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

On May 20, 2021, the Supreme People’s Court (“SPC”) rendered a final decision in favor of Tommy Bahama (“TB”) for the “TOMMY BAHAMA” trademark opposition cases in Classes 9, 14, and 18. In its decisions, the SPC revoked the lower courts’ and the CNIPA’s decision. The SPC’s final decision marvelously closed TB’s decade-long battle against the other party, who sought return of its own trademarks. We were thrilled to assist TB from the second instance court appeal to winning the retrial before the SPC.

The issue presented in this case was whether the opposed marks constituted as the circumstances of “obtaining registrations by other unfair means” as described in Article 41(1) of the Chinese Trademark Law 2001. The hurdle lied in the interwoven relationships and between various parties involved, their actions, and protecting interests of a particular entity and public orders.

The SPC found that the other party and other closely related third parties did not have justifiable explanations for applying trademarks identical or highly similar to “TOMMY BAHAMA,” TB’s business signs and designs. Meanwhile, the other party used “TOMMY BAHAMA” to register corporate names and domain names and cause confusion among the relevant public to believe that the other party is the owner of the “TOMMY BAHAMA” trademarks through promotions on websites. What’s more, the related third parties and their legal representatives was a trademark agent who should have known the relevant trademark regulations and laws, abide by the good faith principle in conducting businesses, and respect others’ rights. However, the other party and the related third parties obviously violated the principle of good faith and applied multiple “TOMMY BAHAMA” trademarks, used it as corporate name and domain name for business purposes with the intent to obtain unjustified interests. Such actions amounted to subjective bad faith. The other party and the related third parties also applied other entities’ rightful trademarks, disturbed the trademark registration order. The SPC concluded that consider the actions taken by the other party and the related third parties surrounding the “TOMMY BAHAMA” trademark and other entities’ trademarks without justified reasons, the opposed marks constituted as the circumstances of “obtaining registrations by other unfair means” as described in Article 41(1) of the Chinese Trademark Law 2001.

Beijing East IP’s Yan Zhang, Yanfang Fu, and Di Yuan were involved at the second instance trial phase before the Beijing High Court. Upon further investigating and studying the case, we were certain that the key in overturning the lower court’s decision lied in the said application of “obtaining registrations by other unfair means.” We began collecting evidence regarding the bad faith among the other party, related third parties, and the mastermind behind. During evidence collection, we found the relationships between the other party, the other party’s shareholders and trademark agent, the opposed marks’ applicant and assignee were particularly intertwined, namely, although these parties were related, they could not be simply connected through shareholders (one of the common strategies we use when a case involves more than one party). It was critical for us to connect the dots between the said parties’ network because simply relying on the other party’s trademark filings was insufficient to hold it for “obtaining registrations by other unfair means.” To conquer such challenge, our attorneys investigated and dissected available information to find the collusion between the involved parties in copying “TOMMY BAHAMA.” Based on the evidence found, we persuaded the judges that not only the other party’s actions should be considered, but the third parties’ actions should also be considered. These actions include trademarks applied, use of the trademarks, similarity and relatedness between the applied trademarks and other famous corporate names or logos, and trademark assignments. We argued that these actions could prove that the other party and the related third parties had subjective bad faith. The SPC supported our allegations and held that the actions of the other party and the related third parties disturbed the trademark registration orders and constituted as “obtaining registrations by other unfair means.”

Remarks: this case was brought to trial by the SPC in 2018 and according to the SPC’s 2018 annual intellectual property report, in the 1,243 retrial cases, 976 cases were rejected, 190 were brought to trial by the SPC. That is, only 15.3% of the retail petitions would be actually tried by the SPC. Further, in 2020, there were only 305 retrial cases and even fewer cases were overruled.

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

Weekly China Trademark News Updates

February 22, 2021

1. Burberry obtained its first preliminary injunction order against Baneberry

Burberry Limited (“Burberry”) registered the “BURBERRY,” “ ,” “,” and “,” marks on clothing and related goods. Among them, “BURBERRY” and “” marks were recognized as well-known marks multiple times. Xinboli Trading (Shanghai) Co., Ltd. (“Xinboli”) is the licensee of the marks “BANEBERRY” and “” (“Licensed Marks”).

