laws and regulations against bad faith filings

• Trademark law
• Anti-unfair competition law 
• Provisions of the Supreme Court on trade mark issues
• Provisions on Standardizing Trade Mark Applications
• Special Plan for Combating Bad Faith Filings
• Notice on Continuously and Severely Combating Bad Faith Filings
• Regulations on the Administration of IP Credit
• Management for the List of Serious Illegality and Dishonesty

Principles and rules against bad faith filings in the trademark law

The principles of [intent or an ability] to use good faith apply:

Article 4: Applications that are not intended for use shall be rejected.

Article 7: Applications shall follow the principle of good faith. Based on these two principles, the following rules have been promulgated:

Rule 1 Filings in large quantities

Under the principle of use, examiners now regularly refuse filings in large quantities on the ground that the filings are not for use. In the past years it was quite common for a person or company to register hundreds or thousands of trade marks without a valid intention to use the mark.

The true intention behind these filings has quite often been to warehouse and hold the marks for sale, holding the real owner of the mark hostage if/when the pirated mark is cited against their application. There are many trade mark sales markets, which is the platform for the trade mark hoarders and hijackers to sell their trade marks.

Tip: When you file oppositions or invalidations, run a proprietor search against the pirate to identify all of their trade marks to support the assertion that they are a bad-faith filer. Such evidence can help to convince the examiners that the disputed trade marks are filed or registered without intent to use.

Tip: If many trade marks were registered by the other party with no use intention, there is a very good chance of knocking the mark out via a non-use cancellation application, which becomes available three years after the mark’s date of registration.

Rule 2. Filings of well-known trade marks

If the trade marks of the true brand owner are able to be deemed “well known” under Chinese law, a targeted brand owner can file oppositions or invalidations against the bad faith filings on any goods/services in any classes outside the usual five-year time limit on such actions. In determining whether a given mark is well-known, the examiners will consider the following factors:

• the extent of the public's familiarity with the trade mark;
• the duration of continued use of the trade mark;
• the duration, extent and geographical scope of the promotions for the trade mark;
• the record of the trade mark being protected as a well-known trade mark;
• any other factors to prove the trade mark is well-known.

Tip: As it is very difficult to prove the well-known status of your mark, your oppositions or invalidations should focus on the trade mark pirate’s bad faith. In addition to Rules 1-4, you can also base such actions on Rule 5, below, a kind of catch-all provision covering many different types of bad faith conduct.

As long as you can prove bad faith on the pirate’s part, the examiners will likely support your oppositions or invalidations without the need to reach the question of the trade mark’s well-known status.

Rule 3 Filings by business partners

If the brand owner’s trade mark has been registered by its business agent or representative, the mark can be opposed or invalidated under Article 15 of the Trademark Law, which specifically prohibits such applications.

Related court rules also note that even applications by relatives of a given agent or representative will be classed as malicious collusion.

Further, and if an applicant is aware of the existence of the prior unregistered trade mark due to contractual or business relationship or “other relationship” with the true owner of the mark, such applications for marks for use on identical or similar goods/services shall be rejected. Again, under corresponding court rules, “other relationship” refers to the following circumstances:

• The registrant is a relative of the prior user of the trade mark;
• The registrant was the employee of the prior user;
• The registrant’s business address is close to that of the prior user; and/or
• The registrant and the prior user had discussions on the agent or representative, but failed to conclude an agreement.

Rule 4 Filings harming another’s prior right

Article 32 of the Trademark Law dictates that trade mark filings shall not harm the existing prior rights of others, meaning copyright, design and trade name rights.

It is prohibited to register trade marks of others that enjoy a certain degree of popularity by “improper means”. Under the court rule, “improper means” also refers to the circumstance in which the registrant knows or should have known of the trade mark.

Tip: Register your device mark as a copyright work to obtain a Chinese certificate of copyright registration. That document can form the basis of oppositions or invalidation on any goods/services and in any classes.

