403 Forbidden

Introduction

2019 was the 70thyear of the founding of the People’s Republic of China. The same year saw theunfolding of the People’s Courts’ Fifth Five-Year Reform Programme (2019–2023).Guided by General-Secretary Xi Jinping’s thought on Chinese socialism for thenew era, the courts implemented the decisions and essential values of the 19thNational Congress of the Communist Party of China (“Party Congress”) and of thesecond, third and fourth plena of the 19th CCP Central Committee. They havealso continued to foster the “four aspects of consciousness”, the “four mattersof confidence” and the “two pillars to safeguard”, never losing sight of theiroriginal aspirations and mission. They pursued the national goal of building acomplete xiaokang society, discharged adjudication duties based on thelaw and the constitution, and intensified reform of the adjudication system toimprove adjudication efficiency, effectiveness and judicial credibility. Theyhave also ensured efficacious discharge of their adjudication duties. Havingdedicated significant effort to building an effective team, the courts rebootedand renewed the intellectual property adjudication regime to further elevatethe credibility and impact of China’s intellectual property adjudication at theinternational level. By continuing to modernise the intellectual property adjudicationregime and capacity, the courts have also enabled the delivery of robustjudicial services and enactment of judicial safeguards to underpin thecountry’s innovation-driven development and creation of a pro-businessenvironment.

I. Leveraging the adjudicationprocess for more effective protection

The 19th CCP Central Committee’s fourth plenary session issuedimportant directives to advance Chinese socialism and modernise the nationalgovernance system and governance capabilities. The session also gave instructions forthe country to improve systems and mechanisms to encourage technologicalinnovation, redouble efforts to build an innovation-based country andstrengthen national strategic technologies. To elevate China’s technologicaland innovation capabilities, drive quality economic growth and implement ourinnovation-driven development strategy, we need greater protection and utilisationof intellectual property to fashion an effective incentive structure. As thecourts “strive to make the people feel fairness and justice in every judicialcase”—a goal that centres on the people and fair justice—intellectual propertyadjudication has become an important means to incentivise and protectinnovation.

In 2019, the courts have accepteda total of 481,793 cases, including first instance and second instance casesand applications for extraordinary legal remedy to reopen cases.475,853 cases(including carried forward cases) were concluded, representing a respectiveyear-on-year increase of 44.16 % and 48.87%.

(I) More effective adjudication ofcivil disputes

Given the essential role ofintellectual property adjudication in protecting innovation and in levellingthe competitive playing field, adjudication has focused on encouragingtechnological innovation, promoting cultural transmission and maintainingmarket order to provide clear, consistent and predictable rules to guideadjudication and instil confidence among entrepreneurs and innovators.

In 2019, the Supreme People’s Court accepted2,504 new civil intellectual property cases and concluded 1,976 cases, respectively174.26% and 260.97% higher than the previous year. In the same year, the localcourts accepted 399,031 and concluded 394,521 first instance civil cases, wherethe respective year-on-year increases were 40.79% and 44.02%. Among the newlyaccepted cases, 22,272 were patent cases (2.64% year-on-year increase); 65,209 trademark cases (25.41% year-on-year increase); 293,066 copyright cases (49.98% year-on-year increase). There were also 3,135 cases ontechnology contract disputes, (16.98% year-on-year increase) and 4,128 unfair competitioncases, including 70 monopoly cases, (49.71% year-on-year increase). Other civil intellectualproperty disputes constituted 11,221 cases, or 49.71% more than last year. Forsecond instance cases, 49,704 were accepted and 48,710 concluded, translatingto a year-on-year increase of 79.95% and 85.29% respectively.

High profile civil disputesinvolving intellectual property heard and concluded by the courts during theyear include:

French automotive parts manufacturer Valeo Systemes D’Essuyage(plaintiff- appellee)vs. Lukasi Car Accessories(Xiamen) Co. Ltd (respondent-appellant) and Fuke Car Accessories (Xiamen) Co. Ltd. (respondent-appellant)et al. involving a utility patent infringement dispute; HondaMotor Company (plaintiff-appellee- petitioner) vs. Hengsheng Xintai (Chongqing) Trade Company (respondent-appellant-petitionee), Hensim (Chongqing)Group et al. (respondent- appellant-petitionee) involving a trademarkinfringement dispute; Hemujia Medical Management Consultancy(Beijing) Co., Ltd (plaintiff,-appellant-petitioner)vs. Hemujia Obstetrics andGynaecology Hospital (Fuzhou)(respondent-appellee- petitionee) involving unfair competition; Cai Xinguang (plaintiff-appellant) vs. RunpingCommerce (Guangzhou) Co., Ltd(respondent-appellee) involving infringement of new plant variety; and copyrightinfringement case of ShanrenSculpture (Hebei) Co., Ltd(plaintiff-appellant) vs.Zhongding Garden Sculptures (Hebei) Co., Ltd et al. (respondent-appellant) and the People’s Government of Sanhe Township, Bozhou District, Zunyi Cityet al. (respondent-appellee).

(II) More rigorous legality review ofadministrative actions

The courtshave strengthened legality review of intellectual property granted andvalidated by administrative authorities and of administrative enforcementactions. In 2019, the Supreme People’s Court accepted1,066 intellectual property cases involving administrative disputes andconcluded 884 cases. Compared to last year, the number of cases has risen by70.83% and 52.15% respectively. The same year saw local courts accepting 16,134first instance administrative cases (19.11% increase year-on-year), 1,661were patent cases (8.14% increase year-on-year), 14,457 trademark cases (20.56%increase year-on-year) and 16 copyright cases. 17, 938 first instance caseswere concluded (89.74% increase year-on-year). Local courts also accepted 7,304(104.88% increase year-on-year) second instance administrative cases, and 5,942cases were concluded (84.71% increase year-on-year), of which, decision wasupheld for 4,791 cases, first instance judgement was amended for 1,026 cases; 4cases were remanded for retrial, 613 cases withdrawn, and 132 cases overruled.

High profileintellectual property-related administrative disputes heard and concluded bythe people’s courts during the year include Huawei. Technologies, Co, Ltd(plaintiff-appellee) v. Samsung Electronics Co, Ltd (Thirdparty-appellant) and CNIPA (respondent) involving an administrative overthe invalidation of a patent; and Kangzhi Lesi Network Technology (Beijing)Co., Ltd (plaintiff-appellee-petitionee) v. Meiyou InformationTechnology (Xiamen) Co., Ltd (third party-appellant-petitioner) and CNIPA(respondent-appellant) involving an administrative dispute over theinvalidation of a trademark.

(III) Stricter sanctions onintellectual property crimes

Intellectualproperty crimes were subject to more rigorous adjudication   toclean up the market, therefore better defend intellectual property fromcriminal infringement.

In 2019, thelocal courts accepted 5,242 first instance intellectual property-relatedcriminal cases, 21.37% higher than last year, including 4,982 cases relating toinfringement of registered trademarks ( 21.01% increase year-on-year), and 210 oncopyright infringement (34.62% increase year-on-year).

At the locallevel, 5,075 first instance cases were concluded during the year (24.88%increase year-on-year), including 2,134 cases involving counterfeiting ofregistered trademarks (15.23% increase year-on-year), 2,279 cases involvedselling goods bearing counterfeit registered trademarks (32.19% increaseyear-on-year), 423 were cases of illegal manufacturing or sale of goods bearingillegally produced registered trademarks (38.69% increase year-on-year); 1 caseinvolved counterfeiting patents, 191 were criminalinfringement of copyright, (40.44% increase year-on-year), 8 involved sellinginfringing reproductions (33.33% increase year-on-year), and 39 involved trade secret infringement crime (no changefrom last year).

For second instance intellectual propertycases involving criminal offences, the local courts accepted 808 cases (18.30% increaseyear-on-year), and 807 cases were concluded (23.70% increase year-on-year).

High profile criminal cases involvingintellectual property heard and concluded by the people’s courts during theyear include: Yang Fengming, Yang Maogang et al. for counterfeiting aregistered trademark; Lin Yixiang et al. involving infringement of tradesecrets; Xu Zhenwei et al. involving counterfeiting of registeredmark; and Chen Li et al. involving trademark infringement.

Intellectual property adjudication has madesteady progress in the year, and has scored higher in quality andeffectiveness. The key features for 2019 are:

New highs in caseload. Withincreased social awareness of intellectual property right and greatercredibility of the courts in adjudicating intellectual property disputes, thecourts have faced a spike in caseload. The total number of accepted andconcluded cases for the year 2019 were at historic high, both recording a year-over-yearincrease of more than 40%.

By geographical location, Beijing accepted80,165 cases, Shanghai 23,580 cases, Jiangsu Province 20,249 cases, ZhejiangProvince 27,706 cases and Guangdong Province 157,363 cases, totalling 309,063cases. This constituted 64.15% of China’s total case number and the greaterpart of the country’s intellectual property caseload. The areas that experiencedmore than 50% year-on-year increase in caseload were Hebei Province (53.53%),Anhui Province (60.30%), Fujian Province (64.88%), Guangxi Autonomous Region(98.49%) and Chongqing Municipality (173.66%). Despite facing manpowershortages, the courts have managed to dispose of a large number of cases duringthe year, with the total disposal number reaching historic high. Other thanbeing the most active regions, the courts in Beijing, Shanghai, JiangsuProvince, Zhejiang Province and Guangdong Province have also achievedcommendable disposal rates of more than 90%.

Continued emergence of new case genres. As the newround of technological revolution and industrial transformation rapidlyemerges, legal boundaries are increasing tested and pushed by new technologies,new products and new forms of business. New intellectual property issuesinvolving cutting-edge technology relating to the Internet, big data,artificial intelligence, standard essential patents, biomedicine have also continuedto emerge, requiring detailed examination of complex technological solutionsand creative application of the law, based on the merits of each case. Someexamples are:

The Supreme People’s Court: Heardpatent cases involving mechanics, material science, electrical engineering,communications, biopharmaceuticals, and fine-tuned the adjudication rules baseon the derived insights.

Beijing Intellectual Property Court: Heard andconcluded many significant and complex cases, including the first case relatingto the infringement of cloud servers, and preservation of evidence duringpre-trail for a case involving the infringement of a patent relating to the productionof stable lyophilised pharmaceutical composition.

Shanghai High People’s Court: Concluded Nokiavs. Shanghai Huaqin Communication Technology Co., Ltd involving the infringementof a utility patent. The case provides reference for tryingcommunications-related SEP disputes in the future.

Guangdong Province: The courtshave heard 63 patent cases, each involving a jurisdictional amount of more thanCNY 10 million, the aggregate amount of which was approximately CNY 8.18billion.

Continued to augment protection. The courtshave implemented the “Opinions on Improving the System of Property RightsProtection to Protect Property Rights According to Law” to provide more timelyand accessible judicial relief for intellectual property disputes, as well as tobalance the damages awarded with the market value of the intellectual propertyin question. Some exemplary efforts include:

Beijing: TheHaidian District People’s Court awarded damages of more than CNY 20 millionbased on discretionary valuation when Motion Scene (which operates UC browser)sued Sogou for using its Sogou Input Method to redirect the user to Sogou’ssearch website.

Inner MongoliaAutonomous Region High People’s Court: Increased the amountof damages from CNY 50,000 to CNY 1 million in the Guangdong Landai GroupBeijing Lanbao Beer Co., Ltd vs. Henan Honghuo Food Co., Ltd et al.trademark infringement case to sanction infringers more severely.

Zhejiang High People’sCourt: Ordered the respondent to pay CNY 8 million in damages for the Aupu ElectricalAppliances (Hangzhou) Co., Ltd and Aopu Home Furnishing Co., Ltd vs. Zhejiang FashionBuilding Materials Co., Ltd and Zhejiang New Energy Co., Ltd case involvingtrademark infringement and unfair competition. The court’s decision has protectedthe “AOPU” brand value.

Fujian Province: The courtsimposed punitive damages in the “JIU MU WANG (lit. ‘King of Nine Herds’)”trademark dispute and the “BOLIMO” trademark and unfair competition disputewhen the damages awarded were either doubled or trebled the amount forcompensatory damages.

Effects of judicial efforts were recognised. The courtshave done well in a series of complex and novel cases that attractedconsiderable public attention. The precedence would serve as classic cases thatare demonstrative and could guide future adjudication. Exemplary effortsinclude:

SPC IP Court: Issued decision forits first case immediately after the hearing, and the determination criteria forfunctional features were detailed in the written judgement. The hearing wasbroadcasted live and was widely reported by the media. Live streaming of thehearing—a case that took only 50 days to conclude from the date it was acceptedto service of judgement—attracted more than 18 million viewings. Opening up thecourtroom for public scrutiny has ensured fairness, transparency andefficiency.

Gansu High People’s Court: Concludeda new plant variety dispute involving a foreign party, thereby protecting thelawful rights of the plant breeder.

Shanghai Intellectual Property Court: Concluded aseries of cases, which include the utility patent dispute between NetacTechnology (Shenzhen) Co., Ltd and Transcend China (Shanghai) Co., Ltd. Thedisputes, which involved cutting-edge technology used in mobile storage and ajurisdictional amount of more than CNY 24.7 million, has attracted widespreadattention and much recognition.

Hunan Province: Adjudicated trademarkinfringement and unfair competition cases involving a wide range of servicesectors such as food and beverage, creative photography and department-storesales. The decisions provided direction for the regulated and reasonable use oftrademark by players in the food & beverage, department store and creativeindustries, which in turn supported the healthy growth of the service sector.

Remarkable ADR outcomes. The courtshave continued to turn to non-litigious alternative dispute resolution as theprimary means to settle dispute, and on promoting the new era FengqiaoExperience—a way of community-level social governance whereby public effortwas harnessed to maintain social stability. By actively encouraging the broaduse of ADR, parties were encouraged to resolve disputes through non-litigiousmeans by working together to find mutually agreeable and beneficial ways tosettle intellectual property disputes efficiently. Exemplary efforts include:

The Supreme People’s Court : Successfully mediated the trademark infringement case of Henan DukangInvestment Group vs. Shaanxi Baishui Dukang Company, and permanentlyresolved all cases relating to the “DUKANG” (believed to be a minister underthe mythological Yellow Emperor and originator of winemaking) trademark issue. Thecourt’s efforts have contributed to improving the stability of the local marketand providing protecting local businesses. It established a nation-widewhole-of-system coordinating mechanism to explore a circuit adjudication modelcombining the workings of an IP court and a circuit court, and an adjudicationmechanism combining onsite examination (kanyan) and hearing, and hassince facilitated the unified settlement of 48 related cases nationwide. Italso enabled the efficient resolution of 80 patent infringement cases at thepre-trial stage. The court’s efforts have made litigation easier and enabledthe Fengqiao Experience to enrich the intellectual property sector.

Beijing: Continued to drivereform of the “ADR + expedited procedure” as part of the city’s effort tomodernise the capital city’s social governance system and governance approach.

Jilin Province: The courts focused onusing mediation to resolve disputes. Total mediation rate for intellectualproperty disputes was 75%.

Anhui High People’s Court: Succeededin mediating the dispute between China Broadcasting Satellite TV and ChinaTelecom Anhui Branch concerning the infringement of broadcasting right, with ajurisdictional amount exceeding CNY 100 million.

Shandong Province: The courts implementedthe “Regulations to Promote Use of Alternative Dispute Resolution for ShandongProvince” and worked at developing a platform to align litigation withmediation.

Hubei Province: The courts coordinatedresources and established mediation platforms comprising administrative organs,lessors of the site where infringement occurred, industry associations, attorney-mediationorganisations to facilitate mediated settlement of disputes.

Sichuan Province: The courts enteredinto a cooperation agreement with the China (Sichuan) Intellectual PropertyProtection Centre to develop a mechanism to provide coordinated protection ofintellectual property. Under the agreement, the centre was appointed to mediateintellectual property-related disputes.

Yunnan Province: The courts establisheda pre-trial mediation system for intellectual property cases to enable theprompt resolution of a certain proportion of intellectual property disputes.

Liaoning Province: The courts beefed upexisting ADR mechanism by using pre-trial mediation for copyright, trademarkand unfair competition cases if the facts are clear and minimally disputed. Themechanism has enabled the courts to align litigation with mediation.

Xinjiang Autonomous Region: The courtsfocused on using mediation to settle dispute, translating to a rather highpercentage of post-mediation withdrawal rate.

II. Intensified supporting measuresfor judicial reform and built a more robust intellectual property justicesystem

In 2019, the courts leveraged the “Opinions on Several Issues on Reformand Innovation Relating to Intellectual Property Adjudication” to develop moreinnovative theories and institutions and adopt more innovative practices. Asuite of relevant reforms was also instituted as part of the courts’ effort tocontinue building better systems and mechanisms for intellectual property.

(I) SPC IP Court off to a flyingstart

Creatingthe Intellectual Property Court (SPC IP Court) within the Supreme People’sCourt was an important move by the Party Central Committee, with Xi Jinping asthe core, based on the strategic vision of building an intellectual propertypowerhouse and a high-tech global superpower. It was an important milestonemarking a major breakthrough and innovative step in our intellectual propertyadjudication system.

2019 isthe SPC IP Court’s first year of operation. As an agency tasked to hear all appealcases of technology-related intellectual property disputes, the SPC IP Courthas overcome the early difficulties to drive comprehensive progress bylaunching copious reform initiatives that have scored preliminary successes.

First, it unified adjudication standards . Unificationof adjudication standards was the primary objective of creating the SPC IPCourt. The “Rules of Implementation of a Unified Adjudication Standard for the IntellectualProperty Court of the Supreme People’s court”, among others, was developed toensure that the entire process, from preliminary analysis to mid-processcontrol, final review and approval and stringent management of important cases,were well- administered. Also, the “Minutes of the Conferences of Judges” werecompiled and “Guidelines on Case Operations” prepared and distributed to unifyadjudicative standards and methods for handling similar cases.

Second, it explored combining the hearing of administrative andcivil disputes. Disputes relating to civil infringement andadministrative validation involving the same patent was heard by the sameadjudication panel to ensure alignment of the civil and administrativeprocedures and consistency of adjudicative standards.

Third, it optimised the mechanism for adjudicatingtechnology-related intellectual property disputes. Living by itsmotto of people-centredness and being dedicated to delivering optimaladjudication management, the court leveraged its advantage as the centralcoordinating authority and the “1+76” hierarchical structure to resolve linkeddisputes within the country.

Fourth, it continued to develop the multiprong technicalfact-finding mechanism. By coordinating technical investigationresources in the country, including more than 360 technical investigators frommore than 30 technical fields, the SPC IP Court worked at alleviating theproblems faced by the courts, including inadequacies in technical investigationfor the less-developed regions and the lack of specific technical expertise in developedregions.

Fifth, it strengthened informatisation and adoption of smarttechnology. The court has built case and adjudication rules databases,and created smart platforms such as the “Big Data Intellectual PropertyAnalysis Platform”. It also explored the creation of an “IP CourtCloud”. These were endeavours to meet the demands of parties for onlinesubmission of evidence and online reading of case files, and would become the technologicalbedrock for adjudicating technology-related intellectual property disputes.

(II) Steady progress in development ofintellectual property courts

Toimplement the National People’s Congress (NPC) Standing Committee’s reviewopinions on the progress of local intellectual property courts, the SupremePeople’s court continued to provide more guidance for the Beijing, Shanghai andGuangzhou intellectual property courts, which have continued to make smooth progressand achieve remarkable outcomes.

Sincetheir establishment at the end of 2014, the intellectual property courts haveaccepted more than 100,000 cases and heard intellectual property cases of internationalimpact and which are important basis for crafting adjudication rules. They werealso instrumental for improving the quality and efficiency of hearings,ensuring consistency in decisions, and facilitating innovation-drivendevelopment. The courts have also leveraged their functional positioning toexplore bold and innovative initiatives to drive judicial reform thatengendered a new intellectual property adjudication landscape. The reforms alsoenabled specialisation, an important feature that has helped buttress judicialprotection for intellectual property.

