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30 March 2020
The fourth amendment of the Trademark Law came into force on 1 November 2019. The revised Article 4 of the law now states that a "trademark filed in bad faith without intention to use shall be rejected". This modified version is also mentioned in Article 44.1 of the law, which provides that any trademark registered in violation of Article 4 and any trademark registered by fraudulent or unfair means will be declared invalid.
On 26 April 2019 the China National Intellectual Property Administration (CNIPA) issued a decision, albeit under the previous version of the law, that analysed the difference between "application in bad faith without intention to use" and "obtaining registration by fraudulent or unfair means".
Shanghai KANG HANG Biotechnology Co Ltd applied to register the trademark NEOCATE in respect of goods in Class 3, including "soap; laundry preparations; cosmetics; talcum powder; cotton swabs for cosmetic purposes; bath powder; toilet water; tissues impregnated with cosmetic lotions; [and] dentifrices".
On 28 April 2018 SHS INTERNATIONAL LTD filed an application to declare the aforesaid trademark invalid, alleging that the registration violated Articles 30 and 44.1 of the Trademark Law.
The CNIPA found that the registration of the disputed trademark had been "acquired by unfair means" – an absolute ground for invalidation according to Article 44.1 of the Trademark Law – and thus declared the trademark invalid.
The CNIPA's reasoning combined Articles 4 and 44.1:
The CNIPA cited Article 44.1 of the Trademark Law to invalidate the disputed trademark.
In its reasoning, the CNIPA combined Articles 4 and 44.1 of the Trademark Law. The CNIPA held that, even before its revision, Article 4 had established a link between the act of filing a trademark application and the business requirement underlying such act. Without such business, the concept of "disruption of the trademark public order" provided by Article 44.1 could be used as grounds for invalidating an application.
The new Article 4 makes this even clearer, but will apply only to trademarks filed after the entry into force of the revised law. The Supreme People's Court has yet to promulgate any judicial interpretation on how to apply the new law. However, Article 4 will likely have no retroactive effect on trademarks that were registered before 1 November 2019.
Nevertheless, the Guidelines of the Beijing High Court for the Adjudication of Administrative Cases Concerning Granting and Affirmation of Trademark Rights, which came into force on 24 April 2019, set out a useful explanation.
For example, the guidelines clarify that bad faith and lack of intention to use are cumulative conditions. In other words, filing a trademark without intention to use it is not per se an act of bad faith. The guidelines provide examples indicating the presence of bad faith, such as the fact of being aware of the existence of other trademarks prior to filing an identical or similar trademark. However, the background mainly concerns compliance with the public order, as permitted by Article 44.1. Thus, it is necessary to prove that an applicant's bad faith "disturbs the trademark registration order, impedes public interest, or encroaches public resources".
Regarding the lack of real intention to use, which is not mentioned in Article 44.1, the Several Provisions on Regulating Trademark Application issued by the State Administration for Market Regulation, which came into force on 1 December 2019, set out parameters that may help to determine real intention to use, including:
In practice, the CNIPA applies Article 44.1 of the Trademark Law only in trademark invalidation proceedings. On the other hand, Article 4 has a much broader scope, as it can be applied from the trademark application examination stage to reviews of refusal and opposition and invalidation proceedings.
For further information on this topic please contact Yang Mingming or Li Chen at Wanhuida Intellectual Property by telephone (+86 10 6892 1000) or email (email@example.com or firstname.lastname@example.org). The Wanhuida Intellectual Property website can be accessed at www.wanhuida.com.
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