On 23 April 2019, the Standing Committee of the National People’s Congress amended the Trademark Law of the People’s Republic of China (“amended Trademark Law”), which went into effect 1 November 2019. The amended Trademark Law revises six articles of the current Trademark Law and increases the monetary penalties for trademark infringement. Specifically, the amended Trademark Law targets trademark squatters, who have exploited the trademark registration system in China.
In China, trademarks are registered according to the “first to file” rule. And under the current Trademark Law, the following provisions are applied in the application of trademark registration:
- Where two or more applicants for trademark
registration applying for registration of an identical or similar trademark for
the same type of commodities or similar commodities, the earlier trademark
registration shall be preliminarily validated and gazetted.
- Where trademark registration applications are submitted on the same day, the trademark which has been used earlier shall be preliminarily validated and gazetted, and the other applications shall be denied and not gazetted.
In other words, whoever is first to file the application to register the trademark is granted approval (For more information on trademark registration please see our previous article on trademark, China business: understanding trademarks in China — be proactive and avoid common pitfalls in IP protection.)
In battling trademark squatting, the relevant authorities are on your side
Regardless of whether companies are currently doing business in China or not, the trademark of a company could be vulnerable to trademark squatting. Generally, trademark squatting is the act of registering existing trademarks of others in China across numerous classes in anticipation of being able to sell the trademark to the legitimate trademark owner, who is dependent on such trademark in the Chinese market for doing business.
In the amended Trademark Law, Article 4 stipulates an application for trademark registration that is malicious and not filed for the purpose of use shall be refused registration. Equally, where a registered trademark violates Article 4, an invalidation may be raised by entities or individuals through the China National Intellectual Property Administration (CNIPA). What’s more, according to the amended Trademark Law, when determining the maliciousness on the trademark registration, the criteria for invalidation is more flexible than during the registration phase. Namely, if a trademark filed in bad faith is approved for registration, the legitimate owner of the trademark may still be able to rebut the registration by raising legitimate reasons for invalidation.
Trademark registrations made in bad faith can be subject to administrative warning and/or penalties. In this manner, stricter regulation of trademark registration provides strong protection for legitimate trademark owners in the Chinese market. Specifically, for those who have found their trademark has already been registered by a trademark squatter, the amended Trademark Law provisions a solution to pursue such trademark squatters directly through CNIPA without having to purchase the trademark from the squatter or engage litigation, which saves valuable time and money.
What’s more, the amended Trademark Law enhances the supervision of each phase of the application formality check and the procedure of the trademark agent, while also serving to reduce malicious registration for non-use purpose.
If you have concerns related to trademarks and Trademark Law in China or been victimised by trademark squatters, please contact Horizons at email@example.com to schedule a consultation session. From RMB 1,500 per session, Horizons can provide insight, expertise and the right solutions for you.
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