(III) Continued optimisation ofmechanism governing trans-regional jurisdiction

Since2017, specialised judicial organs (IP divisions) were established within 21intermediate courts, such as the Nanjing Intermediate People’s Court, to facilitatecentralised jurisdiction over certain categories of trans-regional firstinstance intellectual property cases and enable specialised intellectualproperty judicial organs to be rationally distributed. The IP divisions havededicated themselves to exploring innovative initiatives and to improving thelevel of specialisation, an important effort that would drive the co-ordinateddevelopment of the Beijing-Tianjin-Heibei (Jing-Jin-Ji) region, and the developmentof the Yangtze River Economic Belt and the Guangdong-Hong Kong-Macao GreaterBay Area (Greater Bay Area). Exemplary work by several local IP divisionsinclude:

Nanjing:Conducted circuit trials, implemented specialised and centralised adjudication,and responded to the demands of high-tech industrial parks to protect theintellectual property of business innovations.

Hangzhou:Leveraged internet technology and established a trans-regional cooperationmechanism to facilitate access to online hearing and standardised applicationof the law.

Zhengzhou:Digitised processes such as introduction of online filing and acceptance ofcases, electronic service of documents and WeChat mediation to overcome timeand spatial constraints, as part of its effort to provide easy access and to increasethe level of informatisation.

Shenzhen:Capitalised on the city’s geographical advantage to strengthen judicialprotection of intellectual property by participating in the development of theGuangzhou-Shenzhen Science and Technology Innovation Corridor and the PearlRiver Delta National Demonstration Zone for Home-Grown Innovation.

Haikou: Tookthe initiative to protect intellectual property by establishing circuit-courtstations and contact points for judicial services within different parts of theprovince.

(IV) Continued rolling-out of moremeasures for the “three-in-one” intellectual property adjudication system

In 2019, the courts implemented the “Supreme People’s ‘s Opinions onPromoting ‘Three-in-One’ Adjudication of Intellectual Property-Related Civil,Administrative and Criminal Cases” to further consolidate the results of the”three-in-one” reform.

SupremePeople’s Court: Reviewed case files relating to intellectualproperty crime to distil first-hand information on criminal adjudication. Thiswill allow more in-depth examination of the norms of adjudicating intellectualproperty criminal offences, based on which, the relevant judicial interpretationscould be revised and improved.

JiangsuHigh People’s Court: Initiated a study relating to the sentencingof intellectual property crimes to provide reference for standardising the useof sanction discretion and in sentencing.

ZhejiangProvince: Since 1 November 2019, all the courts in Zhejiang Province haveimplemented the “three-in-one” adjudication procedure. 260 criminal offencesand 41 administrative disputes were heard during the year.

HainanHigh People’s Court: Initiated research studies on using designatedjurisdiction for intellectual property criminal offences, and clarified the jurisdictionmechanism for “three-in-one” adjudication for intellectual propertycases.

(V) Continued improvement oflitigation procedures

The People’sCourts worked on improving the rules of procedure based on the merits ofindividual intellectual property cases and on developing an optimaladjudication approach to overcome institutional obstacles.

First, giving reasonable guidance in evidenceproduction. The courts have developed innovative measures tostrengthen the burden of proof by enabling ex-officio investigation andcollection of evidence to effectively reduce the costs borne by right-holders.

Shanghai High People’s Court: Explored the use of an evidenceproduction order such that any behaviour that obstructed the production ofevidence would be punished under the law.

Hunan High People’s Court: Regulated policies and proceduresrelating to investigation orders for lawyers.

Hainan High People’s Court: Parties were encouraged to make fulluse of third-party means such as notarisation and electronic data platforms tocollect and preserve evidence.

Second, building a more robust fact-findingmechanism. The courts have elaborated the ways which differentpersonnel could participate in the investigation of technical facts, and have mobilisedmanpower and resources to develop a dynamic and coordinated system for fact-finding.

Supreme People’s Court: Created a pool of experts comprisingtechnical investigators and technical advisory experts employed and appointedby the courts, and established a national mechanism for sharing oftechnical-investigation resources among the courts. It also launched the”Work Manual for Technical Investigators (2019)” to guide the courts intechnical fact-finding and regulate their technical fact-finding activities.

Beijing Intellectual Property Court: Established a”four-in-one” technical fact-finding mechanism, comprisingspecialised people’s assessors, technical investigators, expert assessors andforensic institutes.

Jiangsu High People’s Court: Entered into a framework agreementwith the Jiangsu Province Collaborative Innovation Centre for BiomedicalFunctional Materials, where the parties would cooperate on intellectualproperty-related technical fact-finding. The cooperation enabled the court toengage technical experts to assist in intellectual property cases.

Production and Construction Corps Branch of the Higher People’s Court ofXinjiang Uygur Autonomous Region: When preserving evidence,  professionals were engaged to survey thelocation and the planting area of infringing seeds, and to collect samples of infringingplants .

Hubei, Hunan, Sichuan and Shaanxi High People’s Courts: Formedexpert pools to tap professional expertise and improve the accuracy oftechnical fact-finding.

Third, optimisation of adjudication approach. Giventhe diverse judicial needs, the different levels of courts have sought tooptimise their adjudication approaches through a diversion mechanism that separatesthe complicated cases from simple ones, and that applies a unified standard whenapplying the law.

Beijing Intellectual Property Court: Implemented thespeedy trial mechanism, and introduced a pilot that judges would issue”abridged written judgments” for trademark review cases. Averagedisposal time was reduced by 30%.

Xi’an IP Division: Formed an adjudication team to conductspeedy trial, an approached that required only 20% of the manpower to hear 70%of the cases.

Chengdu IP Division: Explored the use of speedy trialmechanism for intellectual property disputes to better allocate adjudicationresources. The outcomes were encouraging.

Haikou IP Division: Implemented an integrated model ofoperations that combined case acceptance, adjudication and enforcement underone operational framework to improve adjudication quality and effectiveness.

Changchun IP Division: Introduced speedy and simplifiedtrials for copyright and trademark disputes. 84.8% of the cases were concludedwithin five months, and the adjudication cycle was substantially shortened.

III. Broadened judicial functions andcontinued improvement of research quality and effectiveness to guideadjudication

Always vigilant ofhot button issues, the People’s Courts have leveraged the Supreme People’sCourt’s Intellectual Property Judicial Protection Research Centre and itstheoretical research base to strengthen development of intellectual propertyprotection-related innovative theories and research of the relevant judicialpolicies. They have also actively participated in the revision of intellectualproperty-related laws and provided effective judicial supervision and guidance.

(I) More focus on providing legislativerecommendations

The courts haveactively participated in the revision of laws and regulations such as the CivilCode, Patent Law, Trademark Law, Anti-Unfair Competition Law, Copyright law,Regulations on the Implementation of the Trademark Law, and Regulations on theProtection of New Plant Varieties.

Other legislativeendeavours include participating in thefourth forum on Patent Law amendment, and CPPCC’s meeting on folkliterature and artistic works relating to the drafting of the amendments to theCopyright Law. The courts also initiated researches on a special procedure lawfor intellectual property litigation, established the general direction, basicframework and key content of the research.

(II) Intensified drafting of judicialinterpretation

The Supreme People’s Court issue the “Provisions on the Participationof Technical Investigators in Intellectual Property Litigation” setting forththe procedure, responsibility, validity, liability relating to theparticipation of technical investigators in intellectual property litigation.It also researched on topics such allocation of the burden of proof,investigation and collection of evidence, exchange of evidence, and examinationand determination of electronic evidence. The court also organised variousseminars on the drafting of judicial interpretation for punitive damages forintellectual property infringement, application of the Trademark Law and LawAgainst Unfair Competition, trade secrets, and national defence patentdisputes.

(III) More in-depth study of judicialpolicies

The courts participated in the drafting of the “Opinions onStrengthening the Protection of Intellectual Property”, allowing specialisedintellectual property adjudication organs such the Guangzhou IntellectualProperty Court and the Shenzhen Intellectual Property Division to play biggerroles, and stepped up cooperation in GBA-related intellectual propertyprotection and professional training. For Guangzhou Knowledge City (GKC), thecourts also pressed ahead with the national comprehensive reform pilotprogramme to better utilise and protect intellectual property.

To better serve the free trade zones, special studies on theprotection of intellectual property were conducted, based on which, 38initiatives relating to the judicial protection of intellectual property forthe development of free trade zones and free trade ports were proposed.

(IV) Leveraged the role of caseguidance

As part of its annual activities, theSupreme People’s Court published the “Annual Report on Intellectual PropertyCases (2018)’” and the “Top Ten Intellectual Property Cases Decided by ChineseCourts and Fifty Typical Intellectual Property Cases”. The publicationsindicate Supreme People’s Court’s priority in distilling universally applicableadjudication standards to guide judges. The court also organised a “JudgementWeek” during which the decisions of benchmark cases were issued in an opencourtroom so as to use new genre, difficult and complex cases to shape rulesand regulations. The endeavours of other courts include:

Shenzhen IP Division: Reviewed its experience from the reformfor speedy hearing of design patent disputes and selected 19 typical cases foranalysis.

Inner MongoliaAutonomous Region High People’s Court: Held a briefing to update on intellectual property adjudicationand to launch the compilation of typical cases heard by the court to regulateand guide market players. The court hoped to influence market players tooperate in good faith and ensure that the economic order of the market respectsfair competition.

Henan HighPeople’s Court: Published typical casesrelating to trademark and brand protection .

Sichuan HighPeople’s Court: Published for the firsttime a white paper on the judicial protection of the intellectual property of non-stateenterprises (minying qiye) and typical cases. The paper expounded the problemswith intellectual property protection that non-state enterprises have faced,the underlying causes, and provided recommendations.

(V) Intensified judicial researches

Diverse research methods. The SupremePeople’s Court collated big data relating to trademarks registered and usedduring the past five years, studied the measures regulating trademark squatting,and gave recommendations. It also convened discussions on image copyrightinfringement to examine the pronounced issues and addressed social concerns byproviding clear adjudication standards.

Liaoning Province: The courts conducted intellectual property-related studies on topicssuch as the Belt & Road Initiative and pilot free trade zones to find outwhat companies need in terms of judicial protection.

Zhejiang High People’s Court: Surveyed more than 20 companies within theprovince to effectively address the judicial protection needs ofinnovation-based businesses.

Heilongjiang Province: The courts conducted in-depth studies on non-state enterprises anddeveloped manuals to educate the public to better protect the intellectualproperty of private enterprises and drive the development of the privateeconomy.

Hunan Province: The courts took the initiative to meet the judicial needs ofenterprises and tech parks, and enhanced awareness among businesses ininnovation-based development.

Productive research studies. The Supreme People’s Courtinitiated  surveys relating to revisionof the Patent law, patent linkage, and business model innovation. The surveysculminated in research outcomes such as the “Recommendations on Reforming and ImprovingLegislation for Patent Invalidation Procedure”, “Recommendations on Legislatingfor Patent Linkage”, and “A Study on the Judicial Protection of Business Model Innovations”.Other research efforts include:

Beijing High People’s Court: Reviewed the guidelines for adjudicating administrativedisputes relating to the granting and validation of trademarks to guidelitigation behaviour.

Zhejiang High People’s Court: Conducted studies on adjudication rules forintellectual property disputes involving e-commerce platforms to share judicialexperiences relating to e-commerce business.

Fujian High People’s Court: Provided opinions on how the courtscould improve judicial protection of intellectual property to better serve and fosterinnovation, entrepreneurship and creation.

Jiangsu High People’s Court: Proposed more rigorous judicialprotection of intellectual property to underpin the province’sinnovation-driven economic development.

IV. Increased transparency of thecourts to augment credibility of intellectual property adjudication

The courts are fully aware of the need for transparency, and have maderemarkable progress in developing a judicial mechanism that upholds justicethrough enhanced transparency and that champions credibility, openness,dynamism, transparency and accessibility.

(I) A more open court system

The courts have opened up further to allow public access to courthearings. This is in line with the directive that open courts should be therule and closed courts the exception. They have also found innovative ways forthe public to access court hearings and expanded the types of hearing permittedfor public observation. Some exemplary practices are:

Guangdong High People’s Court: Held a public hearing on the dispute between Shenzhen-basedJiedian Technology Co., Ltd and Laidian Technology Co., Ltd over theinfringement of utility models. About 100 people attended the hearing. Livestreaming over the internet was also accessed by nearly 10,000 viewers.

Sichuan High People’s Court: Heard a trademark infringement dispute and issued decision withinthe same hearing session. People’s Congress deputies and members of the People’sPolitical Consultative Conference  wereinvited to the observe hearing.

Inner Mongolia Autonomous Region High People’s Court: Launched “On-Campus Hearing” where approximately 300teachers and students attended the hearing for a dispute over copyrightinfringement.

(II) Greater use of cases for publiclegal education

The Supreme People’s Courtparticipated in a production by the China Central Television’s (CCTV) entitled“Judge Talk (Dafaguan Shuo)” in the third season of “China Rule of Law (FazhiZhongguo Shuo)”. It was involved in the planning, scriptwriting, productionand recording, and broadcasting of the programme. This was an important joint-publicityeffort by the Supreme People’s Court and CCTV-12 in celebration of the 70thanniversary of the founding of the People’s Republic of China. Vice President ofthe Supreme People’s Court Justice Tao Kaiyuan gave a talk in one episode. Accordingto statistics, nearly 50 million viewers watched the live telecast of theprogramme. There were also 1,357 online news articles relating to theprogramme, 78 news articles published in newspapers and magazines, 151microblog comments, 99 blog articles, 2,238 WeChat articles, and 294 apparticles. The public applauded the court for its outstanding work inintellectual property protection.

The “WIPOCollection of Leading Judgments on Intellectual Property Rights: People’sRepublic of China (2011–2018)” was launched at the Second Annual WIPOIntellectual Property Judges Forum. WIPO’s legal counsel Frits Bontekoe spokeat the launch event. The forewords of the volume were written by WIPO DirectorGeneral Francis Gurry and Justice Tao Kaiyuan. This casebook of judgments givesthe global intellectual property community access to landmark judgments fromChina and allows China’s leading cases to play their demonstrative role and Chinesejudgements to create greater impact. Other key endeavours include:

The Supreme People’s Court:Organised a series of activities, including a Judgement Week and a “Judges Goon Campus” to make better use of cases to educate the public on the law, and instilgreater respect for knowledge and awareness of protecting intellectual property.When hearing important cases, the court also ensured that it invited NPCdeputies, CPPCC members, and SPC’s special supervisors and advisors as well as fellowsof the Chinese Academy of Sciences, lawyers and representatives of industryassociations to observe the proceedings and share their insights.

Beijing Xiong’an New AreaIntermediate People’s Court : Organised the “ProtectIntellectual Property Outreach Event” to educate businesses newly establishedin the area, such as Baidu, Tencent, JD and Huawei, on intellectual propertylaws and regulation.

Zhejiang High People’s Court : Established the “Zhejiang Balance (Zhejiang Tianping)” WeChat OfficialAccount, the “IP Converge (Zhi Zhi Hui)” website, and the “Zhejiang IPLaw Connect (Zhe Zhi Xi Fa)” column to lay the ground for regularoutreach activities. During the year, the court published 85 articles, and madeavailable live streaming of 26 hearings which boast of 900,000 visits.

Jiangsu High People’s Court : Organised a walkabout for the People’s Congress deputies and members of theCPPCC committee cum media event. The effort was effective and well-received.

(III) Joint outreach

The Supreme People’s Court organised the “IP JudicialProtection-Anhui Expedition”, for which selected NPC deputies, SPC’s specialsupervisors and Anhui Province’s leaders, together with the centralgovernment’s media agencies, visited some Anhui courts and key hi-tech companies.During their visits, the delegation learnt about the state of intellectualprotection in Anhui Province, innovative outcomes, and focused on discoveringthe judicial needs of commercial entities to better serve the development of innovation-basedbusinesses. Other outreach activities include the “IP Courtroom Open Day” and“IP Protection Judgement Week” during which many major cases involving advancedtechnology such as medical equipment, internet data mining and opticaltechnology were heard. The court also launched the “Faxin-IP” online project tocreate a unified big data intellectual property service platform by integratingand upgrading the existing intellectual property case guidance platform and throughresearch and development. The platform aims to provide free retrieval andconsulting services for intellectual property judges nationwide. Otherendeavours include:

Hebei High People’s Court : Combined 26-April outreach activities with the publicity campaign to promotethe “Regulations on the Protection of Olympic Symbols” to publicise extensivelythe relevant laws and regulations. It was a successful event.

Shanxi High People’s Court : Visited the province’s Comprehensive Reform Pilot Zone to find out the needs ofbusinesses and set forth requirements on how the courts should provideinnovative services to better serve businesses and create an environment thatconduces to innovation.

Tibet Autonomous Region HighPeople’s Court : Organised legal outreach activities in theChinese and Tibetan languages based on local folk customs and religious beliefsin interesting formats.

Ningxia Autonomous Region HighPeople’s Court: Organised outreach activities andconsultations, including providing on-site legal advice.

V. Greater cooperation and exchangefor greater impact in the intellectual property judicial landscape

Given the increasingly open andinclusive world, intellectual property adjudication should be based on China’snational circumstances, a global mindset, and an international vision. Itshould also promote the sharing of China’s experience and wisdom.

(I) Serving the needs ofinternational relations for the larger good

The Supreme People’s Courts has intensified thestudy of intellectual property issues emerging from foreign trade and economicnegotiations, and strengthened its adjudication guidance and supervision of thelower courts according to law.

Judges fromthe Supreme People’s Courts participated in bilateral and multilateraldialogues and exchanges, including negotiations on the “Convention on theRecognition and Enforcement of Foreign Judgments in Civil or CommercialMatters” adopted by the Hague Conference on Private International Law (HCCH). SPChas made important contributions to the satisfactory resolution of intellectualproperty issues relating to the Convention.

(II) Increasing China’s impact in theworld

In June2019, the Supreme People’s Court and WIPO co-organised the Seminar onApplication of WIPO Mediations Service in Intellectual Property Litigation,during which participants from WIPO, Singapore, the Supreme People’s Courts andour local courts shared their insights on WIPO’s alternative dispute resolutionmechanism. Director of the WIPO Arbitration and Mediation Centre Erik Wilberscommended China for being the organisation’s close partner. SPC alsoparticipated in the International Cooperation in Fighting against IntellectualProperty Right Infringement at the second China International Import Expo inShanghai, during which it shared the importance of using punitive damages todeter and prevent repeat and malicious infringing behaviour, as part of aneffort to engender a legal environment that fosters protection of intellectualproperty, that makes the infringer pay for its wrongdoing, and that sanctionsoffences.

JusticeLuo Dongchuan, Vice President of the Supreme People’s Court, held more than 20 constructivemeetings and discussions with representatives  from WIPO, AIPPI, AIPLA, ICJ, the SupremeCourt of Cuba and High Court of Justice in London. Francis Gurry,director-general of the WIPO, spoken favourably of the establishment of the SPCIP Court, and said that the court embodies China’s commitment to protectingintellectual property and its determination to provide fairer and moreefficient protection for intellectual property. Abdulqawi Ahmed Yusuf, Presidentof the International Court of Justice, commended that China’s achievements inthe legal sector was not only reflected in the country’s overall effort todevelop a robust legal system, its achievements in specific areas in field ofintellectual property also deserves admiration.

(III) Widened channels of foreigncooperation

In response to the global interest in how judicial protection ofintellectual property works in China, the People’s Courts have actively engagedin dialogues through different platforms to build understanding of China’ssituation and create greater impact at the international level.

