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24 July 2017
Since 2008, the development of intellectual property has become a national priority in China. The volume of trademark applications has consistently grown over the past 15 years and reached 3.69 million in 2016.
One of the consequences of this growth is the proliferation of so-called 'pre-emptive trademark applications', filed in bad faith.
The Chinese government is becoming increasingly aware of this problem.
The revised Trademark Law, which became effective in May 2014, introduced the general principle of good faith in Article 7 and specific measures in Article 15.2. This update explores the notion that trademark applications should be refused when they are made by applicants who are fully aware of the existence of a prior unregistered trademark.
The Supreme People's Court recently published an official interpretation of the revised Trademark Law. On January 10 2017 the court issued the Provisions on Several Issues Concerning the Hearing of Administrative Cases Involving the Granting and Affirmation of Trademark Rights, which became effective on March 1 2017.
According to Provision 15, the terms 'agent' and 'representative' in Article 15.1 of the Trademark Law, include any person with any kind of relationship with such an agent, even if negotiations have taken place, but are not concluded. Under Provision 16, the term 'other relations' used in Article 15.2 of the law should also be interpreted broadly and includes:
Regarding the concept of 'bad-faith registration', in Provision 25 the Supreme People's Court introduced the two following points:
The China Trademark Office and Trademark Review and Adjudication Board are also taking concrete measures, which include the following:
More generally, the authorities have emphasised that a trademark serves as an indicator of the origin of goods and services and is not an asset. Therefore, the act of purchasing and selling trademarks to make a profit is not encouraged.
The Supreme People's Court and the Beijing IP Court are also acting to fight against bad-faith filings by publishing precedents.
In March 2017 the Judicial Committee of the Supreme People's Court published, as a 'guiding case' – therefore binding for lower courts – a judgment rendered by the court in August 2014 in a retrial procedure in which the court stressed that:
"where a party, through bad faith trademark registration and malicious lawsuit, violates the principle of good faith, damages the legal interests of another person and disturbs the market order, courts should not support the claim because such acts amount to an abuse of rights." (Supreme People's Court Guiding Case 82, Wang Suiyong v Ellassay.)
In Wang Suiyong the infringement action launched by the bad-faith trademark owner was dismissed, even though the trademark was still valid.
Such a decision, if repeatedly confirmed by courts in the future, would have a big effect on bad-faith filing activities.
On April 24 2017, two days before World IP Day, the Beijing IP Court held a press conference concerning how to deal with bad-faith filing, which covered the following:
The Beijing IP Court simultaneously publicised 18 typical cases concerning bad-faith trademark filing, which included:
The actions detailed above indicate that the Chinese government and courts are determined to fight bad-faith trademark filing. However, success is not guaranteed and bad-faith cases remain difficult to control and proving bad faith is not easy. Time will tell if more severe actions are necessary.
For further information on this topic please contact Haiyan Ren or Yongjian Lei at WAN HUI DA by telephone (+86 10 6892 1000) or email (email@example.com or firstname.lastname@example.org). The WAN HUI DA website can be accessed at www.wanhuida.com.
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