Xinboli had been using the Licensed Marks and similar marks to Burberry’s marks “” and “” on clothing related goods across all Burberry’s clothing styles, designs, hangtags, purses, and bags, as well as the respective products’ shape. What is more, Xinboli used the royal arms of the United Kingdom (“Royal Arms”) to falsely promote its brand history and sources. Xinboli even opened its own brick and mortar shops or clearance shops in 2019 to sell its goods. Xinboli quickly expanded its sales and extended its coverage. At the time Burberry filed for the preliminary injunction at the end of 2020, Xinboli had opened 40 brick and mortar stores in large shopping malls and outlets in first and second tier cities, almost outmatched Burberry’s brick and mortar stores in mainland China. Xinboli also opened its online stores on TMall.com, WeChat, Pingduoduo, and Little Red Book. Xinboli’s actions caused confusion among the relevant public. Burberry sued Xinboli for trademark infringement and unfair competition. After docketing its case, Burberry filed a petition for preliminary injunction against Xinboli.

On January 29, 2021, the Suzhou Intermediate Court held the preliminary injunction hearing. The court ordered Xinboli to immediately stop using the Licensed Marks and immediately stop manufacturing and sell products bearing similar marks to Burberry’s G732879 “” mark and G987322 “” mark; also immediately stop using the “” Royal Arms logo on the hangtag of all its products and stop all false promotions.

In reaching its conclusion, the court examined 1) the status and stability of Burberry’s rights, 2) Xinboli’s likelihood of infringement, 3) urgency of Burberry’s petition for preliminary injunction, namely, whether Burberry would suffer irreparable harm unless the injunction is issued, 4) whether impairing the balance between the two parties and issuing the injunction would damage public interests.

Regarding Xinboli’s likelihood of infringement, the court found that Burberry’s “BURBERRY” and “” marks were likely to be recognized as well-known marks. Although the Licensed Marks used by Xinboli were registered for more than 5 years, Burberry’s “BURBERRY” and  ” marks were factually well-known prior to the License Marks’ application dates. Considered the Licensed Marks prosecution history, assignments, and actual use, the Licensed Marks shall be seen as bad faith registrations and not limited by the 5-year statute limitation. Moreover, Xinboli’s infringing use were bad faith copying and imitating Burberry’s well-known marks, used a mark similar to the Royal Arms, extensively copied all Burberry’s products, and intentionally copied Burberry’s brand history for false promotional activities. Xinboli’s actions were likely to infringe upon Burberry’s trademark right and amounted unfair competition.

Regarding the urgency of Burberry’s petition for preliminary injunction, namely, whether Burberry would suffer irreparable harm unless the injunction is issued, the court found that first, the scale of the alleged infringing activities was extensive and with high growth rate, while failure to issue the injunction would cause Burberry’s market share to be occupied and suffer irreparable economic harm. Second, the alleged infringing act would highly likely to cause confusion and mistake on the market, while failure to issue the injunction would seriously disparage Burberry’s goodwill and tarnish the significance and distinctiveness of Burberry’s well-known marks. Last, sales for the Chinese New Year’s holiday was approaching, which made it factually urgent to issue an injunction against the alleged infringing activities.

2. The Supreme People’s Procuratorate released the 26th batch of Guiding Cases of the Supreme People’s Procuratorate

On February 8, the Supreme People’s Procuratorate released the 26^th batch of the Guiding Cases of the Supreme People’s Procuratorate. We handpicked the following to share with our readers.

a. Selling counterfeit products bearing registered Starbucks trademarks

Between May 2017 and January 2019, defendant Qiucheng Deng knowingly purchased counterfeit instant coffee bearing “XING BA KE in Chinese (星巴克)” and “STARBUCKS VIA” trademarks from Hong Kong with below-the-market price and sold some 21,304 products to defendant Shuangshan Food (Xiamen) Co., Ltd. (“Shuangshan”) for RMB 3.83 million (USD 592,000). Qiucheng Deng knew that its company Bai Yi Co., Ltd. did not have authorization from Starbucks Corporation but forged an authorization letter to authorized Shuangshan for sale of counterfeit Starbucks instant coffee. During the said period, the defendants used the forged authorization letter to sell 19,264 counterfeit Starbucks instant coffee to more than 50 shops in Wuxi, Hangzhou, Shantou, Wulumuqi, and 18 other provinces for RMB 7.24 million (USD 1.12 million).