To support WIPO’s collaborativeprogrammes, our judges participated in the Roundtable on WIPO-China Cooperationand Major Intellectual Property Developments in China. We havealso send representatives to participate in WIPO’sMaster Dialogue on IP Adjudication. A delegation of patent judges visited theEuropean Union. These were occasions at which our judges shared China’s latestdevelopment and historic achievements in intellectual property adjudication.Other international activities in the year include participating in the SecondAnnual WIPO Intellectual Property Judges Forum, 9th OECD/ Korea Policy Centre(KPC) Competition Law Seminar for Asia-Pacific Judges, AIPPI Annual WorldCongress, 2019 Annual Meeting of the International Trademark Association(INTA),and the European Communities TradeMark Association (ECTA) Annual Conference, and the Japan-China-Korea IPSymposium.

VI. Capacity-building for judges aspart of an incessant effort to improve adjudication capability

Political cultivation has always been the guiding light for the People’sCourts. By continuing to develop the judges’ political awareness and by takingbig strides to revolutionise the judiciary and putting together a team offull-time, professional and specialised judges, the courts have been working atbuilding a team of intellectual property judges that have a firm politicalstand, a holistic view and international perspective, and extensive legal expertiseand technical know-how. Organisational- and people-building are key to standingthe courts in good stead for intellectual property adjudication in the new era.

(I) Ideological and politicaleducation

Given that political cultivationis our priority, the courts have organised educational activities to remind everyoneof the motto: “Do not lose sight of our original aspirations; be mindful of ourmission (buwang chuxin, laoji shiming)”. Various institutions governingintraparty political activities were also harnessed to awaken judges to theneed to guard their original aspirations and to buttress their ability to fulfiltheir mission. Platforms such as the “New Knowledge Forum” and “Forumon Intellectual Property Court” were established to enable online andoffline education and management for party-development. The courts have also adopteda party-development approach for round-the-clock online and offline educationand management. The SPC IP Court’s party branch has also won the “100 Model ofExcellence” accolade presented by Banner (“qizhi”), a magazinepublished by the State Organs Work Committee of CPC Central Committee, for the secondParty-building Innovative Outcomes Award. It was the sole recipient of theaward within the court system.

(II) Developing a sense of honour andself-discipline

The courts have managed court and partyoperations based on rigorous standards, having implemented the “Eight-PointFrugality Code (‘ba-xiang gui-ding’)” and its rules of implementation.They have also stamped out “the four forms of decadence” (i.e.formalism, bureaucratism, hedonism and extravagance) or si feng, and havedeepened the development of party ethics and clean governance and their fightagainst corruption.

(III) Building judicial capabilities

By focusing on the overallrequirements of the “five excellences (wuge guoying)”, i.e.excellence in belief, political stance, sense of responsibility, ability andbehaviour, the courts have strengthened people development at every turn. Theyhave focused efforts at building a quality team of effective, loyal, incorruptand responsible individuals to helm the courts of the new era and drive newdevelopments. The Supreme People’s court has also increased its involvement incoordinating and guiding the lower courts, and encouraged the courts to planfor the training and creation of a pool of professional intellectual propertyjudges, and the establishment of different of personnel exchange mechanisms. Toelevate judicial capabilities, the courts have also adopted many differentapproaches, including special training, thematic seminars, on-the-job training, exchanges and secondment, andobservation of court proceedings. These efforts will help build an adjudicationteam that believes in perpetual learning, which will in turn enable the courtsto adapt to new circumstances and the demands of intellectual propertyadjudication, and judges to continue building their professional capabilities.

Conclusion

Today’s world is defined by unprecedented changes which quicken the paceof reform of the global governance system and the international order. As thenext wave of technological revolution and industrial reform arrives withastonishing force, protection of intellectual property is confronted with newissues, new tasks and new challenges. As the People’s Courts discharge theirduties and responsibilities, they will discern new trends and circumstances,and will leverage their judicial powers to protect intellectual property. They willalso strive to provide effective judicial service and safeguards to achieve sustainedand robust economic development and social stability, build a comprehensive xiaokangsociety, and bring the 13th five-year plan to a successful completion.

Introduction

In the Report to the 20th National Congress of the Communist Party of China, it was emphasized that pursuing high-quality development is one of the essential requirements of the Chinese path to modernization; it was clearly defined that innovation will remain at the heart of China’s modernization drive; and special deployment was made to strengthen the legal protection of intellectual property rights. In 2022, Chinese courts adhered to Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, put the guiding principles from the 20th National Congress into action, and fully implemented Xi Jinping Thought on the Rule of Law, while keeping in mind the top priorities of the country. In order to make the people feel justice has been served in each and every judicial case, Chinese courts enhanced the sense of responsibility and mission in improving the trial of intellectual property (hereinafter “IP”)cases in the new era and continued to improve judicial protection of IP rights.

1. Fully Utilized Trial Functions to Support Innovation-
   Driven Development

In 2022, Chinese courts focused on bolstering their trial functions, while trying various IP cases fairly and efficiently in accordance with the law. The courts newly accepted 526,165 IP cases of first instance, second instance, and remanded for retrial, and concluded 543,379 cases (including carried over cases, ditto hereinafter), a year-on-year decrease of 18.17% and 9.67%, respectively.

In 2022, local people’s courts at all levels newly accepted 438,480 civil IP cases of first instance and concluded 457,805, a year- on-year decrease of 20.31% and 11.25%, respectively. In these newly accepted cases, the number of patent cases increased by 23.25% to 38,970 respectively from the previous year; trademark cases dropped by 9.82% to 112,474 year on year; copyright cases decreased by 29.07% to 255,693; technology contract cases grew by 5.55% to 4,238; competition cases increased by 11.51% to 9,388; other cases of civil IP disputes fell by 15.66% to 17,717 year on year. In 2022, local courts newly accepted 46,524 civil IP cases of second instance, down 5.22% year on year; and concluded 46,563, up 2.41% on a year-on-year basis. The Supreme People’s Court newly accepted 3,786 civil IP cases and concluded 3,073, a year-on-year drop of 10.77% and 13.61%, respectively.

In 2022, local courts newly accepted 20,634 administrative IP cases of first instance and concluded 17,630, a year-on-year increase of 0.35% and decrease of 8.85%, respectively. Among those newly accepted cases, the number of patent cases increased by 3.65% to 1,876, trademark cases grew by 4 to 18,738, and copyright cases fell by 7 to 12. In addition, local courts newly accepted 5,897 administrative IP cases of second instance and concluded 7,285 , down 28.22% and 1.79% respectively compared to 2021. Of those cases, 5,518 were sustained, 1,650 were reversed, 3 were remanded for retrial, 78 were withdrawn, 10 were dismissed, and 26 were resolved in other means. The Supreme People’s Court newly accepted 1,456 administrative IP cases, a drop of 48.95% compared to 2021, and concluded 1,542, down 38% year on year.

Local courts newly accepted 5,336 criminal IP infringement cases of first instance and concluded 5,456, down 14.98% and 9.76% respectively. In particular, 4,971 trademark infringement criminal cases were newly accepted, and 5,099 were concluded, a year- on-year drop of 15.3% and 9.86%, respectively; 304 copyright infringement criminal cases were newly accepted, and 302 were concluded, down 8.71% and 7.93%. Other criminal cases newly accepted reached 61, and 55 were concluded, down 13 and 6 respectively compare to the figures of 2021. Local courts newly accepted 979 criminal IP cases of second instance and concluded 977, a decrease of 6.76% and 2.01% compared to 2021, respectively.

In 2022, IP cases accepted by Chinese courts are mainly characterized by the following features:

The number of technology-related cases continued to increase, the demand for IPR protection in central and western China was high, and the importance of IPR judicial services to high-quality development was emphasized further. In 2022, the IP Court of the Supreme People’s Court continued to accepted a significant number of new civil non-procedural cases in second instance involving technical IPRs. Significantly more case of first instance involving patent and technology contract were accepted by local people’s courts at all levels. Courts in Jiangsu province newly accepted 1,817 new cases of disputes over ownership and infringement of technical IP rights, a 17.61% increase from the previous year. Year-on-year; the number of new IPR cases received by the courts in Shanxi province and Hainan province rose by 22.21% and 72.58%, respectively. In Hebei province, the number of IP cases newly accepted and concluded by local courts increased by 45.94% and 106.01% year on year. The number of new civil IPR cases received in courts of Liaoning province increased by 61% annually. The number of new civil IPR cases of first instance accepted by courts in Jiangxi province increased by 22% compared to 2021. In addition, the number of cases accepted by the courts in Hunan province, Heilongjiang province, and the Xinjiang Production and Construction Corps (hereinafter; referred to as “XPCC”)also continued to grow steadily.

The Internet online trial mechanism for IP cases continued to see innovations, the development of smart court architecture was fostered, and the mechanism for convenience and benefit of the judiciary improved. Online trial platforms were leveraged by local courts to facilitate online court hearings, services, and other legal processes of IP cases, which shortened the duration of litigation and reduced litigation costs. For instance, courts in Shanghai accepted 38,505 IP cases online, with over 20,000 online court hearings and meetings and more than 170,000 electronic services. Courts in Henan province recorded an online filing rate of over 90%, with 16,023 IP first instance cases were filed online. In Qinghai, the online filing rate for IP cases reached 62.7%, with 898 electronic services were conducted via the service platform. In Guangxi, the Intermediate People’s Court of Guigang utilized digital technology to have approximately 70% of all accepted IP cases filed online annually. The Qingdao Intellectual Property Court developed an online asynchronous evidence cross-examination system, which enabled relevant parties to upload electronic evidence online and complete cross-examination, thereby streamlining pre-trial procedures.

The substantive resolution of disputes by Chinese courts continued to be strengthened, and the protection of the rights and interests of rights holders became more comprehensive, increased public satisfaction with the judicial protection of IP rights. Local Chinese courts mediated and resolved 44,155 civil IP cases of first instance, a mediation and resolution rate of 9.64%, up 0.78% compared to 2021. Additionally, 2,894 civil IP cases of second instance were mediated and resolved at a rate of 6.22%, an increase of 0.57% from the previous year. Notably, the rates of mediation and withdrawal of IP cases recorded by courts in Tianjin, as well as Hebei, Guangdong, and Heilongjiang provinces were particularly high, reaching 75.51%, 73.48%, 52.94%, and 66.6%, respectively. The high rates of withdrawal reflect the effective reduction of the burden on litigants and the complete maintenance of social stability and harmony. Courts in Jiangsu province heard 97 IP cases in which punitive damages were applied, up 21.25% year on year; the Primary People’s Court of Pudong New Area of Shanghai applied punitive damages in 25 cases; a total of 169 million yuan was awarded as punitive damages for 29 IP cases heard by the Intermediate People’s Court of Shenzhen; local courts in Hunan province conducted a special judicial campaign and concluded 3,796 cases involving IP rights, with 60.4315 million yuan awarded; in Guangdong province, less than 20% of civil IP cases accepted by local courts resulted in forced enforcement, with a 98% enforcement and closing rate. In response to IP infringement in critical areas influencing people’s livelihoods, such as food and drug production, courts in Jiangsu province issued nearly one hundred orders prohibiting the relevant entities from engaging in the specified industry. According to the relevant applications, the Intermediate People’s Court of Guiyang in Guizhou province heard 25 IP preservation cases and froze properties worth 40.1 million yuan last year. The cost of IP infringement increased dramatically, and rights holders were effectively compensated for their losses.

More cases were accepted by courts at lower levels. The quality and effectiveness of IP case trials have improved as a result of jurisdiction diversity of intermediate and high courts. In Jiangsu province, primary people’s courts heard 65.25% of all IP cases in the province, an increase of 10.52% year on year. Meanwhile, the proportion of cases heard by intermediate and high courts dropped to 31.56% and 3.19%, respectively. Similarly, in Chongqing, the number of IP cases newly accepted by primary people’s courts accounted for 75.2% of all IP cases in the city, up 28.1% compared to 2021; the proportion of cases heard by intermediate and high courts, in contrast, decreased by 29.9% to 21.3% and increased by 1.8% to 3.5%, respectively. This demonstrates the gradual formation of a “pyramid” pattern with respect to the trial of IP cases. Of the first- instance civil IP cases concluded by local courts, 320 cases were concluded under the elevated jurisdiction of higher courts, more than three times the figure in 2021. 63 civil IP cases were submitted to a higher-level court in Jiangxi province, and 15 such cases that were submitted to a higher court in Guangdong province due to their novelty, complexity, or guiding significance in law application, thus effectively promoting the uniformity of judicial rules.

1. Encouraged and Assured Scientific and Technological
   Innovation to Promote Self-reliance and Strength

Speeding up efforts to achieve greater self-reliance and strength in science and technology is the path China must take to advance high- quality development. Chinese courts maximized the role speeding up efforts to achieve greater self-reliance and strength in science and technology is the path China must take to advance high-quality development. Chinese courts maximized the role of IP trials in

fostering and safeguarding scientific and technological innovation. Chinese courts provided high-quality judicial services to support basic research, protected original and pioneering scientific and technological advances, and eliminated obstacles that impeded high- quality development.

1. The Chinese Judiciary Continued to Promote the Unification of Judicial Standards in Technology-Related Cases

Concentrating on bolstering IP protection, Chinese courts conducted a more stringent examination of the legitimacy of administrative acts pertaining to patent granting and rights reexamination and promoted the application of unified administrative and judicial standards, thereby enhancing the quality of patent granting and rights reexamination. In 2022, Chinese courts maximized their responsibilities in rule-setting and value guidance for protecting achievements of scientific and technological innovation, summarized and proposed new judicial protection rules, and encouraged the continuous innovation and upgrading of technologies and industries. the Supreme People’s Court reasonably defined the trial functions of courts at four levels and specified that cases involving ownership and infringement disputes related to invention patents, utility model patents, new plant varieties, integrated circuit layout designs, trade secrets, and computer software shall be centrally adjudicated by the intellectual property courts, intermediate people’s courts of provincial capitals, and intermediate people’s courts designated by the Supreme People’s Court. This effectively promoted the nationwide application of consistent judicial standards in technology-related cases and improved judicial protection of significant scientific and technological innovations. The Supreme People’s Court released the Top 10 Intellectual Property Cases and 50 Typical Intellectual Property Cases in 2021, including 11 technology-related cases involving infringement of technology secrets, plant variety rights, and invention patents, which provided useful guidance for trial practices. In addition, the Supreme People’s Court conducted research on the implementation of judicial interpretations such as Provisions on Several Issues Concerning the Application of Law in the Trial of Civil Cases involving Patent Disputes Related to Drugs Applied for Registration in order to quickly summarize the trial experience. In the trial of the patent right ownership dispute over the “dust removal device and system for gasification furnaces’： the Supreme People’s Court defined the right basis for the source party and the technology improvement party. In the trial of the administrative dispute over the invalidity of the patent rights between Qilu Pharmaceutical and Sihuan Pharmaceutical, the judicial standards for the creativity of drug patents and adequate disclosure in specifications were clarified. In the trial of the infringement dispute over the utility model patent rights of the “integral geocell”, it was determined whether the defense concerning a legitimate source complied with reasonable diligence requirements.

2. Chinese Courts Committed to Facilitate and Protect Basic Research and Original Innovation

Based on the requirement that the frontier science and technology in the world should be integrated with the major national strategic needs, economic and social development goals and the livelihoods and wellbeing of the people, Chinese courts intensified IP protection in key areas, core technologies, and emerging industries. Meanwhile, the courts worked to ensure the legitimate rights and interests of innovators and provided judicial services to achieve breakthroughs in core technologies. The Supreme People’s Court implemented the arrangements of the Party Central Committee on the revitalization of the seed industry and issued the Guiding Opinions on Protecting the Intellectual Property Rights of the Seed Industry, Combating Infringement of Counterfeit and inferior goods, and Creating a Good Environment for the Revitalization of the Seed Industry jointly with the Ministry of Agriculture and Rural Affairs and other departments. In addition, the Supreme People’s Court released the second group of model cases from Chinese courts regarding judicial protection of IP rights in the seed industry, supported the establishment of the Base of Chinese Courts for the IP Protection in Germplasm Resource Research (Hainan), and held the Seminar of Judicial Protection for IP Rights in Germplasm Resource for the first time in the name of the Base. The case of the “Jinjing 818” rice plant variety infringement was selected as one of the “Top Ten Cases of Promoting the progress of the Rule of Law in the New Era in 2021.” The Supreme People’s Court concluded China’s first drug patent linkage lawsuit, which was nominated as one of the “Top Ten Cases of Promoting the progress of the Rule of Law in the New Era in 2022” and accelerated to shape and improve the drug patent linkage system. During the two related cases of patent and technology secret infringement involving “melamine,” the defendants were ordered to compensate the rights holders for a total of 218 million yuan in economic losses with several and joint liabilities, which reflects the judicial goal of vigorously protecting technological innovation. During the trial of the technology secret infringement case of “oil and gas microorganism exploration’； the Supreme People’s Court delivered a strong signal to improve the protection of technology secrets. The High People’s Court of Jiangsu Province, along with the competent provincial departments, signed a memorandum of understanding on “Building Strong Industrial Chains via IP Protection and Developing an Independent and Self­controlled Modern Industrial System,” which established a working mechanism to develop the key industrial chains. The Suzhou Intellectual Property Court facilitated a package settlement between the parties in a invention patent infringement dispute involving a US corporation, effectively protecting the legitimate rights and interests of innovators. The Hefei Intellectual Property Court met with administrative and law enforcement agencies as well as companies based in Anhui Province, to solicit and respond to commercial innovators for rights protection.

• Increased the Judicial Protection of Trademarks to
  Enable the Growth of Successful Brands

Chinese courts continued to strengthen the judicial protection of trademark rights, improved the trial quality of administrative cases on trademark registration and review, as well as civil cases on trademarks, and upheld the order of trademark application, registration, and use. They directed rights holders to register trademarks in compliance with the law, regulated the use of trademarks, and upheld the rule of law on the market, thereby encouraging the growth of successful Chinese brands in the new era.

1. Chinese Courts Improved the Quality of Trademark Registration and Review

In order to improve the trial quality of administrative cases involving trademark registration and review, steps have been taken to crack down on malicious trademark registration for the non-purpose of use. The boundaries and protective scopes of trademark rights were reasonably defined, and normalized, standardized procedures for trademark application and registration were promoted. The Supreme People’s Court and China National Intellectual Property Administration co-hosted a symposium to solicit opinions from courts across the country and provide sound suggestions and references for legislation work such as the revision of trademark laws and the legislation of geographical indications, as well as to promote the continuous improvement of the legal system for trademark regulations, which further improved the rules for trademark registration and review. The administrative case concluded by the Supreme People’s Court regarding the invalidation of the trademark “Chen Mahua” was selected as one of the “Top Ten Cases of Promoting the progress of the Rule of Law in the New Era in 2022’； which provided effective guidance for rulings of trademarks lacking distinctive features. The criteria for determining the distinctiveness of English trademarks were clarified during the retrial of the denied “BIODERMA” trademark application. In the case regarding the invalidation of the “Youlian” trademark, it was stated that trademarks violated the principle of good faith and failed to reasonably avoid prior registered trademarks should not be registered. Beijing High People’s Court established two distinct teams to try administrative trademark rejection review cases and administrative cases proceeding involving regular trademarks. This facilitated the intensive case management and reduced the average review time for administrative trademark rejection review cases to 35 days, making it possible to “quickly try simple cases, and scrutinize complicated cases.”

