Wanhuida Peksung IP Group Legal update: Becoming more strategic in fighting bad faith filing in China

China’s trademark filing has grown dramatically in the last few years. Statistics shows that the number of filings reached a staggering 5.9 million in 2017, giving rise to a surge in trade mark administrative litigations. Data released by the Beijing Intellectual Property Court in 2016 shows that bad faith filing/registration accounts for 30% of all the trademark-related administrative suits, making it officially a major concern to brand owners.

In response to the situation, the China Trademark Office (CTMO), the Trade mark Review and Adjudication Board (TRAB), and the judiciary have been ramping up efforts to contain bad faith filings. Examiners and judges are becoming more open minded in recognizing evidence and in the application of the law.

The following case law reveals how brand owners could be more strategic in fighting bad faith filing under the current trade mark legislative framework.

Application of the Principle of Good Faith

The 2013 Trade mark Law (TML) introduces, in Article 7, “good faith” as a general principle: “The application for registration and the use of a trade mark shall be made in good faith”. The principle is customarily perceived as a general principle, whose application can be found in a large number of articles, yet its direct citation is rather unusual.

In the case below, the CTMO rejected the applicant’s trade mark by applying both Article 30 (similar mark on similar goods) and Article 7 (good faith principle) of TML.

Moen Incorporated, owner of MOEN and its corresponding Chinese “摩恩” marks in China, filed an opposition against the trade mark application “魔恩印象” applied by an individual whose store was raided for selling fake Moen products and freeriding on Moen’s reputation.

The CTMO ascertained that the administrative decision corroborated the fact that coercive measures were imposed on the opposed party for selling fake Moen products. The opposed party was fully aware of the reputation of the opponent’s sanitary and bath products, yet it altered the first character of Moen’s Chinese trade mark without changing the pronunciation, combined it with the Chinese character of impression and filed the mark on goods that are closely related to Moen’s products. The opposed party exhibits mala fide in copying and imitating MOEN trade mark. The CTMO cited Moen’s earlier trademarks and the good faith principle to reject the opposed mark in all designated goods.

Administrative action helps preserve evidence on the prior offence of trade mark squatter.

Preemptive filing by agent or representative (in a broad sense)

Article 15.1 of TML prohibits the agent or representative from preemptively registering the trade mark of the party being represented. The Supreme People’s Court further specifies in Article 15.3 of the “Judicial Interpretation on Several Issues on the Trial of Administrative Litigation relating to Granting and Affirming Trade mark Rights” that where the trade mark applicant’s filing could be presumed to be the result of bad faith collusion with the agent or representative, with whom he has specific personal status relationship”, Article 15.1 of the TML should apply.

The case below is an exemplary application of the SPC judicial interpretation.

SOCIETE VITICOLE HENRI LURTON (Henri Lurton) is the owner of French winery Chateau Brane-Cantenac, which owns registered trade mark “BRANE CANTENAC” in France. In 2014, Fujian Lucky Horse Group registered trade mark "BRANE CANTENAC" for wines in China. Henri Lurton applied for the declaration of invalidation of the trade mark.

In this case, without direct contact with Henri Lurton, an in-depth investigation disclosed that the associated company of Fujian Lucky Horse used to sell Brane-Cantenac wine to Shanghai Lucky Horse. Shanghai Lucky Horse had investment from the shareholder of Fujian Lucky Horse and the senior management of these two companies is the same. The Beijing IP Court presumed that Fujian Lucky Horse should have known the trade mark “Brane-Cantenac” owned by Henri Lurton.

The court also recognized the reputation of Chateau Brane-Cantenac and ascertained that registration and use of the disputed trade mark by Fujian Lucky Horse would cause confusion among consumers. The decision was upheld by the Beijing Higher Court.

Thorough investigation helps to unravel the true identity of trade mark squatter.

Massive filing of others’ famous trade marks

Article 44.1 of China’s TML concerns bad faith filing by fraud or other unfair means - massive filings/registrations of others’ famous trade marks (one famous mark in several classes or several famous marks in different classes).

The case below is a 12-year legal wrangle between brand owner and a cunning squatter that attempts to launder its bad faith filing through multiple assignments.

AKRIS PRET-A-PORTER AG (AKRIS AG), a famous Swiss fashion house, raised opposition to applied trademark “A-K-R-I-S-” filed by a France Benny International Enterprise Group Co., Limited. After going through opposition, opposition review, court trial of first and second instance, TRAB, which was ordered by the court of appeal to re-make the opposition review decision, rejected the application of the opposed trademark. The applicant of the opposed trademark then brought an action before the Beijing IP Court.

The opposed mark had been assigned twice during the previous proceeding, from France Benny International to Gu Bai Tools then to AKRIS (Hong Kong) Limited. It is obvious that the original owner of the opposed trade mark deliberately assigned the trade mark several times in an attempt to launder the preemptively filed trademark and clear itself of “filing massive preemptive trademark registrations”.

The Beijing IP Court held that trade mark registration purportedly not for use and massive registrations of prior reputable or original trade marks fall under the circumstance of “acquiring the registration of a trade mark by any other unfair means” as provided in Article 44.1 of the TML, because such acts disrupts the trade mark registration procedures, damages public benefits and misappropriates public resources. In this case, the assignors and assignees of the opposed mark are interested parties, without any proper cause to justify the frequent assignment acts. Therefore, the assignment of the opposed mark did not alter the fact that the mark was filed in bad faith. The Beijing IP Court maintained the TRAB's decision of disapproval.

A simple trade mark check of the trade mark squatter may help the brand owner find more.

 

Wanhuida Peksung IP Group
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Haiyan Ren
Senior Partner
E-mail: renhaiyan@wanhuida.com
Haiyan Ren is a Senior Partner at Wanhuida Peksung IP Group. Haiyan is the most experienced trade mark attorney of the firm. In her 23 years of practice, she has handled high-profile cases relating to trade mark and design patent filing, registration, litigation and dispute resolution. She has advised numerous Fortune 500 companies on trade mark profile auditing, strategic planning for trade mark and design protection, domain name disputes, unfair competition cases, IP border protection by Customs and criminal enforcement. Haiyan was named as an “Outstanding Individual” by the World Trademark Review in 2017 and an “IP STAR” by Managing IP in 2017. 

Yongjian Lei
Partner
E-mail: leiyongjian@wanhuida.com
Yongjian Lei is a Partner at Wanhuida Peksung IP Group. Yongjian helps many worldwide well-known clients build their trade mark strategies. He excels in providing comprehensive services to the clients with regard to cases concerning bad-faith preemptive trade mark filings, well-known trade mark recognition, trade mark purchase, licensing, geographic indications, domain name, and copyright. His practice covers prosecution, enforcement, and litigation. In 2017, Yongjian is elected member of the Young Practitioners Committee of the International Trade mark Association (INTA) for the 2018–2019 term.