On September 26, 2019, People’s Procuratorate of Xinwu District, Wuxi City, Jiangsu Province (“Xinwu Dist. Procuratorate”) prosecuted the defendants for selling counterfeit products. On December 6, 2019, Xinwu Dist. The court rendered first instance decision which ordered defendant Shuangshan to pay a fine of RMB 3.2 million (USD495,000) and sentenced defendants Qiucheng Deng and 4 others to jail-terms between 21 months and 5 years.

Consider numerous public consumers’ interests and public interests were damaged, the Wuxi Consumer Protection Commission initiated a civil public interest lawsuit sua sponte claiming treble punitive damages. The Wuxi Intermediate Court docketed the case on September 18, 2020.

b. Forging “CISCO,” “HP,” and “HUAWEI” trademarks

Between 2015 and April 2019, defendant Changlong Yao arranged defendant Jin Gu to purchase printers, labels, and fiber optic transceiver module for forging “CISCO,” “HP,” and “HUAWEI” fiber optic transceiver module products and arranged defendant Zihao Wei and two other people for selling abroad. Defendants Changlong Yao and Jin Gu manufactured and sold more than 100,000 pieces of the said forged fiber optic transceiver module for RMB 31.6 million (USD 4.88 million). 11,975 pieces of counterfeit fiber optic transceiver module and switches were seized on site, worth more than RMB 3.83 million (USD 592,000). The sales amount of Zihao Wei and two others were about RMB 7.45 million (USD 1.15 million), RMB 4.29 million (USD 663,000), and RMB 3.52 million (USD 544,000) respectively.

On September 6, 2019, People’s Procuratorate of Donggang District, Rizhao City, Shandong (Donggang Dist. Procuratorate) prosecuted the defendants before the Donggang Court. On December 12, 2019, the Donggang Court rendered the first instance decision and sentenced defendants Changlong Yao and four others for jail-terms between 26 months and 4 years. Changlong Yao was fined for RMB 5 million (USD 773,000) and the rest of the defendants were fined for an amount between RMB 140,000 to 250,000 (USD 21,600 to 38,600). The decision has come into effect.

Selling counterfeit products in or out of mainland China without authorization from the registered trademark owner in China violates China’s trademark law and regulations, infringes upon the registered trademark owner’s exclusive trademark right, damages goods goodwill, and constitutes a crime where the circumstances are serious.

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Weekly China Trademark News Updates

February 8, 2021

1. BP’s Helio logo recognized as a well-known mark against China Fuel

BP P.L.C. (“BP”) appealed the unfavorable decision of an invalidation petition ruled by the CNIPA regarding the sunflower design mark owned by China National Fuel Group Co., Ltd. (“China Fuel”) in Class 4 with Reg. No. 7916482 (“Disputed Mark”). On the appeal, the Beijing Intellectual Property (“IP”) Court held that BP’s cited mark shall be recognized as a well-known mark on industrial oil, greases, fuel, and other related goods. The Disputed Mark constituted as an imitation of BP’s prior mark and shall be invalidated.

BP’s Cited Mark 1	BP’s Cited Mark 2	China Fuel’s Disputed Mark

In its ruling, the Beijing IP Court concluded that BP’s evidence supported its petition recognizing BP’s registered trademarks (Reg. Nos. G763249 and G744047) (“Cited Marks”) as well-known marks on industrial oil, greases, fuel, and other related goods before the Disputed Mark’s application date. The court found that 1) the composition, design, and overall appearances between the Cited Marks and the Disputed Mark were similar, 2) China Fuel adopted the gradian style design found on the Cited Marks onto the Disputed Mark in actual use, which can be regarded as intentionally causing confusion, and 3) China Fuel situated in the same industry as BP and should have known about the fame of the Cited Marks but China Fuel failed to refrain from using a similar mark. Accordingly, the Disputed Mark was an imitation of the Cited Marks. The Disputed Mark’s use on fuel and gas related goods were highly similar or closely associated with the goods that made the Cited Marks well-known. The Disputed Mark’s registration and use was likely to cause confusion to the public and damage BP’s interest.

2. Peppa pig energy saving desk lamp ruled as trademark infringement

Entertainment One UK Limited (“Entertainment One”) sued Shanghai Xunmeng Information Technology Co., Ltd. (“Shanghai Xunmeng”) for infringing its exclusive trademark right by selling “Peppa pig energy saving desk lamp” on Pinduoduo e-commerce platform before the Shanghai IP Court.

