What the amendment to Article 4 of the Chinese Trademark Law means for bad-faith trademark filings

To many trademark owners’ dismay, China’s first-to-file system has contributed to a rise in malicious trademark filings and hoarding, as well as an increase in bad-faith trademark applications. This has not only seriously affected the trademark registration procedure, but has also infringed on other market entities’ legitimate rights and interests in the Chinese market.

According to the amended Article 4 of the Chinese Trademark Law, any natural or legal person or organisation that needs to obtain the exclusive rights to use a mark for its goods or services can apply for trademark registration at the China National IP Administration (CNIPA).

Article 4 stipulates that the CNIPA will reject any applications for trademarks that are not intended to be used and provides the grounds for initiating an opposition or invalidation action and effectively cracking down on malicious filings. Among other provisions, it gives examiners the legal grounds to reject bad-faith applications during the substantial examination stage.

The updates to the law provide a clear legal basis for regulating malicious trademark registrations and a comprehensive mechanism for combatting bad-faith filings and hoardings at any point in the trademark lifecycle. As a result, a bad-faith application may be:

• rejected as early as the substantial examination stage;
• prohibited from registration after preliminary publication;
• declared invalid after registration or cancelled for non-use three years after registration; or
• investigated for civil liability for infringement.

To facilitate the implementation of the amended Article 4, the State Administration of Market Regulation and the Beijing High People’s Court have issued documents that provide clear guidance on its application.

The State Administration of Market Regulation’s Provisions on Regulating Trademark Applications for Registration came into effect on 1 December 2019. Article 8 states as follows:

The following factors could be comprehensively taken into consideration by the relevant trademark registration department in determining whether the trademark registration application is in violation of Article 4 of the Trademark Law: (1) the amount of registered trademarks applied for by the applicant or the natural person, legal person or other organization associated with the applicant, the classes designated, the trademark transaction situation, etc; (2) The industry and business operation status of the applicant; (3) The applicant has been determined by an effective administrative decision or ruling or judicial judgment to have engaged in malicious trademark filings or trademark infringement against others’ exclusive trademark rights; (4) The trademark applied for is same as or similar to the others’ trademark with certain reputation; (5) The trademark applied for registration is same as or similar to the name of a well-known person, company trade name, abbreviation of trade name, or other business logos; (6) other factors.

The Beijing High People’s Court issued the Guidelines for the Trial of Trademark Right Granting and Verification Cases, which also list the ways in which to apply Article 4. This stipulates as follows:

If any trademark applicant obviously lacks the true intention of use and is under any of the following circumstances, this applicant may be determined to violate the provisions of Article 4 of the Trademark Law: (1) applying for registration of the trademark identical with or similar to that of various subjects with certain popularity or higher distinctiveness, which is regarded as a serious circumstance; (2) applying for registration of the trademark identical with or similar to that of the same subject with certain popularity or higher distinctiveness, which is regarded as a serious circumstance; (3) applying for registration of the trademark identical with or similar to any other commercial signs other than trademarks of others, which is regarded as a serious circumstance; (4) applying for registration of the trademark identical with or similar to any name of place, scenic spot, building and others with certain popularity, which is regarded as a serious circumstance; (5) applying for registration of a large number of trademarks without good reasons. If the trademark applicant above claims that he has the true intention of use, but fails to present the relevant evidence, this claim shall not be supported.

It takes significant investigation to determine whether a trademark application constitutes an instance of bad-faith filing or hoarding. As an interested party, the legitimate trademark owner may already have evidence – or be more capable of presenting evidence – to show the applicant’s bad faith. In order to provide sufficient evidence of bad faith, it is usually recommended to file a written request for an ex officio refusal against a pending trademark once it has been filed or before it is published. This will assist CNIPA examiners in assessing whether the applicant has filed the mark in bad faith and whether it is appropriate to reject the application by adopting Article 4 during the substantial examination stage. If the CNIPA supports the claim, the trademark will be rejected at this stage.