2. Chinese Courts Strengthened the Judicial Protection of Trademarks

People’s courts continued to strengthen the role of trademark using in determining the scope of trademark right protection and encouraged trademark owners to use trademarks in practice continuously to give full play to the identification function of trademarks, while protecting the legitimate rights and interests of consumers. In accordance with the law, the judicial protection of well-known trademarks, traditional brands, and time-honored brands was strengthened, and the development of brands was encouraged. The rules and regulations for protecting geographical indications were improved, and infringement on geographical indication rights were curtailed. During the trademark infringement case trial of the “Nanmiao” tofu, the Supreme People’s Court protected the legitimate use of the geographical name in the registered trademark by other operators. In the “Yipinshi” trademark infringement case trial, the abusive use of rights by maliciously obtaining trademarks and initiating infringement lawsuits was halted in accordance with the law. The organizing committee of the Beijing Winter Olympics and Paralympic Winter Olympics sent a letter of appreciation to Beijing High People’s Court and the Beijing Intellectual Property Court for supporting the protection of Olympic brands. The High People’s Court of Sichuan Province heard the “Qinhuajiao(green pepper)” trademark infringement case in accordance with the law, maintained the order of trademark usage, and safeguarded ethical business practices. To enhance judicial protection of geographical indications, the High People’s Court of Zhejiang Province launched a major research project initiative on the judicial protection of trademarks with geographical indications to enhance judicial protection of geographical indications. The Intellectual Property Court of Hainan Free Trade Port conducted research to develop a guide for judicial protection of geographical indications, exploring the integration of IP protection and rural revitalization. Beijing Xicheng District People’s Court visited time- honored brands within its jurisdiction and established a IP cases trial supervisory mechanism to promote time-honored brands rejuvenation.

1. Strengthened Copyright Trials to Contribute to the
   Building of a Country with a Strong Culture

People’s courts fully leveraged the guiding role of copyright trials in promoting outstanding culture, strengthened protection of copyright and related rights, promoted the development of culture and science, and contributed to the building of a socialist country with a strong culture.

1. Chinese Courts Vigorously Promoted Advanced Socialist Culture

Chinese courts continued to be dedicated to promoting advanced socialist culture based on their functions in judicial trials. They also facilitated the creative transformation and innovative development of fine traditional Chinese culture, and sparked the creative vitality for cultural innovation and creation, thereby bolstering the cultural- ethical driving force necessary to realize the great rejuvenation of the Chinese nation. Chinese courts heard cases involving the inheritance of classic Chinese revolutionary works and the protection of the legitimate rights and interests of heroes, heroines and martyrs according to the law, while vigorously promoting the core socialist values. Copyright protection for genetic resources, traditional culture, traditional knowledge, and folk art was intensified to promote the consolidation and utilization of intangible cultural heritage. Chinese courts prioritized copyright protection in new areas such as live streaming, short videos, animation and games, and cultural creativity, clamping down on piracy and plagiarism while promoting the prosperous development of cultural undertakings and industries. To improve the market environment for digital culture, courts in Beijing, Tianjin, and Shanghai, issued injunctions against behaviors such as the piracy of the Beijing Winter Olympics and the Qatar World Cup. The Suqian Intermediate People’s Court of Jiangsu Province analyzed the characteristics of local book piracy cases and submitted judicial recommendations to the administrative authority, which effectively reduced book infringements and piracies. The Intermediate People’s Court of Qinzhou, Guangxi, concluded a cross­provincial copyright infringement crime case involving the sale of pirated textbooks and reference books , which was selected as one of the Top Ten Typical Cases of Youth Copyright Protection in 2022. The Beijing Internet Court has released version 2.0 of the Tianping Blockchain-Copyright Chain co-governance platform, which achieved full coverage of digital copyright rights confirmation, authorization, transaction, and protection, thereby promoting the development of the copyright market in a healthy and orderly manner. The Quanzhou Dehua People’s Court in Fujian province established a “1-2-3-4” protection mechanism targeting ceramic IP rights to address 4 main challenges: evidence preservation, law enforcement & supervision, social recognition, and dispute resolution, which was formally acknowledged by the World Intellectual Property Organization (WIPO).

2. Chinese Courts Enhanced Judicial Protection of Copyright in the New Era

People’s courts fully implemented the Copyright Law to protect copyright and related rights. The Supreme People’s Court continued to summarize judicial experiences and conducted researches jointly with local courts, and drafted judicial interpretations of the Copyright Law to solve challenging legal issues in the field of copyright trials. The Supreme People’s Court heard and reversed the judgment on the copyright infringement case of the “Big-Headed Kid” artwork, which clarified the rules for determining copyright ownership and achieved positive social effects. In a case involving the jurisdiction query for the infringement of the right to disseminate works over the Internet, the Supreme People’s Court specified the jurisdiction of civil cases involving such infringement and the judicial interpretation application standards, providing sound guidance for copyright trial practices. Beijing High People’s Court provided a reply on determining the royalty standards for image infringement cases, which promoted the adoption of consistent judicial standards concerning similar cases in its jurisdiction. In Hubei province, local courts promoted the use of standardized table judgment in copyright cases, which significantly shortened the trial term. Sichuan High People’s Court and Chongqing High People’s Court jointly issued minutes to unify the judicial standards concerning infringement cases of the right to disseminate information over the Internet in their jurisdictions. Heilongjiang High People’s Court, along with 9 other government departments included the Heilongjiang Provincial Copyright Administration, jointly signed a notice to crack down on violations of the Copyright Law to strengthen criminal protection of copyright. Beijing Intellectual Property Court made well-coordinated efforts and mediated a series of lawsuits between companies regarding copyright infringement of Chinese academic literature network databases, settled over 1,000 cases in the city and properly resolving potential disputes.

1. Maintained a Sound Legal Environment for
   Competition to Stimulate Innovation and Creativity

People’s courts continued to enhance anti-monopoly and anti-unfair competition judicial efforts. By strengthening the fundamental status of competition policies, maintained a sound legal environment for fair market competition, optimized the business environment, in order to make contribution to the development of a sound system of socialist market economy.

1. Anti-Monopoly and Anti-Unfair Competition Judicial Efforts Improved

In 2022, People’s courts continued to improve the application rules in the field of competition, strengthened judicial trials concerning unfair competition, and maintained the rule of law in market competition. The Supreme People’s Court issued the Interpretation of Several Issues Concerning the Application of the Anti-Unfair Competition Law of the People’s Republic of China, which provided detailed rules regarding the Anti-Unfair Competition Law, including its General Provisions and articles on counterfeiting and confusion, false publicity, commercial defamation, and unfair competition on the internet, etc. Furthermore, the document also unified the relevant judicial standards and responded to the judicial needs arising from new fields and new business practices. The Supreme People’s Court researched and drafted new judicial interpretations on anti-monopoly civil litigation, solicited public opinions, and improved judicial rules for anti-monopoly cases, while clarifying the judicial standards for determining monopolistic behaviors. The Supreme People’s Court held a press conference on Chinese courts’ strengthening judicial practice of anti-monopoly and anti-unfair competition, The Court released 10 typical cases for each category to enhance the public legal awareness for respecting and protecting fair competition. Additionally, the press conference also guided courts at all levels to punish monopolistic behaviors and maintain the market order for fair competition. People’s courts at all levels enhanced judicial efforts in key fields and critical junctures such as platform economies, core technologies, medicine, and communication, cracked down on monopolistic agreements, as well as exclusive and restrictive competition behaviors with the abuse of market dominance. Chinese courts also refined the criteria for identifying monopolistic behaviors involving internet platforms, specified the rules for determining unfair competition behaviors such as traffic hijacking and interference, and regulated and directed capital operation in healthy manner in accordance with the law. During the trial of the “Zhang Bainian” case of trademark infringement and unfair competition dispute and the Bairui Runxing case of unfair competition dispute, the Supreme People’s Court clearly stated the responsibilities of sellers in disputes related to unfair competition. In the “kindergarten” case concerning horizontal monopoly agreements and the case involving the abuse of market dominance by public utility companies in relation to water supply and drainage, the Supreme People’s Court responded to public concerns regarding market competition behaviors that affect people’s livelihood and promptly forbidden exclusive and restrictive behaviors in competition, ensured that the public benefit from fair competition.

2. Healthy Development of the Digital Economy Promoted in Accordance with the Law

Efforts were made to explore and strengthen judicial protection of IP rights in the digital economy field, provide robust judicial services and guarantees to fully leverage the function of data, and improve the efficiency of data governance, thereby promoting high-quality development of the digital economy. Chinese courts improved hearings of cases involving data cloud storage, open-source data, data ownership, data trading, data services, and unfair competition in data markets to effectively maintain data security. In addition, research was carried out on IP rights judicial protection of data rights, as well as fair competition in the era of the digital economy, and local courts were guided to explore trial models catering to the demand of the digital economy and promote the judicial protection of innovative achievements in the digital economy. During the trial of the “web crawler platform data” case of technology secret infringement, the Supreme People’s Court specified that platform data can be protected as technology secrets, which strengthened the protection of data rights and interests with competitive advantages and values created by platform operators through legitimate business operations. Jiangxi High People’s Court produced opinions on IP judicial services to safeguard the development of the digital economy and proposed 13 measures of services and guarantees. Shenzhen Intermediate People’s Court of Guangdong province issued implementation opinions on enhancing judicial protection of IP rights in the digital economy, contributing to the high- quality development of the digital economy within the city. Beijing Intellectual Property Court concluded research including Research on Judicial Rules Regarding Competition Behaviors in New Business Practices and Models in the Digital Economy, properly closed multiple data infringement cases, continued to explore judicial rules where the Anti-unfair Competition Law is applied to protect data.

1. Deepened Judicial Reforms to Improve Efficiency
   and Quality of IPRs Protection

The judicial reform in IP domain was deepened by people’s courts, by continuing to improve the specialized trial system for IP cases, strengthening the IP litigation system, and deepening the “three- in-one” reform of IP trials. These efforts helped unify the legal application standards, enhanced diversified resolution of disputes, and improved the coordination between administrative enforcement and judicial practice, thereby enabling the comprehensive improvement of judicial protection for IP rights.

1. Promoted the Modernization of the Trial System to Boost Judicial Capacity

Led by the IP trial department of the Supreme People’s Court and backed by IP divisions of local courts, China’s specialized IP trial framework with 4 demonstrating IP courts and 27 IP divisions of local intermediate people’s courts as the focuses, saw further improvement. The Supreme People’s Court issued Several Provisions on the Jurisdiction of Civil and Administrative Intellectual Property Cases of First Instance, as well as its associated documents: Notice of Issuing the Standards for Civil and Administrative Intellectual Property Cases of First Instance under Jurisdiction of Primary People’s Courts, and Notice Regarding Issues Concerning the Appellate Jurisdiction of Cases Involving Disputes over Invention Patent and Other Intellectual Property Contracts. The documents established a judicial protection system with sound jurisdictional rules, reasonably defined the trial functions of courts at four levels, and optimized the allocation of trial resources. Currently, 558 primary courts, including Internet courts, have jurisdiction over civil IP cases. Meanwhile, the Supreme People’s Court continued to improve the appellate mechanism of IP cases at the national level, upgraded the retrial application procedures of IP cases, and intensified supervision and guiding to ensure the consistent application of the relevant laws and regulations. Local courts leveraged trial resources and jurisdictional mechanisms by elevating jurisdiction in accordance with the law to enable the efficient trial of IP cases and fully safeguard the rights and interests of the parties involved.

The Supreme People’s Court strengthened its guiding efforts to promote the “three-in-one” trial mechanism reform of civil, administrative, and criminal IP cases across 25 high courts, 236 intermediate courts, and 275 primary courts nationwide. In particular, 10 courts have achieved full coverage of the “three- in-one” trial mechanism for IP cases within their jurisdiction. the Supreme People’s Court conducted research to formulate normative documents on IP cases and issued the Interpretation on Several Issues concerning the Application of Law in the Handling of Criminal Cases Involving Infringement on Intellectual Property Rights (SOLICIT OPINION DRAFT) jointly with the Supreme People’s Procuratorate to solicit opinions from the public. Working with the relevant departments, Heilongjiang High People’s Court named the divisions which receive IP cases as IP divisions in the intermediate and primary courts, distributed implementation plans which guidelined the practical effect of the “three-in-one” reform. High courts in provinces including Anhui, Zhejiang, Henan, and Qinghai jointly issued guiding documents with the relevant provincial procuratorates and public security departments to improve jurisdiction over criminal IP cases, which established clear procedures and sound coordination mechanisms, thereby fully implementing the “three-in-one” reform target.

Chinese courts continued to improve the diversified technical fact­finding mechanism, and improved the “Database of Technical Investigation Talent for Chinese Courts”，with more than 500 technical investigators added to the Database. Additionally, the nationwide on-demand deployment and talent sharing mechanism saw continued improvements, effectively addressing the difficulties in ascertaining the facts of technology-related cases. High courts in regions such as Guangxi and Tibet introduced regulations on the engagement of technical investigators in IP cases and improved their institutional mechanisms according to local realities. Moreover, the IP courts in Nanjing and Suzhou fully leveraged the function of technical investigators by participated in the fact­finding investigation of 751 technology-related cases, conducted 66 inspections and preservations, and attended 490 trials and court hearings, with 388 technical investigation reports issued.

People’s courts enhanced judicial protection of IP rights. The Supreme People’s Court issued the Opinions on Strengthening Judicial Pro tection of Intellectual Property Rights of Traditional Chinese Medicine to facilitate the inheritance and innovative development of traditional Chinese medicine. Focusing on the characteristics of IP litigation, Chinese courts conducted researches to formulate specialized procedures law for IP lawsuits. Efforts were made to curb the abuse of rights and strengthen the protection of rights holders through specialized research on regulating malicious IP litigation and the accurate application of punitive damages. Shanghai High People’s Court issued opinions on handling IP cases involving small amounts to optimize and adjust the procedures for IP litigation and to try simple cases quickly and tough ones delicately. Guidelines for the application of punitive damages were drafted or issued by high courts and intermediate courts in Beijing, Shandong, Guangdong, XPCC, Inner Mongolia, and other regions, with typical cases published to promote the accurate implementation of the punitive damages system in accordance with the law.

2. Contributed to the Building of an Overarching IP Protection Framework

Chinese courts continued to improve the coordination between judicial trials and administrative law enforcement to enable the unification of judicial and enforcement standards. The Supreme People’s Court, jointly with government departments including the Supreme People’s Procuratorate, Ministry of Agriculture and Rural Affairs, Ministry of Commerce, Ministry of Culture and Tourism, State Administration for Market Regulation, China National Intellectual Property Administration, and National Administration of Traditional Chinese Medicine, improved coordination mechanisms and promoted institutional exchanges, data exchange, and information sharing. Additionally, the Supreme People’s Court released the Opinions on Strengthening Intellectual Property Appraisal jointly with departments including China National Intellectual Property Administration and the Supreme People’s Procuratorate to deepen cooperation between law enforcement departments and judicial organs in the field of IP identification. The Supreme People’s Court and China National Intellectual Property Administration co­released the Opinions on Strengthening the Coordinated Protection of Intellectual Property, including 13 specific measures to improve the coordination between administrative protection and judicial protection of IP rights. The High People’s Court of Shaanxi Province led the establishment of the Qinchuangyuan Intellectual Property Judicial Protection Center; involving 13 provincial-level government organs and academic institutions. The Center features a joint meeting system and offers a platform for cooperation. The Guangzhou Intellectual Property Court, Shanghai Intellectual Property Court, worked with China National Intellectual Property Administration, to explore the synchronization of administrative patent re-examination and infringement disputes hearings, shortening the trial cycle of patent infringement cases to improve patent protection.

Chinese courts accelerated the building of a diversified settlement mechanism for IP disputes, fully implemented the “head office to head office” working mechanism for the online connection between litigations and mediations, improved the system for the judicial confirmation of administrative mediation agreements, and built a joint force for protecting IP rights. Mediation organizations focusing on IP cases achieved full coverage in 30 regions across the country, with continued growth in the number of mediation organizations and mediators. People’s courts entrusted more than 90,000 IP disputes to pre-litigation mediation organizations, with a success rate of over 80%, effectively resolving IP disputes in China. The Supreme People’s Court intensified communication with departments including the National Copyright Administration, China Writers Association, and China Federation of Literary and Art Circles to promote the establishment of a “head office to head office” mechanism for the online connection between complaints and mediations in the field of copyright protection. Notably, the High People’s Court of Hebei province and Hebei Provincial Admiration for Market Regulation signed the Memorandum of Cooperation on the Judicial Confirmation of Administrative Mediation Agreements for Intellectual Property Disputes, which facilitated the resolution of 5 patent disputes through the mechanism. Courts in Shandong province handled 146 cases involving the judicial confirmation of administrative mediation agreements for IPRs disputes. The High People’s Court of Liaoning Province and the Liaoning Intellectual Property Office, co-issued the Notice on Establishing a Mechanism for the Online Connection Between Complaints and Mediations Involving Intellectual Property Disputes. After 11 mediation organizations set up, 110 mediators stationed and successfully mediated 2,834 IP disputes, a success rate of 96.29%. Heilongjiang High People’s Court and the Department of Justice of Heilongjiang Province co­founded an intellectual property arbitration court and issued the Notice on Properly Handling Arbitration and Preservation Cases in Accordance with the Law, which facilitated the integration of litigation, arbitration, and mediation, while strengthening well- coordinated governance.

The Supreme People’s Court endeavored to build regional mechanisms for IP protection, strengthen the development of IP integrity systems, and expand the promotion of the rule of law for the judicial protection of IP. The Court continued to guide relative courts to empower the coordinated development of the Beijing-Tianjin- Hebei region, the development of the Yangtze River Economic Belt, the integrated development of the Yangtze River Delta, the building of the Guangdong-Hong Kong-Macao Greater Bay Area, the full revitalization of Northeast China, and the building of the Hainan Free Trade Port, and the development of the Chengdu- Chongqing Economic Circle, thereby enabling well-coordinated regional innovation. The high people’s courts of Hunan, Hubei, and Jiangxi province established a cooperative working mechanism for trials in city clusters along the middle reaches of the Yangtze River. Under their guidance, intermediate courts in cities including Yueyang, Xianning, and Jiujiang signed cross-regional IP protection agreements with the competent market regulation departments to explore solutions to new challenges in cross-regional, large- scale, and collective IP infringement. The high people’s courts of Sichuan province and Chongqing jointly held the 2022 Sichuan- Chongqing Intellectual Property Protection Seminar to enable the integrated protection of IP rights in both regions. Beijing Intellectual Property Court, the Third Intermediate Court of Tianjin, and the Intermediate Court of Xiong’an New Area signed the Cooperation Framework Agreement on Strengthening Judicial Protection of Intellectual Property, a move that promoted cooperation including talent training, trial collaboration, and experience sharing. The Intellectual Property Court of the Hainan Free Trade Port sent judicial recommendations to the Hainan Administration for Market Regulation and the Intellectual Property Office of Hainan Province, publicly listing 12 individuals involved in 9 criminal cases of IP infringement as serious violators of IP laws. The Intermediate Court of Dalian in Liaoning Province sent judicial recommendations to the local administration for market regulation, publicly disclosing the information of 4 entities involved in intentional IP infringement. The People’s Court of Binhai New Area in Tianjin adopted new regulations to report persons subject to execution in IP cases who failed to fulfill their obligations to departments for market regulation, financial institutions, and industry associations. During Intellectual Property Promotion Week, the Supreme People’s Court held a press conference and planned a series of events to showcase the achievements of Chinese courts in providing judicial protection for IPRs from all angles, perspectives and depths. Courts in regions including Jilin, Gansu, Qinghai, Ningxia, and XPCC released well- planned typical cases and conducted events such as public hearings and public enforcement to encourage the general public to respect and protect IP rights.