Peppa Pig Energy Saving Desk Lamp

The Shanghai IP Court found that Entertainment One’s “Xiao Zhu Pei Qi (Peppa pig in Chinese)” trademark in Class 9 for “computer game software (recorded), and electronic publication (downloadable)” related goods has enjoyed relatively high fame and goodwill through continuously promoting and using the mark on animations and electronic publication goods. The “Xiao Zhu Pei Qi (Peppa pig in Chinese)” trademark shall be recognized as a well-known mark. The packaging of “Xiao Zhu Pei Qi (Peppa pig in Chinese)” desk lamp sold by Shanghai Xunmeng imitated and copied the “Xiao Zhu Pei Qi (Peppa pig in Chinese)” trademark owned by Entertainment One, which was likely to mistake the public, infringed upon Entertainment One’s exclusive trademark right, and damage its interest.

3. Paris Baguette in Chinese (巴黎贝甜) recognized as unregistered well-known mark

Ai Si Bi Xi Investment Co., Ltd. (ASBX) is the operator of the famous bakery “Paris Baguette” or “Paris Baguette in Chinese (巴黎贝甜).” ASBX sued Beijing Bali Beitian Enterprise Management Co., Ltd. (“Beijing Beitian”) in the Beijing Intellectual Property (“IP”) Court for infringing its unregistered well-known mark right by registering numerous “Ba Li Bei Tian in Chinese (芭黎贝甜)” marks and promoting the marks “Paris Baguette” and “Paris Baguette in Chinese (巴黎贝甜)” on Beijing Beitian’s website.

Cited Marks	Disputed Marks

The Beijing IP Court found that ASBX’s evidence supported its petition to recognize the marks “Paris Baguette” and “Paris Baguette in Chinese (巴黎贝甜)” reached well-known status among relevant consumers as unregistered well-known marks. Beijing Beitian used “Paris Baguette in Chinese (巴黎贝甜)” prominently on its WeChat public account and website caused relevant public associated “Paris Baguette in Chinese (巴黎贝甜)” with Beijing Beitian. Such use was sufficient to mistake the source of services and infringed upon ASBX’s interests on the unregistered well-known marks “Paris Baguette” and “Paris Baguette in Chinese (巴黎贝甜).” Meanwhile, ASBX’s unregistered marks “Paris Baguette” and “Paris Baguette in Chinese (巴黎贝甜)” had relative high fame when Beijing Beitian was established. Under such circumstance, Beijing Beitian’s registration and use of the mark “Ba Li Bei Tian in Chinese (芭黎贝甜),” that was highly similar to the unregistered mark “Ba Li Bei Tian in Chinese (巴黎贝甜),” as its trade name was likely to cause confusion among the relevant public and violated the Chinese Anti-unfair Competition Law. The Beijing IP Court ordered Beijing Beitian to immediately stop any infringing activities and pay damages and reasonable legal costs of RMB 1.5 million (USD 231,600).

4. Building a high-standard market system and strengthening intellectual property protection

The General Office of the Communist Party Central Committee of China and the General Office of the State Council have issued the “Action Plan for Building a High-Standard Market System,” which calls for strengthening intellectual property rights protection. According to this action plan, it will formulate and promulgate judicial interpretations on several issues concerning the applicable law of punitive damages for intellectual property infringement, and strictly implement the punitive compensation system for infringements against malicious infringement, long-term and continuous infringement, and trademark infringement.

This action plan also aims to promote formulation and revision of local regulations such as trademark agency management measures, geographical indication product protection regulations, and official mark protection measures. Research and formulate rules for the protection of intellectual property rights in the field of pharmaceutical patent protection, cross-border e-commerce intellectual property protection regulations, and publish guidelines for corporate intellectual property protection and country-specific guidelines for intellectual property protection.

Finally, the action plan aims to optimize the application and examination procedures for patents and trademarks, improve examination efficiency, and reduce examination time. Establish and improve the evaluation and management system of intangible assets such as patents and trademarks.

