CNIPA’s Amended Trademark Examination and Adjudication Guideline on Article 4 of the Chinese Trademark Law regarding bad faith filing without an intent to use the trademark
by Yan Zhang & Austin Chang
Bad faith trademark filings have been one of the most notorious pains for rights holders in the PRC and worldwide. The amended Chinese Trademark Law 2019 (“Trademark Law 2019”) was adopted with provisions to tackle down on bad faith trademark filings and registrations. Article 4 states that “[a]ny natural person, legal person, or other organizations that needs to acquire the exclusive right to use a trademark in the production and operation activities shall file an application for trademark registration with the Trademark Office. Trademark applications that are filed in bad faith and not filed for the purpose of use shall be refused.” This is the first time the language “purpose of use” is seen in the Chinese Trademark Law.
The legislative intent of Article 4 of the Trademark Law 2019 is to refuse bad faith applications filed without an intent to use from registration, clear sleeping trademark registrations obtained without an intent to use, and to encourage trademark applicants to perform their obligation by using their trademarks. Bad faith applications and trademark hoarding can usually be found in applicants who file in excess of regular business needs and in large quantities, because such filings may indicate that the applications are “not filed for the purpose of use,” which means that the applicant filed the applications either without actual purpose to use the trademark, or without anticipation to use the trademark in the near future, or there is no actual possibility the applicant will use the trademark based on the facts, background information, and evidence submitted. Article 4 specifically target bad faith applications and trademark hoarding because these applications will damage the public interests by depleting public trademark resources and disturbing trademark registration order. Hence, Article 4 does not apply to 1) applicants who file for defensive purpose or 2) applicants who file for use in foreseeable future business. As for trademark filings that only damage a particular entity’s civil rights, other provisions, but Article 4, of the Trademark Law 2019 should be applied.
In determining whether an application constitutes as a bad faith one filed not for the purpose of use, the Trademark Examination and Adjudication Guideline (“Guideline”) specified that in preliminary examination, examiners should pay attention to the facts discovered while examining the application. In oppositions and other adjudication proceedings, examiners should pay attention to the evidence submitted. The Guideline further provided the following six factors to be considered when examining or adjudicating whether an application constitutes as a bad faith application filed not for the purpose of use.
- Basic information of the applicant that is an entity such as duration of existence, actual capital paid upon registering the entity with the local Administration for Market Regulation, whether there are any unusual signs of the entity’s status, for example, revoked, cancelled, or suspended business license, liquidation in process, etc.
- Overall status of the applicant’s trademark applications including the accumulative numbers of applications filed and the classes of designated goods and services, the time span among the applications filed, and the trademark applications filed and the classes of designated goods and services in a short time.
- The composition of the applied trademark, for example, whether the applied trademark is identical or similar to other famous or highly distinctive trademark, whether the applied trademark includes public resources such as administrative district names, names of mountains, rivers, scenic spots, industry terms, etc., whether it contains the names of well-known people, corporate names, business terms, etc., whether the applied trademark includes other famous individual’s name, trade name, e-commerce name, well-known advertising slogans, works of art, designs, etc.
- The applicant’s behaviors during trademark registration proceedings and after issuance of trademark registration certificate, for example, selling or assigning the trademark to a third-party without evidence proving it had intent to use the trademark before selling or assigning the trademark, actively offering the trademark for sale to others or in public, threatening others to cooperate in business, or demanding high fees to assign the trademark, high license fee, high compensation fee for infringement, or high settlement for litigation.
- Evidence submitted in opposition and other adjudication proceedings such as the applicant lacked actual intent to use the trademark upon filing, or the applicant did not actually use the trademark after issuance of the trademark certificate and no preparatory work was done towards using the trademark, and the applicant failed to prove its intent to use or explanations for not using the trademark, or the applicant had used the trademark in dispute in an infringement lawsuit to claim for unjustified gains.
- Other factors to be considered in opposition and other adjudication proceedings include but not limited to 1) effective administrative rulings or judgements or judicial decisions that the applicant was found to have engaged in bad faith trademark filings or infringed upon other’s trademark right, 2) the applicant has been listed in the list of serious violations of law and dishonesty by the National Enterprise Credit Information Publicity System, 3) the cumulative number of trademark applications and the classes of designated goods and services owned by individuals, legal persons, or other organizations that have a specific relationship with the applicant, and 4) actual trademark transactions, offers, and invitations for offers of natural persons, legal persons, or other organizations that have a specific relationship with the applicant.
The Guideline also listed 10 circumstances that would constitute as trademark applications “filed in bad faith and not filed for the purpose of use” as stipulated in Article 4 of the Trademark Law 2019, unless the applicant or other interested party proves otherwise. Note, point 3 and 9 should be primarily applied in oppositions and other adjudications, while the rests can be both applied in examinations, oppositions, and other adjudications.
- The number of trademark registration applications is large, which obviously exceeds the requirements of normal business activities, lacks real intention to use, and disrupts the order of trademark registration.
- A large number of copies, imitations, or plagiarisms of multiple entity’s prior trademarks with a certain degree of fame or strong distinctiveness, disrupting the order of trademark registration.
- Repeated applications for registration of a specific trademark with a certain degree of fame or strong distinctiveness owned by the same entity, disrupting the order of trademark registration. If such repeated applications for registration fall under the circumstances of bad faith registrations regulated by other provisions of the Chinese Trademark Law, these other provisions shall apply.
- A large number of applications that are identical to others’ business names, abbreviations of business names, e-commerce names, domain names, product names, packaging, decorations that have a certain influence, and identical or similar marks to other well-known and identifying slogans, designs, and other commercial logos.
- A large number of applications that are identical or similar to public cultural resources such as the name of a well-known person, a well-known work or character name, and a well-known artwork of others that have gained distinctiveness.
- A large number of applications that are identical or similar to the names of administrative districts, mountains and rivers, scenic spots, and buildings.
- A large number of applications that are generic names, industry terms, or indicators that directly indicate the quality, main raw materials, functions, uses, weight, and quantity of the goods or services, etc., which lack distinctiveness.
- The applicant submits a large number of applications, and assigns a large number of trademarks, and the assignees are scattered, which disrupts the order of trademark registration.
- The applicant has sold in large quantities for the purpose of seeking unjustified interests, demanding commercial cooperation from the prior user of the trademark or others, high assignment fees, license fees, or infringement compensation, etc.
- Other circumstances that can be deemed as bad faith in applying for trademark registration.
Although the Guideline listed the 10 circumstances for the examiners to consider when determining whether a trademark application “filed in bad faith and not filed for the purpose of use” as stipulated in Article 4 of the Trademark Law 2019, these factors are not limited to bad faith trademark applications filed by the applicant. It also applies to natural persons, legal persons, or other organizations that have a specific relationship or connections with the applicant or have colluded with the applicant to filing the applications. Finally, simply assigning a registered trademark to a third party does not affect the determination of whether an application was filed in violation of Article 4 of the Trademark Law 2019..