• Upheld the Legal Equality in IPRs Protection
  and Promoted International Communication and

Cooperation

Chinese courts made greater efforts to establish China as a preferred venue for international IP litigation, properly tried major IP disputes related to international trade, and created an open, transparent judicial environment, as well as a sound market environment for fair competition, thereby contributing to a greater degree of opening up. In 2022, Chinese courts concluded nearly 9,000 IP cases of first instance involving foreign parties. During the trialing of administrative dispute case between Manolo Blahnik and China National Intellectual Property Administration regarding the invalidity of trademark rights, the Supreme People’s Court equally protected the prior rights of the foreign party and received a letter of appreciation from the Spanish Embassy in China. Courts in Jiangsu newly accepted 527 IP cases involving foreign parties, with a trademark infringement and unfair competition dispute involving a well-known foreign brand concluded in which punitive damages was awarded in accordance with the law, and upheld the foreign rights holder’s claim for compensation of 50 million yuan. In Guangdong, courts resolved a series of standard essential patent disputes involving foreign parties and assisted the parties reach global package settlement via mediation. The People’s Court of Siming in Xiamen, Fujian province, and the International Commercial Mediation Center for BRI established the “Intellectual Property Mediation Room of the Maritime Silk Road Central Legal District”, expanding the channel for mediating IP disputes involving foreign parties jointly.

Committed to building a community with a shared future for humanity, Chinese courts actively engaged in global IP governance under the framework of the WIPO in 2022, deepened judicial IP cooperation with other nations and regions, and pushed for the improvement of international rules and standards on IP rights. The Supreme People’s Court sent judges to participated in the Third China-ASEAN Justice Forum and the Fourth Session for the China-Singapore Supreme Courts Joint Working Group, and co­organized with the European Union the Seminar on Specialized Litigation Procedures for IP Cases. Judges were also sent to attended conferences including the 2022 WIPO Intellectual Property Judges Forum, the WIPO Assemblies Side Event: WIPO ADR for IPOs and Courts, the Fifteenth Session of the Advisory Committee on Enforcement (ACE), as well as the 13th Meeting of the Russia- China Working Group on Cooperation in Protection of IPRs, which was organized by the Ministry of Commerce of China. In addition, the Supreme People’s Court co-organized the Seminar on the Legal Application and Judicial Cooperation in IP Cases between China’s Mainland and Hong Kong jointly with the HKSAR Department of Justice, participated in the drafting of the China chapter of the WIPO International Patent Case Management Judicial Guide, and offered advanced courses through the WIPO Distance Learning Courses in Chinese. Fujian High People’s Court and the WIPO Arbitration and Mediation Center signed the Agreement on Strengthening Communication and Cooperation on Alternative Dispute Resolution for Intellectual Property Rights and formulated the corresponding coordination and working mechanisms.

• Leveraged the Guiding Role of Party Building to
  Build a First-Class Judicial Team

Committed to the political development of the Party, Chinese courts strengthened political loyalty, engaged in impartial and honest judicial practices, and endeavored to build an IP trial team of law and technology-savvy professionals with political integrity, big-picture thinking, and a global outlook.

The 20th National Congress of the Communist Party of China is a meeting of great importance. It takes place at a critical time as the entire Party and the Chinese people of all ethnic groups embark on a new journey to build China into a modern socialist country in all respects and advance toward the Second Centenary Goal. The 20 th National Congress draws a grand blueprint for advancing the great rejuvenation of the Chinese nation on all fronts through Chinese modernization, while making arrangements for improving the legal protection of IP rights. Chinese courts adhered to the absolute leadership of the Party on judicial work concerning IP. Gained a deep understanding of the decisive significance of establishing Comrade Xi Jinping’s core position on the Party Central Committee and in the Party as a whole and establishing the guiding role of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era; Chinese courts endeavored to fully study, understand, and implement the guiding principles from the 20th National Congress. They have relied on Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era to enhance cohesion and forge the judicial soul. Upholding Xi Jinping Thought on the Rule of Law in judicial practices involving IR Chinese courts extensively conducted the “Two Establishes” themed education program to consolidate the progress made in learning the Party’s history and the education and rectification of political and legal teams. Furthermore, Chinese courts continued to promote the high-quality development of judicial work on IP.

Chinese courts strictly adhered to stringent prohibitions such as the “Three Provisions” and the “Ten Prohibitions” for political and legal officials in the new era. In 2022, Chinese courts implemented the “list of prohibited industries” to regulate the post-employment behaviors of the relevant officials, fully implemented the judicial accountability system, standardized the exercise of judicial power; and established the mechanism for the exercise of judicial power and supervision in the field of IP rights, thereby guaranteeing impartial and honest judicial practices. Last yea。Chinese courts continued to intensify education and training in an effort to enhance the political, theoretical, and practical competence of judicial officers, carry forward their fighting spirit and build up their fighting ability. The Supreme People’s Court held a press conference on the new judicial interpretations and judicial policies pertaining to IP rights to facilitate the accurate application of laws by local courts. In addition, the Court mobilized efforts to compile the IP and competition volume of the Application of the Civil Code of the People’s Republic of China and compiled summaries of judicial opinions to guide their trial practices. The high people’s courts of Sichuan and Chongqing jointly organized a training course on judicial protection of IP. Under their guidance, the Chengdu Intermediate People’s Court and the Chongqing No. 1 Intermediate People’s Court co-hosted a forum for IP judges. The High People’s Court of Yunnan Province and the

Yunnan Administration for Market Regulation jointly held a training course on administrative enforcement and judicial protection of IP rights to broaden the judicial horizons of IP judges. Focusing on the characteristics of border port cities, the Dandong Intermediate People’s Court of Liaoning Province collaborated with the customs department to enhance trial officials* knowledge of international brand protection.

Conclusion

2023 marks the first year for fully implementing the guiding principles of the 20th National Congress of the Communist Party of China. In IP trials, Chinese courts will continue to follow the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and fully acted on the guiding principles from the 19th CPC National Congress and the plenary sessions of the 19th Party Central Committee and thoroughly implemented the guiding principles from the Party’s 20th National Congress and the first and second plenary sessions of the 20th Central Committee. Chinese courts will practice Xi Jinping Thought on the Rule of Law across the board, gain a deep understanding of the decisive significance of establishing Comrade Xi Jinping’s core position on the Party Central Committee and in the Party as a whole and establishing the guiding role of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era; enhance their consciousness of the need to maintain political integrity, think in big-picture terms, follow the leadership core, and keep in alignment with the central Party leadership; stay confident in the path, theory, system, and culture of socialism with Chinese characteristics; and uphold Comrade Xi Jinping’s core position on the Party Central Committee and in the Party as a whole and upheld the Central Committee’s authority and its centralized, unified leadership. Under the absolute leadership of the Party, Chinese courts will adhere resolutely to the path of socialist rule of law with Chinese characteristics and endeavor to ensure that the people perceive fairness and justice in every judicial case. Chinese courts will strive to increase their political awareness, consider the big picture, enhance judicial fairness and efficiency, prioritize self-discipline and team building, and provide impartial judicial services to the people on a consistent basis. This year; Chinese courts will “ strengthen legal protection of intellectual property rights in order to establish a foundational system for all- around innovation”； create an open, fair; just and non-discriminatory environment for the development of science and technology, as well as a world-class business environment that is market-oriented, law­based, and internationalized, thereby laying the groundwork for the construction of a fully modern socialist country.

Major Points of the Draft China Trademark Law Amendments (2023)

by Yan Zhang, Miao Tian, & Austin Chang

China Trademark Law, enacted in 1982, has been amended four times (1993, 2001, 2013, and 2019). Yet there are still issues of bad faith trademark applications, redundant and repeated registrations, improper use and abuse of trademark rights, etc. in trademark practice. On 13 January 2023, less than four years after the 2019 amendment, the China National Intellectual Property Administration (CNIPA) released a new Draft Amendment to the Trademark Law (“Draft”) for public comment.

The Draft expands the current Trademark Law to 10 chapters and 101 articles, among which, there are 23 newly added articles, 6 new articles split from existing articles, 45 articles with substantive updates, and 27 articles basically remain unchanged.

In light of such drastic revisions, this newsletter is prepared with major points that we believe are most noteworthy.

I. Strengthen Measures to Crackdown on Bad Faith Trademarks

1. Clarify specific circumstances of bad faith trademarks

Article 22 of the Draft lists specific circumstances of bad faith marks, including: (1) applying for trademarks in bulk with no intent to use, which disrupts the order of trademark registration; (2) applying for trademarks using fraudulent or other improper means; (3) applying for trademarks that are detrimental to the interest of the country or of the public, or that have other significant unhealthy effects; (4) copying, imitating, or translating other’s well-known mark; (5) pre-emptively applying by the trademark owner’s agent, representative, or interested party; (6) pre-emptively applying for other’s trademarks by unfair means, which damages other’s existing prior rights or interests; and (7) other actions in bad faith.

The Draft clarifies that “applying with no intent to use, or filing applications in bulk,” and “applying using fraudulent or other improper means” could be used as absolute grounds for trademark refusals, oppositions, and invalidations. This has broadened the application scope of the Article 44 of Trademark Law 2019, which is mostly applicable only against registered trademarks in invalidation actions.

2. Add more restrictions on signs that can be used and registered as trademarks 

– those in violation of public order or morality (Article 14)
– those contrary to core socialist values, or detrimental to excellent Chinese traditional culture (Article 15)
– both domestic and foreign geographical names known to the public (Article 15)
– those consisting of only generic names, designs, model numbers or technical terms of the goods concerned can neither be registered as trademarks, nor acquired distinctiveness through use (Article 16)

The Trademark Law 2019 stipulates that “geographic names of administrative divisions above the county level or foreign geographic names known to the public shall not be used as trademarks.” On this basis, Draft further adds “domestic geographic names known to the public” into the scope of signs that are prohibited from using and registering as trademarks.

In addition, review of trademark distinctiveness is more stringent, that is, generic names, designs, model numbers or technical terms are prohibited from securing registration by obtaining distinctiveness through use.

3. Prohibit repeated registrations

Article 21 of the Draft clarifies that a trademark application shall not be identical to the applicant’s previous applications, registered trademarks, or trademarks that have been revoked, cancelled, or declared invalid within the prior year for the same kind of goods or services. The purpose is to regulate improper acts of trademark squatters such as repeated bad faith applications, and re-application for registration immediately after their squatted trademarks are invalidated or cancelled. And there are some exceptions for right holders who have legitimate need, such as: (1) due to production and operation needs, the trademark application bears minor modifications to the prior trademark which has been in actual use, and the applicant can illustrate the differences; (2) for reasons not attributable to the applicant, the prior registered trademark was not renewed; (3) due to the failure to timely submit trademark use statements, the prior registered trademark that has been in actual use was cancelled; (4) for reasons not attributable to the applicant, the prior registered trademark that has been in actual use was cancelled due to failure to provide evidence of use in response to a non-use cancellation; (5) the prior trademark was declared invalid due to conflicts with prior rights or interests of others, but the prior rights or interests in question no longer exist; (6) there are other legitimate reasons to justify repeated applications for trademark registration.

4. Establish transfer mechanism of bad faith trademarks in invalidation proceeding

Articles 45 to 47 of the Draft stipulate that not only may prior right holder request the CNIPA to declare a registered trademark invalid, but prior right holder may also request to transfer such registered bad faith trademark under his name. This amendment creates a new mechanism favorable to right holders whose marks were pre-emptively registered by squatters. It enables the right holder to obtain earlier registered trademarks while avoiding repeated applications and refusal reviews in line with its trademark enforcement actions. Meanwhile, the Draft sets limitations on transferring registered trademarks by the CNIPA, that is, if there are no other reasons to declare the registered trademark invalid, and the transfer is unlikely to lead to confusion or other adverse effects, the CNIPA shall approve the transfer of the registered trademark. Such limitations, however, lack necessary details for actual implementations. If these particular imitations are to be included in the final version of the amended Trademark Law, we expect the Trademark Implementation Regulations and relevant regulative documents would provide further details and clarifications.

5. Increase penalties against bad faith trademarks

– Increase fines against bad faith registrations (Article 67)
– Civil compensations shall be ordered against bad faith trademark registrations that caused damages to others (Article 83)
– Bad faith trademark registrations that damage national interests, or social public interests, or cause major adverse effects, the Procuratorate shall, in accordance with the law, file a lawsuit in the Court against the bad faith trademark registrations (Article 83)

Articles 67 and 83 of the Draft provide a trinity of administrative, civil, and criminal punishment mechanism to effectively protect the legitimate rights and interests of right holders and crack down on bad faith squatting. A bad faith trademark application can be fined up to RMB250, 000 and any illegal gains shall be confiscated. If losses are caused to a specific entity, such entity may sue in a Court and request monetary compensation for the loss. If a bad faith trademark application damages national interests, social public interests or causes other major adverse effects, the Procuratorate may file a lawsuit.

II. Improve Trademark Examination Proceedings

1. Shorten the timeline for opposition

Article 36 of the Draft shortens the opposition period from three months to two months, which in turn shortens the time needed to obtain a trademark registration.

2. Cancel review of disapproval of trademark registration

Article 39 of the Draft cancels the review of disapproval of trademark registration. Where a trademark is disapproved in opposition, the applicant no longer has the right to appeal such decision with the CNIPA, but it may appeal to the Court. This amendment avoids the same dispute going through three proceedings (substantive examination, opposition, review of disapproval) all before the CNIPA, while still providing remedy for the applicant before the Court.

The Draft does not, however, amend the proceeding where an opposed trademark is approved for registration and where the opponent can file an invalidation with the CNIPA, then still have the remedy to appeal an unfavorable decision to the Court.

How can the two proceedings be harmonized in practice or whether consistency of review is applicable deserves further discussions.

3. Restrict application of the change of circumstances rule in court proceedings

Article 42 of the Draft stipulates that for court proceedings on refusal reviews, registration disapproval reviews, and invalidation actions, “If the status of the relevant trademarks changes after a CNIPA decision is made, it shall not affect the trial of the decision by the Court, except when the principle of fairness is clearly violated.” According to the Draft, change of circumstances shall not be applicable to administrative trademark litigations, except “when the principle of fairness is clearly violated.” However, the circumstances of “when the principle of fairness is clearly violated” remains unclear. Such amendment would greatly impact rights holders’ current practices of obtaining their own trademark registrations by removing prior obstacles via invalidations or cancellations.

III. Strengthen Trademark Use Requirements

1. Strengthen trademark use obligations

– Add use or intent to use requirement when applying new trademarks (Article 5)
– Establish regulations to require trademark owners voluntarily explain trademark use 5 years after registration (Article 61)

Article 5 and 61 of the Draft adds use or intent to use requirement when applying trademarks, and establishes regulations to require trademark owners to voluntarily explain trademark use 5 years after registration. Additionally, a random inspection system for explaining use and provisions for cancelling registered trademarks after random inspections is also added. This amendment will impose higher requirements on the use and maintenance of trademarks by trademark owners. Accordingly, defensive filings may face problems for providing evidence of use 5 years after registration. However, the Draft does not provide for specific review standards and implementing rules. According to the CNIPA statement on the Draft, “a simple and easy-to-implement method such as a use undertaking letter or a use description form is likely to be adopted.”

2. Regulate trademark use

For “unauthorized alteration of registered trademarks, name or address or the registrant and other items,” the Trademark Law 2019 only imposes liabilities “to make corrections within a time limit,” otherwise “the registered trademark shall be cancelled.” Article 64 of the Draft adds “a fine up to RMB100, 000” on top of the said provisions and imposes corresponding administrative and criminal liabilities and compensations for those infringing others’ trademark rights.

3. Broaden the applicable circumstances for cancellation

– Cancellation due to causing confusion among relevant public as to quality, source, or origin or other features of the goods by the use of a registered trademark, or seriously harming public interests and cause significant adverse effects by the use and exercise of exclusive rights of a registered trademark (Article 49)
– Cancellation due to untruthful statement of trademark use during random inspections (Article 61)
– Cancellation due to unauthorized alteration in the process of using the registered trademark (Article 64)

The Draft improves the cancellation system by adding more applicable circumstances and specifies that the CNIPA may cancel ex officio a registered trademark that damages public interests. Meanwhile, Article 49 adds a provision that cancellation “shall not damage the legitimate rights and interests of the trademark registrant or disrupt the order of trademark registration” in order to further regulate repeated three-year non-use cancellations or bad faith three-year non-use cancellations.

In addition, the Draft also expands the scope of cancellation ex officio. The CNIPA may cancel a registered trademark ex officio if an improper use of trademark right seriously damages the public interest and causes major adverse effects. If a trademark registrant alters the registered trademark without authorization in the process of using such registered trademark and fails to make correction within a time limit, that registered trademark shall be cancelled. The CNIPA shall conduct random inspections on a trademark registrant’s statement of the use of the trademark, and if necessary, require the trademark registrant to supplement relevant evidence. Where such statement is found to be untrue, the registered trademark shall be cancelled.

4. Clarify the applicable circumstances and the beginning and end of trademark registration “isolation” period

Article 50 of the Draft stipulates that, within one year from the date when a registered trademark is published as canceled or expired, any application for a trademark that is identical or similar to the said mark shall not be approved.

Regarding this one-year “isolation” period, which aims to avoid market confusion, the Draft improves the applicable circumstances by deleting the current provision of applying the isolation after a registered trademark is invalidated, and only retains applicability after a registered trademark is cancelled or expired.

In practice, prior right holders usually file a trademark application while filing an invalidation against a squatted trademark. If the one-year isolation is applicable to such squatted registration, it will lead to prior right holders’ repeatedly filing new trademark applications or incur new trademark disputes. This amendment, in comparison, is closer to the legislative intent in assuring that prior right holder’s trademark application will be approved timely.

IV. Strengthen Trademark Protection

1. Strengthen well-known mark protection

Article 10 of the Draft amends the current expression of “recognition of a well-known mark” into “confirmation of well-known status of a trademark,” which helps to weaken the administrative tint in the well-known mark affirmation. The amendment further specifies that the protection shall follow the principle of case-to-case confirmation, passive protection, and need-basis confirmation, and provides that the scope of protection of a well-known trademark shall be appropriate to the trademark’s distinctive features and reputation.

Meanwhile, Article 18 extends the scope of protection to circumstance that “is likely to cause the relevant public to believe that a trademark is closely connected with a well-known trademark, thus diminishing the distinctive features of that well-known trademark, or disparaging or improperly free-riding on the market reputation of the well-known trademark.”

2. Improve trademark infringement damage calculation method 

The order of calculating trademark infringement damages in the Trademark Law 2019 is actual loss of the right holder, infringer’s infringement profits, and reasonable multiples of royalties. In judicial practice, however, said damage calculation order is not the basis for calculating infringement profit when rights holder cannot prove its loss after exhausting his burden of proof. Therefore, Article 77 of the Draft lists right holder’s actual loss or infringer’s infringing profits as the first priority in damages calculation methods, which more streamlined with legal practice. Moreover, the Draft clarifies that damages should include right holder’s reasonable costs.

3. Introduce public interest trademark infringement lawsuit

Article 78 of the Draft introduces public interest trademark infringement lawsuit, where the infringement of trademark rights harms national interests or social public interests, and the trademark owner or interested parties does not file a lawsuit, and the department responsible for trademark enforcement does not deal with the infringement, the Procuratorial may file a lawsuit before the Court.

V. Clarify Administrative Power Boundaries 

1. Introduce a principled provision where trademark rights shall not be abused to damage national interests, social public interests, or the legitimate rights and interests of others

Article 9 of the Draft stipulates that the principle of good faith shall be upheld in the application for trademark registration and in the exercise of trademark rights. Trademark owners shall not abuse trademark rights to the detriment of national interests, public interests, or the legitimate rights and interests of others.