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Weekly China Trademark News Updates

February 1, 2021

1. The CNIPA published 2020 Annual Trademark Statistics

In 2020, 5.76 million marks were registered from applicants worldwide. Although 2020 was hit by the pandemic, domestic applicants managed to file 7,553 trademark applications under the Madrid Protocol before the CNIPA.

With a striking 64.7% year-on-year growth, the CNIPA closed 149,000 trademark oppositions. Among them, 55,079 cases were allowed for registration, 38,988 cases were refused for registration, and 9,176 cases were partially allowed for registration.

358,000 other trademark adjudication cases (including rejection appeals, registration refusal appeals, invalidation actions, non-use cancellation appeals, etc.) were closed, achieving a 7.8% year-on-year growth. Among them, the success rate for refusal appeal was 33.2%, the success rate for invalidation was 70.4%.

The average trademark examination time had been shortened to 4 months.

Since 2019, the CNIPA has been organizing and executing the “Blue Sky” Special Initiative among IP agencies nationwide to further strengthen supervision on questionable agencies and enhancing the continued healthy development. By 2020, 2,950 agencies have been interviewed and 1,095 were ordered of rectification, 23,000 agencies have completed self-inspection and made credit commitment.

2. Kinder Surprise Egg affirmed as goods packaging decorations of certain influences, Ferrero received RMB700,000 (USD108,000) in damages

Soremartec SA, Ferrero SpA., and Ferrero Trading (Shanghai) Co., Ltd.t (“Ferrero”) sued Chaozhou City Chaoya Distrct Yaliwen Food Factory (“Yaliwen”) for trademark infringement and anti-unfair competition claiming RMB 1 million (USD 154,750) in damages.

The second instance court held that Yaliwen’s infringing products were similar to Ferrero’s registered trademarks and used on identical goods, which were likely to cause confusion to the relevant public and infringed upon Ferrero’s trademark rights. Meanwhile, the overall appearance of the infringing products was similar to Kinder Surprise Egg’ packaging and decoration, which was likely to cause confusion to the relevant public on the source of goods and amounted to unfair competition.

Kinder Surprise Egg

Infringing goods samples

In finding trademark infringement, the second instance court reasoned that overall appearances or the various compositions as used on every infringing products were likely to cause confusion and were similar to Ferrero’s registered trademarks. In particular, the egg-shaped products, the words’ compositions, the wave design separating the overall designs, and the milk drop design were all similar to the composition and arrangements of various elements found in Ferrero’s registered trademarks. The second instance court concluded that consider Ferrero trademarks’ distinctiveness and fame, use of the alleged infringing trademarks were likely to confuse or mistake the relevant public as to the sources of goods and constituted as trademark infringement.

Regarding whether the packaging and decoration of the Kinder Surprise Egg has certain influence, the second instance court found that it does. First, Ferrero’s evidence proved that A) the Kinder Surprise Egg have been recognized and protected as a famous product multiple times. B) The Kinder Surprise Egg has been in the market since 2011 and became available nationwide with vast amount of advertising expenses and countless promotions. C) Combining its lengths and number of sales, time and level of promotion, Kinder Surprise Egg should be recognized as famous in the market and known by the relevant public in the mainland China market. Second, the packaging and decoration used on the words, colors, graphical design, and composition were uniquely designed, which embodied distinctive characteristics and allowed consumers to distinguish the source of goods. Accordingly, Kinder Surprise Egg’s packaging and decoration shall be considered as a protected product packaging and decoration that has certain influence under the Chinese Anti-unfair Competition Law.

3. World Trade Centers obtained 3 million (USD 464,300) in damages for others using WTC as real estate names

The World Trade Centers Association (“WTCA”) alleged that the naming of the disputed real estate as “Taizhou World Trade Center in Chinese (台州世贸中心)” by Taizhou World Trade Company (“TWTC”), and TWTC’s promotion of that building as the “World Trade Center in Chinese (世贸中心)” with Dongsen Holdings and Dongsen Real Estate Company (“Dongsen”) infringed its trademark right and amounted to unfair competition. The WTCA petitioned the court for RMB 3 million (USD 464,302) in economic loss and reasonable legal costs.