Rule 5 Filings by deception or improper means

Article 44: Registration by deception or improper means shall be invalidated. Deception refers to filing false documents. Under the court rules, “Improper means” refers to the circumstances of disrupting the order of trade mark registration, damaging public interests, improperly occupying public resources, or seeking improper benefits.

“Violations of the principle of good faith, public order and good customs” is the ground most often cited by examiners against bad faith filings.

Tip: In oppositions or invalidations, try to prove their “Violations of the principle of good faith”. In that regard, you can submit evidence of their trade marks which copy or imitate the trade marks, trade names, trade dress, designs, logos of other people or yours.

Multiple applications for trade marks that copy or imitate different trade marks of the true brand owner and others will also be considered to be “Violations of the principle of good faith”.

Administrative measures against bad faith filings

1 Black list of CNIPA

CNIPA has black list of bad faith filers. Based on the list, they refuse the applications of such filers.

Tip: You may request CNIPA to add the pirate’s name to the black list.

2 AMR Penalties

The Administration for Market Regulations (AMR) are intended to punish bad faith filers, including by issuing them warnings against their conduct, and imposing fines of up to CNY30,000. They can also be listed in the List of Dishonesty and entered into the publicly-accessible National Enterprise Credit Information Publicity System (NECIPS).

Parties in the List will be affected when AMR reviews their license and qualification and such entities will be excluded from government project and bidding.

Tip: You may request AMR for their punishment.

3 Consequences for trade mark agents of bad faith filers

The AMR can also punish trade mark agents handling bad faith filings, ordering them to make corrections, issuing them with formal warnings, imposing fines of up to CNY100,000 (€12,000), and/or halting their services.

The responsible person shall be warned and given a fine of up to CNY50,000 or given criminal sanctions.

The agent will be entered into the List of Dishonesty and identified to the public through NECIPS. Agents in the List will be affected when AMR review their licence and qualification and will be excluded from government project and bidding.

4 IP credit

Under CNIPA Regulations on IP Credit, bad faith filers and their agents are listed as “dishonest” and identified to the public through NECIPS. They will be affected when they apply for financial funds and IP preferential fees.

Judicial measures against bad faith filings

In 2021, first and second instance courts in Fujian Province issued a judgment in respect of bad faith trade mark filings based on the PRC’s Anti-unfair Competition Law. These were the first judgments in China where the courts determined that bad faith filing actually constitutes a form of unfair competition.

In that case, a Chinese trade mark pirate had registered 48 trade marks in 14 classes that were identical with or similar to the trade marks of Emerson Electric Co. (US).

Emerson spent many years and substantial cost in oppositions and invalidations against the piracy, but failed, finally initiating an unfair competition lawsuit.

The courts accepted Emerson’s claim, determining that trade mark piracy is a form of unfair competition and ordered the hijackers to halt their efforts to register Emerson’s trade marks, publish an apology and pay Emerson damages of CNY1.6 million.

Importantly, the principle of this case was referenced in a recent draft of the revision of Trademark Law.

Tip: The benefit of a lawsuit is that you can claim compensation of cost for oppositions, invalidations and all related costs, something not possible in the context of oppositions and invalidations before the TMO/TRAD.

Revision of the Trademark Law

The draft of the revision was released in January 2023 for public comments, though it is not yet finalised. One of the key focuses of the revision was to restrain bad faith filings. Provisions in the draft law relating to bad-faith filings include:

Bad faith filings are subject to penalties, including fines of up to CNY250,000 and confiscation of illegal gains.

The prior right owners may request the trade mark hijackers to transfer the trade marks to them.  

If damages are caused to the prior right owners, they could sue the hijackers for compensation of damages, including the cost of oppositions, invalidations and litigations.

If the hijackers sue the prior right owners, the court will punish the hijackers and order them to compensate the damages.

Yunze LIAN is founder of Jadong IP Law Firm and a member of the MARQUES China Team