2. Improve descriptive use regulations and add fair use scenarios

Article 62 of the Draft introduces trademark fair use that includes (1) using one’s name and address in good faith; (2) for the purpose of indicating the kind, nature, quality, functions, purposes, weight, quantity, value, geographic origin or other features of the goods, using the geographical name, generic name, graphics, models, technical terms or other symbols relating to such indication of goods; (3) using its registered trademark for the sole purpose of indicating the purpose of use, target or scenario of use of goods, except where such use misleads the public.

3. Introduce malicious lawsuit compensation system

The Trademark Law 2019 sets a regulatory path for malicious lawsuit to be imposed of a sanction by the Court, which provides a legal basis against trademark right abuse. Article 84 of the Draft further stipulates a compensation system for malicious lawsuit. Where a malicious trademark lawsuit causes losses to others, compensation shall be ordered. The amount of compensation shall at least include the reasonable costs paid by the other party in responding to the malicious trademark lawsuit.

Follow us on LinkedIn! Email: trademark@beijingeastip.com Tel: +86 10 8518 9318 | Fax: +86 10 8518 9338 Address: Suite 1601, Tower E2, Oriental Plaza, 1 East Chang An Ave., Dongcheng Dist., Beijing, 100738, P.R. China

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.

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. A large number of applications that are identical or similar to the names of administrative districts, mountains and rivers, scenic spots, and buildings.

7. 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.

8. 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.

9. 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.

10. 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..

Follow us on LinkedIn! Email: trademark@beijingeastip.com Tel: +86 10 8518 9318 | Fax: +86 10 8518 9338 Address: Suite 1601, Tower E2, Oriental Plaza, 1 East Chang An Ave., Dongcheng Dist., Beijing, 100738, P.R. China

Protection of Chinese Equivalents of Foreign Trademarks

by Yan Zhang & Austin Chang

When an oversea brand enters China market, selecting a Chinese equivalent of the oversea brand is crucial because native Chinese pronounce and remember the Chinese language much easier than any foreign language. This is precisely why nearly all famous international brands have and use its Chinese equivalent names in China. For example, the well-known tech company APPLE has its Chinese name of “PING GUO in Chinese (苹果)” and MICROSOFT uses “WEI RUAN in Chinese (微软).” Both APPLE and MICROSOFT used literal translation as their Chinese equivalent. Literal translation is one of the three ways in selecting a Chinese equivalent. The famous hotel brand HILTON uses “XI ER DUN in Chinese (希尔顿)” and the fashion brand ARMANI uses “A MA NI in Chinese (阿玛尼).” Hilton and Aermani used transliteration, which is another popular way of creating a Chinese equivalent that could be highly distinctive and have a similar pronunciation to its foreign counterpart. Literal translation or transliteration, it is critical that the Chinese equivalent has no negative meanings.

A combination of literal translation and transliteration is also used in creating Chinese equivalents. For example, STARBUCKS uses “XING BA KE in Chinese (星巴克).” The first character “XING in Chinese (星)” is the literal translation of “STAR,” and the last two characters “BA KE in Chinese (巴克)” are the transliteration of “BUCK.” Another great example is “LOCK & LOCK,” a Korean household brand. Its Chinese name sounds like “Le kou Le kou” and means “happily locked or buttoned.”

As Chinese equivalents could involve various Chinese translations or non-exclusive transliterations, in China trademark prosecution, a foreign language trademark will not automatically be deemed similar to its Chinese equivalent. So registering the foreign language trademark alone may not be sufficient to establish priority over all Chinese translations, nor prevent others from registering various transliterations.

More importantly, China adopts the first-to-file trademark system. If a Chinese equivalent of a foreign language trademark is not promptly selected, it is likely that distributors, consumers, or media may “self-select” a Chinese name for that foreign language trademark and even have it registered to block that oversea brand owners from using its Chinese marks in China. So it is vital for an oversea brand owner to create and timely protect its Chinese equivalent.

1. Factors considered in prosecution and litigation

Determining whether or not a foreign language trademark is similar to a prior Chinese language trademark, the general understanding of Chinese relevant public shall be considered, and the following factors should be taken into account according to the Beijing High Court Guidelines for the Trial of Trademark Right Granting and Verification Cases: (i) the ability of Chinese consumers to recognize the foreign language trademark; (ii) the relevance or correspondence in meaning and pronunciation between the foreign language trademark and the Chinese language trademark; (iii) the distinctiveness, popularity and ways of use of the cited trademark; and (iv) the actual use of the trademark in dispute. These factors should be comprehensively considered in different proceedings and evaluated on a case-by-case basis.

For the factor “the ability of Chinese consumers to recognize the foreign language trademark,” two elements should be considered, the type of foreign language and the frequency of use of foreign words.

If Chinese consumers cannot recognize a foreign word, it would be unnecessary to discuss similarity between the foreign language trademark and Chinese language trademark. Like in the “Little Black Dress” case, the Court held that the refused mark “Little Black Dress in Chinese” and the cited mark “LA PETITE ROBE NOIRE” do not constitute similar marks, because most Chinese consumers cannot read French, nor do they know the Chinese meaning of the cited French trademark. They would only recognize the cited French trademark as a combination of Latin alphabets and not associate it with a Chinese language trademark.

For the factor “relevance or correspondence between the foreign language trademark and the Chinese language trademark,” as one foreign word can be translated or transliterated into different Chinese characters, and vice versa, when identifying similarity between a foreign language trademark and a Chinese language trademark, correspondence can be considered from either of the two perspectives – translation from Chinese into English and vice versa.

Taking the “FOREVERMARK” case for example, “FOREVERMARK” can be translated into “永恒印记, ” while “永恒印记” can also be translated into “FOREVER MARK.” As “FOREVER” and “MARK” are both frequently used English words, Chinese consumers can readily understand the Chinese meaning of the trademark and will likely associate the trademark with its corresponding Chinese translation.

Based on current practices in China, the substantial examination of a foreign language trademark at the Trademark Office is straightforward. The examiners mainly focus on the literal meaning of the trademark, and refer to the online dictionaries, such as Kingsoft dictionary for direct translation. Hence, the transliterations of a trademark or phonetically similar trademarks will not be cited by the examiners to block the new application of foreign language trademark.

While in refusal appeal procedure, the examiners apply a broader scope in examining the similarity between a foreign language trademark and a Chinese language trademark, not merely relying on the dictionary meanings. Their broader scope of examination focuses on the two aspects: the general understandings of Chinese consumers and the correspondence in meanings between the foreign language trademark and the Chinese language trademark. The use and reputation of refused marks would also be deemed as a supporting factor but cannot carry much weight.

In reviewing opposition and invalidation cases, however, the Trademark Office and courts apply a more comprehensive analysis using “likelihood of confusion” as the judging standard. In addition to comparison of trademarks per se, other influential factors may be considered when assessing “likelihood of confusion,” such as the cited trademark’s distinctiveness, the use and reputation of the cited trademarks, the relatedness of goods and services, and the applicant’s bad faith.

Chinese courts also apply the “likelihood of confusion” analysis in trademark infringement cases involving Chinese equivalents, requiring only a “stable,” as opposed to “sole” corresponding relationship be established between a foreign language trademark and its Chinese equivalent. However, to achieve the “stable” status, brand owner must provide substantial evidence to prove that its foreign language trademark and its Chinese equivalent have been widely used over a long period of time, and the corresponding relationship has been established and known to the relevant public.

2. Typical cases regarding Chinese equivalents of foreign trademarks

The most common mistake in business practice is that the brand owner does not have an “official” Chinese equivalent for its foreign language trademark, nor does it attempt to use and promote the trademark in Chinese. When a brand owner does not have a Chinese equivalent for its foreign language trademark, its Chinese distributors, public, or media will often self-create and use a Chinese version to refer to the brand owner and its products. This is considered as “passive use” in contrast to the “active use” by the brand owner. In practice, when an issue of determining whether a use is an active one or a passive one is presented to Chinese courts (usually in cancellation actions), the courts will examine whether the asserted “passive use” in the case at hand is used against the brand owner’s will, and whether a corresponding relationship between the foreign language trademark and its Chinese equivalent has been established. Please see below an example case.

In the FREDDIE MAC case, the China Supreme Court held that “FANG DI MEI in Chinese,” as one of the Chinese translations of “FREDDIE MAC,” has been widely used by media reports to refer to Freddie Mac, and “FANG DI MEI in Chinese” has established a corresponding relationship with “FREDDIE MAC” in the field of financial services, although there exists several other translations, like FANG DAI MEI (房贷美) and FU LEI DE MA KE (弗雷迪马克). The FREDDIE MAC case highlights that the existence of several Chinese translations does not affect the establishment of corresponding relationship between the major Chinese translation and the foreign language trademark.

An equally important issue is that the corresponding relationship shall be identified in connection with the specific goods or services used. Taking the FACEBOOK case for example, the Beijing High Court held that, based on the third party evidence including Chinese media reports, and general understanding of Chinese relevant public, the “LIAN PU in Chinese” mark was the corresponding translation of the FACEBOOK mark when used on networking services. Although “LIAN PU in Chinese” has its fixed meaning in Chinese, which means facial makeup in operas, when used in connection with networking services, it refers to Facebook, rather than other entities.

The FREDDIE MAC case and the FACEBOOK case are typical passive use cases where the courts protected the Chinese equivalent of the foreign language trademark. For the passive use, the worse scenario happens when the Chinese distributor created the Chinese name for the oversee brand and registered the Chinese trademark under its own name. Upon the termination of business cooperation, the Chinese distributor may start supplying identical products using the Chinese trademark, which may inevitably mislead consumers about the source of products.

As in the EVOLON case, a Nanjing Company, which was a distributor of Freudenberg, registered the Chinese mark “YI WO LONG in Chinese (依沃珑)” and used it in the sales of Freudenberg’s nonwovens products with the English mark “EVOLON.” The Nanjing Company insisted that the Chinese mark was created by themselves, and it was their efforts that contributed to the reputation of the Chinese mark. The China Supreme Court affirmed the corresponding relationship between the Chinese mark “YI WO LONG in Chinese” and the cited English mark “EVOLON,” and further held that the Nanjing Company used the Chinese mark alone or together with the English mark to promote Freudenberg’s products, which inevitably associated the Chinese mark with Freudenberg and its products.

Despite more and more positive outcomes from Chinese courts, there are cases where Chinese equivalents of foreign language trademarks were not protected because brand owners expressly denied the corresponding Chinese equivalents. The VIAGRA case and SONY ERICSSON case are typical examples. In the VIAGRA case, Pfizer adopted a Chinese name “WAN AI KE in Chinese” for its blue pills, Chinese public and media, however, had already created a Chinese name “WEI GE in Chinese” for VIAGRA. Pfizer opposed a third party’s filing for the “WEI GE in Chinese” mark but failed. The court found that, Pfizer had never promoted their products under the name “WEI GE in Chinese,” and on the contrary, claimed that the Chinese equivalent of VIAGRA was “WAN AI KE in Chinese.”  In the SONY ERICSSON case, Sony Ericsson used “SUO NI AI LI XIN in Chinese” as the official translation of its mobile phone brand, but Chinese public and media called it “SUO AI in Chinese” for short. The court held that, Sony Ericsson had no evidence proving their use of “SUO AI in Chinese” and even denied that “SUO AI in Chinese” was the abbreviation for “SUO NI AI LI XIN in Chinese.”

One final important point, the evidence proving the corresponding relationship shall be prior to the application date of the disputed mark or prior to the first use date of the accused mark.

In the New Balance case, New Balance registered its English trademark “New Balance,” but neglected to register the Chinese version. A Chinese individual, Mr. Zhou, registered the trademarks “BAI LUN in Chinese” and “XIN BAI LUN in Chinese” for footwear and later brought an infringement action against New Balance’s use of “XIN BAI LUN in Chinese” mark. The first instance court affirmed trademark infringement and ordered New Balance to pay damages for around USD 15 million. This astonishing high damage was significantly reduced to around USD 770,000 by the second instance court, that said, the finding of trademark infringement is an important lesson to oversea brand owners doing business in China to have a Chinese equivalent trademark.

On the other hand, New Balance attempted to invalidate Mr. Zhou’s registered trademark “XIN BAI LUN in Chinese,” claiming “XIN BAI LUN in Chinese” is a Chinese equivalent of “NEW BALANCE,” but the Beijing High Court recently made the final decision denying New Balance’s appeal, because New Balance used “XIN BAI LUN in Chinese” as the Chinese equivalent of NEW BALANCE later than the application date of Mr. Zhou’s “BAI LUN in Chinese” trademark. And no sufficient evidence was provided to prove the corresponding relationship between “XIN BAI LUN in Chinese” and “NEW BALANCE” prior to the application date of the disputed mark.

Similarly, a famous Australian wine brand Penfolds got involved in a trademark dispute with a Chinese squatter Mr. Li, who registered the mark “BEN FU in Chinese,” which is the Chinese equivalent of PENFOLDS. This registration blocked the Australian brand owner using the “BEN FU in Chinese” mark in China, despite doing business in China for over twenty-five years. In the PENFOLDS case, the Beijing High Court held that the submitted evidence was sufficient to prove the corresponding relationship established between the disputed mark “BEN FU in Chinese” and the cited English mark “Penfolds” prior to the application date of the disputed mark.

Fortunately for Penfolds, before successfully securing the registration of its own Chinese mark “BEN FU in Chinese,” it landed a victory in an infringement action against a Chinese brewing company and its distributor. The local court affirmed the well-known status of “BEN FU in Chinese” as an unregistered mark, based on its corresponding relationship with the English mark “Penfolds,” and held the defendants’ use of the accused “BEN FU in Chinese” mark constitutes trademark infringement. In this case, “BEN FU in Chinese” was protected as unregistered well-known mark based on the evidence prior to the first use date of the accused mark.

The key issue in the New Balance case and the Penfolds case is the cut-off time for collecting evidence. On top of that, sufficiency of evidence is crucial in swinging the outcome of a case.

3. Takeaways

1) It is highly recommended that oversea brand owners create their own Chinese equivalents before entering the China market. If not, Chinese consumers or media will create Chinese versions in different ways and squatters may even register them.

2) Oversea brand owners should not only register the foreign language trademark, but also file for the Chinese equivalent as soon as possible. Those Chinese equivalents created by the media and public shall be considered and registered as trademark as well, at least for defense purposes.

3) In addition to clearance search, regularly monitoring similar Chinese translations in key classes will help in discovering questionable marks, which allows brand owners to address squatting or counterfeiting problems in a timely manner.

4) Better evidence management is crucial because sufficiency of evidence, especially evidence related to the use and fame of the foreign language trademark as well as the corresponding relationship between the foreign language trademark and its Chinese equivalent, is always a core factor affecting chances of success.

Follow us on LinkedIn! Email: trademark@beijingeastip.com Tel: +86 10 8518 9318 | Fax: +86 10 8518 9338 Address: Suite 1601, Tower E2, Oriental Plaza, 1 East Chang An Ave., Dongcheng Dist., Beijing, 100738, P.R. China

Tackling Bad Faith Trademark Applications or Registrations in China – Part IV

by Yan Zhang, Miao Tian & Austin Chang

In the last part of this series, we will share cases and our suggestions on two issues, one is the impact on bad faith assessment in the event of later trademark assignment, the other is the necessity to assess bad faith if the right holder’s interests have already been protected by applying other clauses of the Trademark Law.

1. Will a trademark assignment change the bad faith nature of a squatted mark?

An individual “A” applied for “” in early 2011 on computers, computer programs, handheld phones, etc. in class 9, secured trademark registration in January 2012, and assigned the mark to another individual “B” in February 2014.

Instagram filed an invalidation action against the trademark in April 2014 but the mark was sustained.  Disagreed with the decision, Instagram appealed to the Beijing IP Court in June 2016 and obtained a favorable judgment, which was later upheld by the Beijing High Court in March 2017 against the CNIPA’s second instance appeal.

In this case, we argued that the application date of the disputed trademark should be used as the time point for judging the bad faith because it is the subjective attitude of the original applicant that matters.  The subsequent transfer of the disputed trademark and whether the assignee is in good faith cannot clean the slate even if a valid contract has been signed and reasonable consideration paid.  To prove A’s bad faith, we submitted the trademark application list of A to show he filed for nearly 30 famous trademarks such as “Google,” “Twitter,” “SQUREUP,” “PINTEREST,” “FOURSQUARE,” “FREEMONEE,” “BLEKKO,” “QUORA”; the declarations condemning A for his bad faith squatter issued by Google, Twitter and other leading Internet companies; and overseas judgments against A for his squatting, etc.

With detailed arguments and convincing evidence, we managed to persuade the courts to find that:

The legislative intent of Article 44. 1 of the Trademark Law is to maintain a good trademark registration and administration order by means of holding the principle of public order and good customs.  When examining and determining whether the disputed trademark is registered by other improper means, it is necessary to consider whether it is a means, other than deception, that disrupts the order of trademark registration, harms public interests, occupies public resources improperly, or seeks improper benefits in other ways.

In this case, in addition to applying for the disputed trademark, the relevant right holders of the disputed trademark also applied for trademarks that are identical or similar to others’ famous brands in multiple classes.  These said trademarks show obvious intention to copy and imitate others’ trademarks with certain fame, disrupt the normal order of trademark registration administration, impair the market order of fair competition, and violate the principle of public order and good customs.  In accordance with the legislative intent of the Trademark Law to prohibit using deceptive or other improper means to obtain trademark registration, the relevant right holders’ registering the disputed trademark in bad faith should be prohibited. Therefore, the disputed trademark shall be revoked.

In this case, we also strengthened our arguments by proving that the current owner B acquired the disputed mark from A with full awareness of A’s bad faith.

Note, in practice, even if the assignee who may be the proprietor that had been squatted acquired the bad faith mark with good faith, the malice or illegality behind the act of applying for a squatted mark will not be eliminated by the assignee’s “bona fide” good faith.

In the last several years, with the SPC’s judgments, regulations or guidance, it now appears to be an acknowledged conclusion that ownership change will not affect the application of Article 4 and Article 44.1 of the Trademark Law.

For example, Article 7.4 of Beijing High People’s Court Guidelines for the Trial of Trademark Right Granting and Verification Cases stipulates that, if a disputed trademark violates the relevant provisions of the Trademark Law, and the only ground that the owner claimed for the trademark to remain valid is that the owner has no fault when the trademark is transferred, then such claim shall not be supported. The Action Plan for Combatting Bad Faith Trademark Registration has similar provisions as well.

Also, in the newly published Draft for Comments of the Trademark Review and Adjudication Standard, Chapter 2 Examination on the bad faith application lacking the true intention of use contains a rule stating that “trademark assignment shall not affect the determination of whether the trademark applicant has violated this article 4.”

In light of the above, on one hand the bad faith squatter cannot escape from being invalidated by means of assigning the mark to a less-malicious affiliate. On the other hand, however, if this rule is applied strictly, any trademarks assigned to their rightful owners could be vulnerable to invalidation due to their original applicant’s lack of intent to use at the time of filing.

Given the uncertainty, before purchasing any squatted marks, or where any such marks have already been purchased, brand owners should consider the following steps:

1) Conduct due diligence against the assignor – if assignor has filed for a huge number of trademarks, and the mark being assigned has never been used, the risks that the CNIPA would reject such an assignment are relatively high.

2) File back-up trademark applications – given the risk of rejection for the assignment, brand owners should file new applications of the squatted mark as a back-up plan, rather than relying entirely on the assignment.

3) Clarify consequences of rejection in assignment agreements – it should be clarified in the assignment agreement between the squatter and the proprietor that if the CNIPA rejects the assignment application, the squatter will agree to voluntarily revoke or cancel the mark instead of assignment.

