The volume of trademark applications in China has consistently been growing in the past 15 years. This growth, together with the fact that China is a first-to-file trademark system, has led to the proliferation of so-called ‘pre-emptive trademark applications’, filed in bad faith. Bad faith refers to the filing of a trademark that the applicant knows to have been used and developed by another brand. This is done with the intention of making a profit out of it, by selling the trademark back to the brand. Until now, the law made it easy for the so called “professional squatters” to file such trademark applications. Under the current law, a few or no documents are required to file to prove its status or intention to use a mark in China. Sole individuals with no businesses can file hundreds of marks with no need to provide a copy of a business license or proof of business activities related to an intent to use.
In February 2019, China’s National Intellectual Property Administration (CNIPA) has published the draft on “Certain Provisions for Regulating Applications for Trademark Registration”.
The goal is to improve the trademark laws to tackle “abnormal registrations.” This term is used to describe bad-faith filings. The CNIPA has taken steps to identify the behaviors resulting in “abnormal” trademark applications, to define the legal basis to curb them based on existing laws and regulations. The applicant filing for the registration of a trademark will have to prove that he or she runs an actual business and has a business need for such a registration. Also, to ensure concrete implementation of the above provisions, the draft further provides that the applicant shall be required to submit relevant evidence and explain the reasons for his or her application.
Art. 3 sets out “typical” scenarios in which a trademark application would be deemed “abnormal”.
- Article 3(1), prohibits the registration of a trademark “familiar to the relevant public.”
- Article 3(5) prohibits the application of “a large number of trademark applications within a short period of time that obviously exceeds the reasonable limit.”
- Article 3(6), prohibits the registration of a trademark “without genuine intention to use.” As always, some sort of guidance is required to define the vague terms. Article 4 sets out the legal consequences of “abnormal” trademark applications.
If implemented, the draft will allow examiners to identify abnormal applications and to start a verification process if they receive reports of abnormal filings by third parties. Any abnormal applications may be published on CNIPA website as well as China Intellectual Property News, a Beijing-based newspaper, and the applicant may face other punishments administered by related authorities.
Considering the difficulties China already encounters in dealing with the huge number of yearly filings, the success of this legislative initiative will depend a lot on how effectively the provisions will be implemented and interpreted in order to reduce the amount of abnormal applications filed in China.