Taizhou World Trade Center in Chinese (台州世贸中心)

In its findings for trademark infringement, the court found that the WTCA registered the “WTC,” “WORLD TRADE CENTER,” and other related trademarks for services in Class 41. Not only have these trademarks been primarily used for conferences and exhibitions, but they have also been specially licensed to be used to name the relevant real estate the “World Trade Center in Chinese (世贸中心)” for promotional purposes. Meanwhile, relevant public also learned about WTCA’s registered trademarks through these real estates. The purpose for TWTC to name its real estate as “Taizhou World Trade Center in Chinese” and to use marks “WTC,” “World Trade Center in Chinese (世贸中心),” and “WORLD TRADE CENTER” in its promotional materials were to invite businesses or increase sales volume. Such use overlapped with the purpose of the services designed under the WTCA’s registered trademarks. In addition, TWTC’s scope of business and the disputed real estate’s functions also include exhibition services, which overlapped with WTCA’s services. Thus, the approved services of the WTCA’s registered trademarks and the services where TWTC used its marks constituted as similar. Moreover, TWTC knew of the fame of the WTCA’s registered trademarks but still used identical or similar marks, which demonstrated obviously bad faith in free riding the WTCA’s fame. Accordingly, TWTC’s infringed upon WTCA’s exclusive trademark rights when TWTC used marks identical or similar to WTCA’s registered trademarks on the disputed real estate and on promotional materials without authorization, and when TWTC registered and used the domain name “www.tzwtc.com.”

4. Tongji Vientiane City was ordered to pay China Resources Vientiane City RMB 1 million (USD 154,750) in damages

“Wan Xiang Cheng in Chinese (万象城)” and “themixc + Wan Xiang Cheng in Chinese (萬象城)” were famous real estate brands owned by the China Resources Group (“CRG”). Upon finding a real estate named “Tong Ji Wan Xiang Cheng in Chinese (同济万象城),” CRG sued the real estate owner for trademark infringement and petitioned for RMB 5 million (USD 773,800) for damages and reasonable legal costs.

Tong Ji Wan Xiang Cheng in Chinese (同济万象城)

Wan Xiang Cheng in Chinese (萬象城)

The court found that “Tong Ji Wan Xiang Cheng in Chinese (同济万象城)” was similar to the “Wan Xiang Cheng in Chinese (万象城)” series trademarks owned by CRG, and Tongji Real Estate Company (“Tongji Real Estate”), owner of the dispute real estate, infringed upon CRG’s exclusive trademark rights. Although Tongji Real Estate claimed that it had used “Wan Xiang Cheng in Chinese (万象城)” in 2009 and 2011 for other construction projections that were earlier than the filing date of CRG’s “Wan Xiang Cheng in Chinese (万象城)” and “themixc+ Wan Xiang Cheng in Chinese (萬象城)” trademarks, and constituted as prior use. The court reasoned that CRG began using the “Wan Xiang Cheng in Chinese (万象城)” trademark in 2004 for its real estate project in Shenzhen. Therefore, Tongji Real Estate’s claim cannot be supported.

The first instance court ordered Tongji Real Estate to immediately stop all infringing activities and pay economic loss of RMB 1 million (USD 154,750). The second instance court affirmed.

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, China 100738

On the November 24, 2020, Chris LIU, lawyer from Beijing East IP Law Firm was invited by the Embassy of Israeli in China to give a presentation for Israeli enterprises on China’s intellectual property protection. Chris, with her rich practical experience to vividly demonstrated the signification, application, protection and operation of IPR in an illustrated manner, and gave a simple and profound explanation of the intellectual property protection system in China.

Beijing Higher People’s Court, on December 15, 2020, issued a second-instance judgment on the invalidation of a utility model patent named “micromotor”, rejected all litigation requests of Sunonwealth Electric Machine Industry Co., LTD, and upheld the original judgment. Our patent attorneys Du Lijian, Liu Jun, and Zhang Yongyu acted for the invalidation petitioner Asia Vital Components Co., LTD to participate in the entire process of this case, got the result that all independent claims and some dependent claims invalid in National Intellectual Property Administration (NIPA), and won all administrative litigations in Beijing Intellectual Property Court and Beijing Higher People’s Court.

Zhang Yongyu, the patent attorney of Beijing East IP, gave a keynote speech on “Introduction to the Fourth Revision of the Patent Law” at an online seminar organized by Japan Institute of Intellectual Property (IIP),on December 2, 2020.

“The revisions generally serve the proclaimed purposes of placing greater importance on and strengthening IP protection, optimizing enforcement of patent rights, increasing dete