4) Seek possible cooperation from squatter – the squatter should guarantee that it will cooperate with any office actions initiated by the CNIPA, including providing the evidence of use (if any) and responding to office actions.

2. Is it necessary to assess bad faith when another substantive article of the Trademark Law has already been supported?

A Chongqing company “K” applied in 2009 and registered in 2015 a US company’s core mark (Disputed Mark) for cosmetics, soaps, etc. in class 3. The US company “P” filed an invalidation in 2016 and received a favorable decision from the CNIPA. The company K disagreed with the decision and appealed to the Beijing IP Court, which dismissed the company K’s claims by affirming Article 32 and Article 44.1. The court found that:

Regarding whether the Disputed Mark constituted a pre-emptive registration by improper means of other’s mark already in use with high fame, the evidence submitted by the company P can prove that before the application date of the Disputed Mark, the licensee of the company P had sold cleansing milk, lotion, and other products branded the Disputed Mark in mainland China and the trademark had obtained certain fame on cosmetics through use. Considering that the Disputed Mark bears certain degree of distinctiveness when used on cosmetics, and that it is hardly a coincidence for the Disputed Mark and the Disputed Mark to be highly similar in mark composition and meaning, the company K is subjectively malicious in applying for the Disputed Mark. The goods designated under the Disputed Mark are the same or similar to cosmetics on which the company P had first used its mark and obtained high fame, so the registration of the Disputed Mark has violated Article 32 of the Trademark Law.

Regarding whether the Disputed Mark constituted a violation of Article 44.1, in addition to the Disputed Mark which is basically the same as the company P’s mark in use with certain influence, The company K has successively applied for more than 60 trademarks, including some copies that are the same or similar to famous brands like “Geely,” “Chrysler,” “U Key,” etc. The company K failed to give a reasonable explanation for its applications and failed to submit evidence to prove its true intention to use these marks. It can be concluded that The company K not only has obvious subjective malice of copying others famous trademarks, but also has an objective of seeking illegitimate profits by hoarding trademarks. Such behaviors will cause confusion and misunderstanding among the relevant public, disrupt the normal order of trademark administration and market competition, and impair the public interests of the society. Therefore, the registration of the Disputed Mark violated the Article 44.1 of the Trademark Law.

In this exemplary case, on top of the Article 32, the CNIPA and the court further applied Article 44.1 to invalidate the bad faith squatted mark. However, we have also received and studied many decisions and judgments where the examiners refused to further review and comment on Article 44.1 when they find either of Article 30 (similar marks on similar goods/services), Article 32 (prior rights), Article 15 (pre-emptive filings by agent or representative), etc. applies in a case.

Not only in the decisions, but also from the rules and regulations we can see this issue still appear to be disputable. For example, Article 17.5 of Beijing High People’s Court Guidelines for the Trial of Trademark Right Granting and Verification Cases sets some restrictions on application of the bad faith clause on “other improper means,” stipulating that when deciding an opposition appeal or an invalidation case, if the request of the petitioner can be supported by applying other clauses of the Trademark Law according to the documented evidence, Article 44.1 of the Trademark Law shall not apply.

In the Draft for Comments of the Trademark Review and Adjudication Standard, Chapter 16 Examination on the trademark registrations obtained by deceptive or other unfair means also contains a restriction, stating that “where other clauses of the Trademark Law could be applied to refuse or invalidate a disputed trademark based on the documented evidence, Article 44.1 of the Trademark Law shall not apply, with the exception that the bad faith is obvious.” From this newly published Draft, we can see that the government’s interests in fighting against bad faith in China is becoming increasingly strong. We look forward to a further improved trademark administration and mark competition environment.

In light of the regulations and practice that we shared, bad faith could not only make a case on its own, but also “outshine” the likelihood that the CNIPA and the courts would apply the non-bad faith related articles in the Trademark Law against squatted marks, such as the cases we have shared in earlier parts of this series. In summary, we suggest brand owners to consider spending the necessary resources to dig down into a squatter’s bad faith and to endeavor for a favorable outcome.

This is the end of this series. Follow us and stay tuned!

Follow us on LinkedIn! Email: trademark@beijingeastip.com Tel: +86 10 8518 9318 | Fax: +86 10 8518 9338 Address: Suite 1601, Tower E2, Oriental Plaza, 1 East Chang An Ave., Dongcheng Dist., Beijing, 100738, P.R. China

Tackling Bad Faith Trademark Applications or Registrations in China – Part III

by Yan Zhang, Miao Tian & Austin Chang

Previously, we shared our insights on the application of bad faith clause with exemplary cases. This time, we are going to share cases to show how we identify the bad faith and how we present the evidence to convince the CNIPA and the courts to achieve favorable outcomes!

1. Devil lies in the details – everything submitted when filing trademark applications counts

A Chinese individual filed an application for “” with App. No. 10558333 on March 2, 2012, designating on “doors of metal; metal door device; door casings of metal; insect screens of metal; metal furniture parts; ironmongery; locks of metal, other than electric; safes; props of metal” in class 6. This registrant only owned this particular disputed mark.

Facebook filed both an opposition and an invalidation against this mark successively, but neither proceedings could remove the disputed mark from the registry successfully. In these proceedings, the examiners found that, for relative grounds, hardware was distant from networking, and for absolute grounds, no harm was placed against public interest or order.

Unsuccessful before the CNIPA, Facebook appealed to the Beijing Intellectual Property Court. We focused our claim on the absolute grounds, that was, to further demonstrate the registrant’s bad faith. In addition to the evidence already collected and submitted in the invalidation, we managed to find a valuable piece of evidence which was only available at court proceeding – the application materials of the disputed mark on file at the Trademark Office. As it turned out, all efforts have been paid off. In its judgment, the court reasoned that, as required by the law, trademark applications should be filed in the name of a responsible person running an individual business or a lease holding rural household, or someone with the permission to engage in business operation. Here, the registrant submitted a copy of a business license which showed him as the operator of a solely owned business engaging in wholesale of doors and construction materials. However, according to the information revealed in the National Enterprise Credit Information Publicity System, this solely owned business was run by another individual that provides housekeeping services. During the court hearing, the examiner from the CNIPA also admitted that when examining trademark applications, they only conduct formality check over the materials but will not verify the authenticity of the content therein. Given the discrepancies, the copy of the business license submitted when filing the application for the disputed mark was obviously forged.

The court further reasoned that the mark “FACEBOOK” bore high distinctiveness as it is neither Chinese characters nor an existed English word, and the mark owner Facebook was the operator of the famous social networking site “FACEBOOK.” Considering the facts that the registrant provided forged materials when applying for trademark registration, the disputed mark was identical with “FACEBOOK”, and the registrant refused to appear in court to state reasons or make explanations despite the court’s subpoenas, the court found the forged business license hardly a coincidence. The court concluded that the registrant used deceptive or other unfair means in obtaining the disputed mark’s registration. Such trademark application was filed with obvious intention of infringing on other’s prior rights and disturbing trademark registration order. If left uncurbed, such behavior will inevitably hinder the normal operation of honest operators and impair the market order of fair competition. Therefore, the disputed mark should be invalidated.

Although procedurally, the registrant has the right to file a second instance appeal against the judgment, he did not appeal, and the judgment became effective. The CNIPA later re-made an invalidation decision based on the Beijing Intellectual Property Court’s judgment to invalidate the disputed mark for violating Article 44.1 of the Chinese Trademark Law 2013.

2. Massive filings without justified reasons can never be tolerated

A Chinese investment management company filed an application for “” with App. No. 18919877 on January 18, 2016, designating on “radio broadcasting; message sending; mobile phone communication; computer terminal communication; computer aided transmission of messages and images; providing user access to global computer network; voice mail services; transmission of digital files; videoconferencing services; video-on-demand transmission” in class 38.

Facebook filed an opposition against this mark, arguing for similarity with its mark “FACEBOOK” in class 38 and for the applicant’s bad faith. The CNIPA, however, granted the differences between the marks and the lack of malicious evidence.

Facebook did not stop at this unfavorable outcome but, taking our advice, further brought the mark to the invalidation stage. Based on the evidence gathered during the opposition, our strategy was to focus on the registrant’s bad faith in achieving a favorable invalidation outcome. We further conducted deeper investigations of the registrant aiming to collect and present as much evidence to demonstrate its bad faith as possible.

Like the opposition proceeding, the registrant did not respond in the invalidation. Upon reviewing our arguments and evidence, the CNIPA found that:

Since 2015, the registrant has applied for more than 280 trademarks such as “UBER in Chinese,” “UBERBEATS,” “APPLEMOBILE,” “APPLELIFE,” “BMWAPPLE,” etc., for computers, automobiles, coffee, currency exchange, online banking, real estate management, electronic information transmission, education and other goods and services in Classes 9, 12, 30, 35, 36, 38, 41, etc. Some trademarks have been refused from registration or been invalidated for constituting similar to others’ prior marks.

The registrant did not respond to the invalidation arguments, did not submit evidence of the use of the disputed trademark, and did not give a reasonable explanation of its intention for its massive trademark applications or of its source for the trademark designs.

As an investment management company solely owned by a natural person, the registrant’s behavior of filing massive applications could hardly be considered legitimate as it showed obvious subjective intention of duplicating or imitating others’ prior marks, which has exceeded the normal needs for business operation, and lacks genuine intention to use.

Considering the above facts comprehensively and in the absence of evidence to the contrary, the CNIPA concluded that the registrant’s massive applications has disrupted the normal order of trademark administration and was detrimental to a fair and competitive market order. The disputed mark’s registration was invalidated based on Article 44.1.

3. Comments

Both exemplary cases are related to Facebook, and admittedly, the distinctiveness of the mark FACEBOOK and the fame of Facebook have their contributions to the final favorable outcome.  However, Facebook’s persistence in pursuing the cases to next levels and our persistence in exhaust all possible evidence to show the other party’s bad faith are also of vital importance.

Regarding the first case against the individual who filed “facebook,” it was not particularly surprising, though disappointing, that both opposition and invalidation decisions were not favorable. After all, the adversary had only one mark in total and the class 6 goods carried weak relatedness with Facebook’s core business. So, at the court proceeding, our arguments focused on presenting evidence laid on the registrant’s qualification for filing trademark applications.

In China, any natural person who applies for trademarks should be a responsible person running an individual business or a lease holding rural household, or someone with the permission to engage in business operation. So, when filing new applications in the name of an individual, a copy of the applicant’s ID card and a copy of business license of their solely owned business or of the lease holding contract should be submitted.

According to our experience in dealing with trademark applications filed by individuals, often that some malicious applicants would submit forged credentials to obtain trademark registration by fraud. In the first case, after the court appeal case was officially docketed, we were well-grounded to request formally an official copy of the disputed mark’s application materials on file with the Trademark Office. Upon receiving the document, it was obvious that the individual filed the trademark application with forged document and the disputed mark was subsequently invalidated based on Article 44.1.

Devil lies in the details. When dealing with bad faith filings, every detail in the life of a trademark application counts and should be closely examined – the second case proves this strategy.

In the invalidation decision against “FBMENTIONS,” the CNIPA referred to the number of the registrant’s filings and some of its marks similar to famous brands, which constituted the basis for finding the bad faith of the investment management company. But when presenting the case to the CNIPA, other than above arguments, we discovered and sorted out the following facts so as to make a convincing argument of bad faith.

Background of the registrant: the duration of its existence, the actual payment of its registered capital, its business scope and the specific situation of the industry, the operation status and whether there are abnormal situations like administrative orders and fines, suspension of business, etc.

In this case, the registrant is an investment management company while the disputed mark is in class 38 for telecommunication services. The two industries both bear strong industry attributes and have strict qualification requirements, but they are not naturally related, which may indicate the low likelihood of genuine intention to use the mark because companies would not often apply for trademarks for goods or services that are too unrelated to its core business, unless they are expanding to other industries.

Circumstances of the registrant’s marks: the accumulative number of trademark applications, the designated classes of goods and services, the time span of the registrant’s submission of trademark applications, the applications similar to others’ marks with distinctiveness and fame, the repeated trademark applications, the marks on sale at public transaction platforms, etc.

In this case, the registrant applied more than 200 trademarks designated on goods and services with high access threshold, like automobiles in class 12, financial services in class 36, telecommunication services in class 38, education services in class 41, medical services in class 44. More importantly, many of the registrant’s marks are imitating the marks owned by worldwide giants such as Facebook, Apple, BMW, Canon, Uber, etc. These applications are inferences that the registrant has bad faith.

Related entities of the registrant: companies shared the same legal representative or senior executives, entities involved in trademark assignment with the registrant, entities associated with the registrant as revealed and proved in other cases, etc.

In some cases, the number of the adversary’s filings is not large; but when we expand the firing range and take a deeper look at its affiliates, we would find that the related entities in combination are large enough to turn the case around.

In this case, we found an affiliate with unusual connection. As shown by the trademark filing records, the registrant filed serial marks starting with “FB,” like “FBATWORK,” “FBSHOPPIN,” “FBWALLET,” etc.; and searching in the trademark database, we noticed that there was an individual who also filed similar series marks starting with “FB.” We conducted further searches using both names and found a special relationship between these two entities – the individual is recorded as the inventor of the registrant’s patent. And that individual happened to be a squatter whose bad faith has been repeatedly affirmed by the CNIPA and the court. Although the number of and the copies among the marks filed on the registrant’s own seem sufficient for our bad faith argument, the more evidence of bad faith, the higher success rate.

Other related actions: selling marks to actual proprietor or at public platform to third parties, registering domain names or e-stores and bundling with trademarks for transfer, coercing others for commercial cooperation, and demanding high transfer fees, license fees, tort compensation, litigation settlement fees, etc.

In order to find evidence from the above-mentioned aspects, we would recommend taking an in-depth investigation of the adversary from the following databases:

• Commercial and business registration
• Trademark
• Patent
• Copyright
• Domain names
• Court judgments and CNIPA decisions

Hope the above could shed some lights on how the tackle the bad faith squatters.

Follow us and stay tuned!

Follow us on LinkedIn! Email: trademark@beijingeastip.com Tel: +86 10 8518 9318 | Fax: +86 10 8518 9338 Address: Suite 1601, Tower E2, Oriental Plaza, 1 East Chang An Ave., Dongcheng Dist., Beijing, 100738, P.R. China

Tackling Bad Faith Trademark Applications or Registrations in China – Part II

by Yan Zhang, Miao Tian & Austin Chang

Previously, we shared the relevant stipulations regarding bad faith trademarks applications or registrations in the China Trademark Law 2019 (“Trademark Law 2019”), our insights on the required factors when applying bad faith stipulations, and the current trend and practices. In the next few articles, we will be sharing cases with analysis on how the CNIPA and the courts apply the laws to tackle bad faith trademark applications or registrations.

1. Opposition against “CISCO” filed by an individual

A Chinese individual filed an application for “” on August 27, 2018, designating on “Razors, electric or non-electric; Crimping irons; Beard clippers; Hair clippers for personal use, electric and non-electric; Depilation appliances, electric and non-electric; Pedicure sets” in class 8. That same Chinese individual filed seven applications in total, including one in class 7 and six in class 8.

Cisco filed an opposition against the opposed mark before the CNIPA. The CNIPA found that Cisco’s marks bore relatively high originality and the evidence can prove that, through Cisco’s consistent use and promotion, its marks have obtained relatively high fame among consumers. The opposed mark was identical with Cisco’s marks in terms of letter composition, so the CNIPA deemed that the applicant’s filing for the opposed mark showed bad faith of copying and imitating Cisco’s marks, which violated the good faith principle. According to Article 7 and Article 30 of the Trademark Law 2019, the CNIPA refused the opposed mark for registration.

Although procedurally the applicant has the right to file an appeal against the refusal decision, he did not appeal the decision and the opposed mark has been recorded as void.

2. Opposition and subsequent Appeal against “LAMAZE (stylized)”

A Chinese company filed an application for “” on March 20, 2017, designating on “Table cutlery [knives, forks and spoons]; Cutlery; Spoons; Spoons, table forks and table knives for babies; Hand operated hand tools; Knives [hand tools]; Sabres; Graving tools [hand tools]; Nail clippers; Flat irons” in class 8. The applicant has 14 applications in total, designating on goods of baby suits, babies’ pacifiers, toys, cutlery, household linen, etc. in different classes.

Lamaze filed an opposition against the opposed mark. The CNIPA found that, the evidence submitted by Lamaze can prove that, prior to the application of the opposed mark, Lamaze had registered and used the marks of LAMAZE and “LAMAZE in Chinese” and had obtained certain fame. Further, LAMAZE and “LAMAZE in Chinese” were fanciful words that bore certain originality. The opposed mark was identical with Lamaze’s marks in terms of letter composition, which was hardly a coincidence and the applicant failed to make reasonable explanations of its creation source. Thus, the applicant’s filing for the opposed mark showed bad faith of copying other’s famous prior marks and free-riding of the goodwill thereof, which not only was likely to cause consumer confusion, but also impaired the normal order of trademark registration and fair competition, and violated the good faith principle. Given the above, the CNIPA refused the registration of the opposed mark based on Article 7 and Article 30.

The applicant was not satisfied and filed a registration refusal appeal against the decision. In the appeal, the CNIPA affirmed the above filings and further ruled as follows:

The applicant filed altogether 14 applications, aside from the opposed mark, the other marks of “Vulli Sophie,” “B toys,” and “OXO tot” are all identical with others’ brands with strong distinctiveness and high reputation. As the applicant neither made reasonable explanations nor provided evidence of its actual use of the marks, the applicant’s behavior showed obvious bad faith of copying others’ marks, violated the good faith principle, impaired the normal order of trademark registration administration, and was detrimental to the market order and fair competition. The CNIPA concluded that the opposed mark constituted the circumstance of “obtaining registration by other unfair means” as stipulated in Article 44.1, and refused the opposed mark from registration accordingly.

The applicant did not further appeal the decision to the court, the opposed mark, as well as other series marks filed by the applicant have been recorded as void.

3. Comments

In China, the division of class and subclass set in the Similar Goods and Services Classification Guide plays an important role in determining if the goods or services are similar. When the right owner’s mark obtains certain fame but has not yet reached the degree of well-known, it is difficult to obtain cross-class or cross-subclass protection based on the provisions for similar marks used on similar goods and services in the Trademark Law 2019, even if the marks are identical or substantially similar. To combat such copycats, bad faith clause could be considered as a good alternative.

As we advised in Part I, several circumstances can be deemed sufficient to show bad faith:

• hoarding massive trademarks in various un-related classes;
• applying for many trademarks identical with or similar to multiple business signs with certain popularity or high distinctiveness;
• applying for a large number of trademarks within a short period of time and obviously beyond reasonable need; and
• having been found of being a squatter in earlier trademark cases.

A mark’s life depends on its use. In order to apply the bad faith stipulations, the easiest way is to prove that the other party does not have the intent to use the target mark and is hoarding trademarks for future profits through sales. For example, a large number of marks filed that designated a broad range of goods and services obviously exceed the reasonable need for regular business. These marks filed without genuine intention to use would soon be slapped with a price tag.

Accordingly, it would not be difficult to convince the CNIPA to find that an opposed mark’s applicant has bad faith, if, for example, it applied for hundreds or thousands of trademarks, or if its applications are all copies of numerous famous brands and designated in all 45 classes, or the marks are up for sale via public platforms or private channels.

In the above two cases, however, the applicants filed rather limited number of marks (seven) and designated goods for their core business, so the “hoarding” argument won’t be persuasive as these marks appear, on its face, to have “genuine intention to use.” Not to mention that in reviewing and adjudicating administrative trademark cases, the CNIPA is rather prudent and strict in applying bad faith articles, especially at the opposition stage. Having said that, East IP was up to the challenge.

