SAMR publishes regulations discouraging bad-faith trademark applications

Introduction
New regulations

Introduction

On 16 October 2019 the State Administration for Market Regulation (SAMR) published Certain Provisions for Regulating Applications for Trademark Registration. The regulations, which entered into force on 1 December 2019, aim to discourage bad-faith trademark applications in China, which have increased exponentially in recent years.

The SAMR solicited two rounds of public opinion on the regulations in March 2019 and September 2019, respectively, and the number of articles increased from eight in the first draft to 19 in the final text (for further details please see "Is filing a trademark without intention to use an act of bad faith?").

The new regulations set parameters for determining bad-faith practices and bad-faith applications for trademarks that are not intended for use. They also introduce procedures and countermeasures for identifying not only bad-faith applications, but also perpetrators (ie, bad-faith applicants), facilitators and enablers (ie, unethical trademark intermediaries).

This article summarises key aspects of the new regulations.

New regulations

Actual needs and good faith (Articles 2 and 3)
The regulations reiterate that trademark applications must be based on actual needs to acquire exclusive rights to use a trademark (Article 2) and follow the principle of good faith (Article 3).

Identifying bad-faith applications (Article 3)
Article 3 of the regulations provide the following criteria for identifying acts of bad faith:

• activities which fall under the circumstances set out in Article 4 of the Trademark Law for identifying bad-faith applications for trademarks that are not intended for use;
• activities which violate Articles 13, 15 or 32 of the Trademark Law;
• trademark applications filed by fraudulent or other unfair means; and
• any other circumstances which violate the principle of good faith or public order and fair practice or that have other adverse effects.

Countermeasures against bad-faith applications for trademarks not intended for use (Articles 6 and 7)
The trademark registry may exercise the following countermeasures:

• Bad-faith applications will be rejected in trademark refusal and review for trademark refusal proceedings.
• Oppositions to bad-faith application decisions will be upheld.
• If a bad-faith application proceeds to registration, it will be declared invalid.

Identifying bad-faith applications for trademarks not intended for use (Article 8)
The regulations clarify various criteria to identify bad-faith applications for trademarks not intended for use:

• the number of trademarks applied for by the applicant or natural person, legal person or other organisations otherwise associated with the applicant, their classes of designated goods and the trademark transactions thereof;
• the industry of the applicant's business and the operation status thereof;
• whether the applicant has been the subject of administrative or judicial decisions that have taken effect which identified them as having engaged in filing bad-faith trademark applications or having infringed another person's exclusive right to use a trademark;
• whether the applied-for trademark is identical with or similar to another person's trademark that has certain reputation;
• whether the applied-for trademark is identical with or similar to the name of a celebrity, the trade name of a business, the abbreviation of a business name or other business signs; and
• any other factors which the trademark registry deems necessary to be taken into consideration.

Penalties for applicants of bad-faith applications for trademarks not intended for use (Article 12)
The local administration for market regulation at or above the county level in the place where the applicant is domiciled or where the illegal activity occurred may give warnings, impose fines or exercise other administrative penalties based on the circumstances of the activity. If illegal business revenue is involved, a fine of up to three times the illegal business revenue, but no more than Rmb30,000, may be imposed; if no illegal business revenue is involved, a fine of up to Rmb10,000 may be imposed.

Penalties for intermediaries handling bad-faith applications for trademarks not intended for use (Article 13)
The IP administration may order offending intermediaries to make rectifications within a time limit, give warnings and impose fines of between Rmb10,000 and Rmb100,000. In certain circumstances, the IP administration may deny or refuse to handle an intermediary's application.

For further information on this topic please contact Meili Hu or Nan Jiang at Wanhuida Intellectual Property by telephone (+86 10 6892 1000) or email (humeili@wanhuida.com or jiangnan@wanhuida.com). The Wanhuida Intellectual Property website can be accessed at www.wanhuida.com.