Weekly China Trademark News Updates

November 15, 2023

1. Assignment or actual use of a trademark registered in bad faith does not change its nature

The Beijing High Court concluded a final judgment on the administrative trademark invalidation dispute between Junshan WANG, the CNIPA, and a third party, Zhiqiang FAN.

The Beijing High Court held that: in this case, the original registrant of the Disputed Mark, Shenzhen Lanxin Weiye Electronics Co., Ltd. filed for more than 80 trademarks in various classes, of which more than 50 marks, including the Disputed Mark, were applied between 2009 and 2011, and the goods and services designated for use in many of the trademarks are not related to the scope of its business. In addition, there was no evidence to prove that it had the intention and behavior to use all the trademarks. Therefore, the above applications obviously exceed the needs of normal production and operation. Furthermore, the trademarks including “Warm Sheep in Chinese,” “You Ke Li Lin in Chinese,”, “lamyal-star,” etc. are identical or similar to the names of famous movie and TV characters, performing arts groups, and other famous marks, which are beyond the scope of coincidence in the absence of any reasonable explanations. In summary, the original registrant’s application for the Disputed Mark disrupted the normal order of trademark registration management, damaged the market environment of fair competition, did not have the legitimacy of the registered trademark, which constituted as “by deception or other improper means to obtain the registration of the situation” under Article 41(1) of the 2001 Trademark Law. Zhiqiang FAN’s acquisition of the Disputed Mark cannot change the fact that the Disputed Mark was obtained by improper means. Zhiqiang FAN’s actual use of the Disputed Mark after registration was not a reasonable explanation to maintain the Disputed Mark’s registration.

2. Filing trademark infringement lawsuit based on marks assigned to outsider constituting bad faith litigation

The Xi’an Yanta District Court recently concluded a bad faith intellectual property disputed between the Plaintiff Xi’an Beilin Guoxing Dental Clinic Co., Ltd (“Guoxing Dental Clinic”) and the Defendant Xi’an Kai Wen Hospital Co. (“Kai Wen Hospital”).

The Court found that Kai Wen Hospital had filed a trademark infringement lawsuit (“Lawsuit No. 62”) against Guoxing Dental Clinic in 2023 and sought an order for Guoxing Dental Clinic to pay RMB200,000 (USD27,418) in economic damages. That court ultimately found that Kai Wen Hospital was not the trademark owner of the four disputed trademarks and that Kai Wen Hospital failed to provide the original evidence of its claim that Guoxing Dental Clinic infringed upon its trademarks. Therefore, the court rejected all of Kai Wen Hospital’s litigation requests. Guoxing Dental Clinic claimed that due to said litigation filed by Kai Wen Hospital and its subsequent complaint to the Bureau of Health of Beilin District, it had delayed obtaining the administrative license and delayed its opening by one-month. Based on the evidence currently available, it was not clear that Lawsuit No. 62 and complaint resulted in Guoxing Dental Clinic’s delay in obtaining the administrative license, but it was certain that, as a result of the filing of the said lawsuit, Guoxing Dental Clinic incurred litigation costs such as attorneys’ fees. Therefore, the evidence can prove that there were actual infringements that caused damages, and a causal relationship between infringement behaviors and damage results in this case, so the key to this case is whether the behavior of Kai Wen Hospital’s filing of the Lawsuit No. 62 was in bad faith.

The Court found that the following factors should be taken into consideration to determine whether Kai Wen Hospital filed Lawsuit No. 62 with subjective malice:

First, the basis of Kai Wen Hospital’s rights in Lawsuit No. 62 and its ability to understand that basis of rights. According to the Notice of Assignment/Transfer of Trademarks dated November 6, 2022, Kai Wen Hospital has assigned the four trademarks in the case to Zhen YANG, an outsider. Kai Wen Hospital was not the trademark owner of the four trademarks in the case at the time of filing Lawsuit No. 62. Upon inquiry by the court, it was learned that the transfer agreement to the outsider Zhen YANG was stamped with the official seal of Kai Wen Hospital and signed by Zhuo SUN, the legal representative of Kai Wen Company.  As an independent commercial entity with multiple trademark registrations, it should have been aware of the consequences of the signing of the “assignment agreement,” and should have known it did not have the basis of the right to file Lawsuit No. 62.

Second, Kai Wen Hospital’s purpose in filing Lawsuit No. 62. After filing Lawsuit No. 62 on March 24, 2023, Kai Wen Hospital initiated a complaint with the Bureau of Health of Beilin District on March 27, 2023, and set forth in the complaint materials that it had filed a trademark infringement lawsuit with the Xi’an Beilin District Court against Guoxing Dental Clinic, and claimed that Guoxing Dental Clinic infringed upon its trademark right and its actions amounted to unfair competition, and requested that its illegal behavior be investigated and punished. At the same time, in view of the company’s dishonest business practices, it requested the Bureau of Health of Beilin District to apply a stricter standard in approving Guoxing Dental Clinic’s license to practice as a medical institution. Combining the above public notice, the time of filing the complaint, and the content of the complaint, it was difficult to exclude the possibility that Kai Wen Hospital filed Lawsuit No. 62 in order to file a complaint against Guoxing Dental Clinic at the time Guoxing Dental Clinic filed to obtain its license with the Bureau of Health of Beilin District. Therefore, it is difficult to conclude that Kai Wen Hospital filed Lawsuit No. 62 with the purpose of defending its rights according to the law and was properly exercising its right to litigate.

Given the above, it can be concluded that Kai Wen Hospital’s filing of Lawsuit No. 62 was a bad faith filing of intellectual property litigation.

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