Facing an uphill fight, East IP threw the following bullets and prevailed:

1. Demonstrate with solid evidence the cited mark’s strong distinctiveness and high fame;
2. Illustrate the copied brands with great details;
3. Find and demonstrate “unique traits” of the opposed mark’s applicant.

Demonstrating the cited mark’s distinctiveness would minimize the likelihood of coincidence in creating an identical mark. At the same time, the cited mark’s high fame implies the possibility that the opposed mark’s applicant has access to the opponent’s marks and the potential benefits from securing such a copied or imitated mark.

Regarding collecting the materials to prove high fame, our well-known mark series could shed some lights.

As for demonstrating applicant’s copying of the marks, the devil lies in the details and clarifications on presenting to the CNIPA and courts with facts and evidence showing the applicant’s imitational behavior, the clearer the more likely that they will reward you with a favorable decision.

In the CISCO case, among the seven marks filed by the applicant, six are imitations of Cisco, Philips, or Siemens, whose distinctiveness and fame are well acknowledged. In the LAMAZE case, all the 14 marks filed by the applicant are copies of brands in the baby products industry, for which we prepared a straightforward chart and supportive evidence.

Last but not the least, “unique traits” of the opposed mark’s applicant could turn out to be the more crucial factor that successfully offset the lack of “hoarding” in these two cases.

In the CISCO case, the applicant is an individual as opposed to a corporation. In China, any natural person who applies for trademarks should be a responsible person running an individual business or a leased rural household, or someone with the permission to engage in business operation. Compared with legal persons, natural person is required to file trademarks with designated goods or services limited to the business scope set in their business certificates or to their own agricultural products.  Hence, it can be legitimately presumed that an individual, different from corporations who may have multiple brands and carry out various business operations, should have less needs for filing multiple trademarks in various goods and services. Accordingly, though the absolute quantity of seven marks is not large, the fact that the applicant being an individual and the ratio of 6 copies and imitations out of the total 7 marks applied overcome the lack of “hoarding” trademarks.

In the LAMAZE case, the unique traits of the applicant is being a “peer” – the applicant is engaged in the baby products industry, the marks it copied are brand owners in baby products industry, the applied-for goods under the copied marks are related to baby products. A player in the same industry not only indicates a high possibility of awareness over the copied brands, but also increases the likelihood of consumer confusion if the copied marks are to be registered and used on the identical goods.

Accordingly, the fact that the applicant resides in the same line of business and the odd proportion of copied trademarks to overall applications serve to offset the shortage of “hoarding.”

Like we stressed in Part I, there is interdependence among the relevant factors for bad faith, and that a relatively small number of trademark filings may be offset by 1) a greater degree of earlier marks’ distinctiveness, 2) a greater degree of the proprietaries’ fame, 3) a higher level of association of the professionalism of the designated goods or services, etc. Similarly, a lesser degree of similarity between the marks may be offset by 1) a closer distance of two parties’ domicile, 2) a closer relatedness of the two parties’ lines of business, 3) a larger amount of the applicant’s trademark filings, etc.

An in-depth investigation of the opposed party and a comprehensive assessment of all factors are highly recommended if one expects a good outcome.

Next, we will continue to share different cases to showcase how to tackle squatters in China.

Follow us and stay tuned!

Follow us on LinkedIn! Email: trademark@beijingeastip.com Tel: +86 10 8518 9318 | Fax: +86 10 8518 9338 Address: Suite 1601, Tower E2, Oriental Plaza, 1 East Chang An Ave., Dongcheng Dist., Beijing, 100738, P.R. China

Tackling Bad Faith Trademark Applications or Registrations in China – Part I

by Yan Zhang, Miao Tian & Austin Chang

In this series, we are going to share our insights on how to best deal with bad faith trademark applications, a constant headache for foreign brand owners due to China’s first-to-file system. We will begin with the relevant stipulations in the Chinese Trademark Law of China (2019 Version) (“Trademark Law 2019”), the required factors when applying the laws, the current trend in tackling bad faith trademark applications or registrations, and finally demonstrate how to tackle the bad faith trademark applications or registrations with our successful cases.

1. Overview of the relevant stipulations in the Trademark Law 2019

We will start with an overview of the relevant portions of the provisions in the Trademark Law 2019.

Article 4

A malicious application for trademark registration not filed for the purpose of using the trademark shall be refused.

Article 7.1

The good faith principle shall be upheld in the application for trademark registration and in the use of trademarks.

Article 44.1

A registered trademark shall be declared invalid by the Trademark Office if […] its registration is obtained by fraudulent or other improper means. Other entities or individuals may request the Trademark Review and Adjudication Board to declare the aforesaid registered trademark invalid.

These are the key articles that shall be applied when the CNIPA (“China National Intellectual Property Administration,” formerly the Trademark Office and Trademark Review and Adjudication Board) and the courts (Beijing Intellectual Property Court and Beijing High People’s Court) establish a bad faith case.  Typically, at the opposition stage, examiners tend to apply Articles 7, while Article 44.1 is commonly invoked in invalidation actions; and we expect to see more application of Article 4 after the amendment of the Trademark Law 2019 that explicitly added the requirement of “intention to use” for filing trademark applications. Different from the CNIPA, the courts tend to apply Article 44.1 not only to invalidate registered trademarks, but also against applications pending in opposition proceedings. In recent years, there has been an increasing reliance on Article 44.1 in cases where the applicant squatted quite a number of others’ famous marks.

2. The required factors when applying the bad faith clause

Following the relevant laws regarding bad faith trademark applications and registrations, we will move onto the required factors when applying the bad faith clause.

First, the Beijing High People’s Court Guidelines for the Trial of Trademark Right Granting and Verification Cases specify what constitutes a bad faith application without intent to use provided in Article 4 and “other improper means” provided in Article 44.1 of the Trademark Law 2019.

Section 7.1 – Application of Article 4 of the Trademark Law

If any trademark applicant obviously lacks the true intent to use and falls into any of the following circumstances, this applicant may be determined to violate the provisions of Article 4 of the Trademark Law 2019:

(1) applying for registration of the trademark identical with or similar to that of various subject 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; or

(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.

Section 17.3 – Determination of specific circumstances of “other improper means” relating to the application of article 44 of the Trademark Law 2019

A trademark under any of the following circumstances may be determined to fall under the circumstances that “the registration is obtained by other improper means” provided in Article 44.1 of the Trademark Law 2019:

(1) the trademark applicant in dispute applies for multiple trademark registrations which are identical with or similar to others’ trademarks with higher distinctiveness or popularity, including the application for trademark registrations of different owners on identical or similar goods or services and also the application for trademark registrations of the same owner on non-identical or dissimilar goods or services;

(2) the trademark applicant in dispute applies for multiple trademark registrations which are identical with or similar to any other corporate names, names of social organization, the names, packaging, decoration and commercial signs of goods with certain influence; or

(3) the trademark applicant in dispute sells the trademark, or file an infringement lawsuit against the users of the prior trademark after failing to transfer at a high price.

The guidelines explicitly provides that bad faith will be inferred where a squatter targets different trademarks belonging to a particular trademark owner. This will significantly improve the applicability of Article 44.1 and turn it into a powerful weapon against those “sophisticated” squatters who copy various trademarks owned by a particular trademark owner instead of different owners.

Second, the State Administration for Market Regulation also published Several Provisions for Regulating Applications for Trademark Registration, which set parameters for determining bad faith practices and bad faith applications for trademarks that are not intended for use, such as number of trademarks applied, classes of trademarks applied, transaction records of trademarks, business operation of the applicant, effective rulings on infringement or bad faith registration, and among other things.

To sum up, if the owner or applicant of a target mark fits any or all of the below circumstances, it is recommended that brand owners considering taking actions safeguarding valuable intellectual property assets.

• hoarding of massive trademarks in various un-related classes;
• applying for many trademarks identical with or similar to multiple business signs with certain popularity or high distinctiveness;
• applying for a large number of trademarks within a short period of time and obviously beyond reasonable; or
• having been found of being a squatter in earlier trademark cases.

Note, however, among the said circumstances, there is not yet a definition for “a large number” or “severe circumstances.”

In practice, we find that when performing a comprehensive assessment in establishing bad faith, some interdependence among the said relevant factors usually occur.  For instances, a relatively small number of trademark filings may be offset by 1) a greater degree of earlier marks’ distinctiveness, 2) a greater degree of the proprietaries’ fame; 3) a closer distance of two parties’ domicile, 4) a closer relatedness of the two parties’ lines of business, 5) a higher level of association of the professionalism of the designated goods or services, etc.

Further, the CNIPA published in March 2021 the Notice on Special Initiative on Cracking Down on Malicious Trademark Squatting (“Notice”), which states that the CNIPA is striving to combat the seven circumstances of malicious trademark squatting which aim at obtaining improper interests, disturbing the trademark administration order, and causing detrimental social impacts. One of the methods to reject bad faith applications is adopting a “fast rejection mechanism” when there are suggestive indications that the applications was filed in bad faith during the trademark application process. Likewise, during oppositions and cancellations, if there are suggestive indications of bad faith, these cases would be prioritize or joined for expedited examination to reject or invalidate those marks.

The Notice shows the CNIPA’s firm standpoint to combat squatting, and from the recent opposition and invalidation decisions, we see a trend in compliance with such determination.

While we will share CNIPA decisions and court judgments applying the bad faith clauses, we set here some drops in the bucket. Spoiler alert!

• At substantial examination stage, the CNIPA refused an individual’s applications by finding that his behaviors of filing fifteen applications in two days, totaling thirty applications as “obviously exceeding regular business needs” and “should be considered as malicious trademark applications not for the purpose of use”;
• In an opposition case, the CNIPA found the opposed party “in violation of the legislative intent of securing registration by improper means” when the opposed party has four marks in total;
• In an invalidation action, after the CNIPA already supported the proprietor under Article 30 of the Trademark Law 2019 (similar marks used on similar goods/services), it further invoked Article 44.1 and affirmed the applicant’s bad faith because it domiciled close to the proprietor and had applied seventeen marks similar to the proprietor’s mark.

Enough for this week, follow us and stay tuned for more cases in the upcoming issues!

Follow us on LinkedIn! Email: trademark@beijingeastip.com Tel: +86 10 8518 9318 | Fax: +86 10 8518 9338 Address: Suite 1601, Tower E2, Oriental Plaza, 1 East Chang An Ave., Dongcheng Dist., Beijing, 100738, P.R. China

Well-Known Mark Recognitions in China – Part IV

by Yan Zhang, Feifei Bian & Austin Chang

In Part III of this series, we selected our representative cases to further illustrate how the courts apply well-known mark recognition and extend the scope of protection for a well-known mark. In Part IV, the finale of our well-known mark recognition in China, we would like to share with you our insights on how to collect evidence for well-known mark recognition for goods and service in the software and internet industry. Collecting evidence for intangible items is already demanding. Collecting evidence for intangible items for well-known recognition is even more challenging but possible.

1. “PHOTOSHOP” v. “photoshop”

Beijing Liantuochuangxiang Technology Development Co., Ltd. (“Liantuo”) applied for the “photoshop” mark (“Disputed Mark”) with App. No. 9329485 in Class 3 for “lipstick; nail polish; cosmetics; cosmetic pens; eyebrow cosmetics; perfume; eyebrow pencil; rouge; eye shadow cream; dyed lash oil” on April 12, 2011.

Disputed Mark	Cited Mark

Adobe owns a prior registration for the “PHOTOSHOP” mark (“Cited Mark”) with App. No. 573256 in Class 9 for “computer program.”

Adobe filed an opposition against the Disputed Mark on April 20, 2012 before the CNIPA. The CNIPA rendered a decision allowing the Disputed Mark to be registered. Unsatisfied, Adobe appealed but the CNIPA affirmed the Disputed Mark’s registration. Adobe filed an administrative appeal against the CNIPA before the Beijing First Intermediate Court. The court rejected Adobe’s appeal against the CNIPA. Adobe appealed to the Beijing High Court which, finally, ruled in favor of Adobe and ordered the CNIPA to reissue its decision.

In this case, the Beijing High Court found that Adobe submitted sufficient evidence in proving the Cited Mark enjoyed high fame through long-term and extensive promotion and use. For example, thousands of media reports from the People’s Daily, Guanming Daily, China Computer News, Computer World, etc. were submitted as evidence proving the Cited Mark enjoyed high fame. Adobe also submitted the various awards “PHOTOSHOP” received, such as “Computer World’s Annual Product Award” and “Milestone Product of China Information Industry 20 Years Award.” Adobe provided records of its annual certificate examination for “National Computer Application Technical Certificate for Photoshop 6.0” since 2001, as well as the number of “PHOTOSHOP” downloads from the Internet. Given the above, the court held that Adobe’s evidence met the criteria to recognize the “PHOTOSHOP” mark as a well-known mark.

Considering that the Cited Mark had strong inherent distinctiveness and the Disputed Mark was identical to the Cited Mark, the court found that the Disputed Mark was a copy of the Cited Mark. Although the Disputed Mark’s designated goods for “lipstick” had certain variance with the Cited Mark’s approved goods for “computer program,” the relevant consumers for the two marks would still overlap. After comprehensively considering the above analysis, namely, the Cited Mark had inherent distinctiveness, enjoyed high fame, the two marks were identical, the court concluded that the Disputed Mark’s designated goods for “lipstick” was likely to weaken the close association between the Cited Mark and its approved goods for “computer program,” dilute the Cited Mark’s distinctiveness, and damage Adobe’s interests.

2. “Mei Tu Xiu Xiu and MEITUXIUXIU” v. “Mei Tu Xiu Xiu”

An individual Rongxiong BEI applied for the “Mei Tu Xiu Xiu and MEITUXIUXIU” mark (“Disputed Mark”) on April 19, 2013 with App. No. 12454059 in Class 3 for “detergent; grinding paste; rose oil; toothpaste; dried petal and perfume mixture (perfume); animal cosmetics; air fragrance; cosmetics; shampoo; shoe polish,” and the Disputed Mark was approved for registration on September 28, 2014.

Disputed Mark	Cited Mark

Xiamen Meitu Technology Co. (“Meitu”) applied for the “Mei Tu Xiu Xiu” mark (“Cited Mark”) on December 8, 2008 with App. No. 7099841 in Class 9 for “optical disk; information processor (central processing unit); computer software (recorded); electronic dictionary; recorded computer program (program); computer; computer program (downloadable software); network communication equipment; electronic sound device with books; magnetic data medium,” and was approved for registration on October 14, 2010.

Meitu filed an invalidation against the Disputed Mark with the CNIPA on July 24, 2015. Upon adjudication, the CNIPA held that the Disputed Mark shall be invalidated. BEI appealed to the Beijing IP Court. The Beijing IP Court rejected BEI’s appeal. BEI then appealed to the Beijing High Court. The Beijing High Court affirmed the CNIPA’s decision and ruled in favor of Meitu. BEI, still unsatisfied, petitioned to the Supreme People’s Court for retrial but the petition was rejected.

In its decision, the Beijing High Court found that prior to the Disputed Mark’s application date, the Cited Mark had occupied a rather large market share and covered wide range of regions for sales through long-term, extensive, and continued promotion and use on its approved goods for “computer software (recorded), recorded computer program (program), computer, etc.” The Cited Mark constituted as a well-known mark because it had been known to the relevant public and enjoyed high fame.

The court reasoned the Cited Mark consisted of four Chinese characters “Mei Tu Xiu Xiu” that did not have particular meaning and had inherent distinctiveness. The Disputed Mark was a copy and imitation of the Cited Mark because the Disputed Mark’s distinctive part was identical with the Cited Mark. Although the two marks designated goods in difference classes, the relevant consumers and target consumers overlapped. Considering the Cited Mark was a well-known mark and that the Disputed Mark’s distinctive part was identical to the Cited Mark, the relevant consumers were likely to be confused regarding the relationship between the two marks when purchasing the Disputed Mark’s designated goods. Such confusion would weaken the Cited Mark’s distinctiveness, unfairly exploit the Cited Mark’s market reputation, and damage the Cited Mark and Meitu’s interests.

3. Beijing East IP analysis and comments

As you may have reckoned, the photoshop and Mei Tu Xiu Xiu cases shared some similarity in that the courts recognized both cited marks as well-known marks on computer program related goods and gave cross-class protection against lipsticks and cosmetic related goods. The two focal points in these two cases are: 1) evidence collection for obtaining well-known mark recognition in connection with software application related goods, and 2) the association between disputed mark’s designated goods or services and cited mark’s approved goods or services.

a. Evidence collection for obtaining well-known mark recognition mark designating software related goods

It is important to note not to apply Article 14 of the Chinese Trademark Law verbatim when collecting evidence for well-known mark recognition. Instead, consider utilizing relevant public’s understanding and recognitions on the marks and the goods involved. In the photoshop case, we supplemented large amount of evidence in the second instance trial to prove that the cited mark had reached well-known status prior to the disputed mark’s application date, including media reports, awards, rankings, sales records, Chinese brochures, China subsidiaries information, China and worldwide judicial and administrative adjudications, to name a few. Since Photoshop is a software, we particularly emphasized Photoshop’s versions, downloads, and user numbers, as well as other facts reflecting that Photoshop is now included in national certificate examinations, included as part of national computer examination, and used as teaching materials. We argued that Photoshop can be considered as well-known because it is included in the national computer application certificate examination and numerous people had taken such exam. Compared to foreign entities, domestic entities such as Meitu tend to have the up hand in collecting evidence originated from China. However, it is more challenging for internet companies than traditional companies collecting evidence for well-known mark recognitions considering the evidence are often intangible. When collecting evidence for Meitu’s cited mark, we collected large amount of use evidence, number of users, product sales records, promotional and advertisement records, and awards received to prove that the cited mark satisfied the well-known mark recognition threshold. For example, for use evidence, evidence of earliest use and software product update records were presented. For product sales records, revenue, profit, tax, sales agreements, collaborators, and regions that products bearing the cited mark covered were presented. Other evidence such as commercial and promotional agreements, fees, media reports, and the actual awards received were submitted as evidence proving the cited mark has reached well-known status. The second instance court found that although Meitu’s profit between 2010 and 2013 was relatively low, profit was merely one of the many factors in determining the cited mark’s well-known status and fame. When determining whether a mark reached well-known status, the focus should be laid on the distinctiveness and well-known status of the cited mark on the approved goods, as well as the internet industry’s operation features, namely, software development and market promotion related investment would likely exceed profit at the beginning.

b. The association between disputed mark’s designated goods or services and cited mark’s approved goods or services

Often, it is difficult to prove the association between disputed mark’s designated goods or services and cited mark’s approved goods or services, especially when these goods or services are in different classes. For example, in the photoshop case, we submitted online media reporting that the approved goods, software, for Adobe’s “PHOTOSHOP” mark can provide various beautify functions and use visual aids during trial to detail how the relevant public use cosmetics prior to taking photos, and subsequently edit photos using the PHOTOSHOP software for beautify purposes to create better photos or pictures presentations. We argued that the disputed mark’s designated goods for “cosmetics” and the cited mark’s approved goods for “software” all carried the functions of beautify human’s faces or images. Thus, the target consumers overlapped and are closely related. Combining the above evidence with the “PHOTOSHOP” mark’s distinctiveness and fame, we further argued that the disputed mark’s registration and use would weaken the one-to-one and unique association between Photoshop and Adobe, dilute the distinctiveness of the well-known “PHOTOSHOP” mark, and damage Adobe’s interests.

Thank you for tuning in to our well-known mark recognition series. If you have any questions, please feel free to contact us.

Next, we will share our experience and insights regarding bad faith trademark registration and how to counter trademark squatting. We selected this topic because China’s first-to-file system can be difficult to navigate for foreign stakeholders who may not always have the need to apply for trademarks in China when they first start their businesses outside of China.

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