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

Weekly China Trademark News Updates

October 12, 2021

1. Osram successfully invalidated the “Ou Shi Lang in Chinese” trademark

Recently, the Beijing High Court made a second-instance judgment on the invalidation of the “Ou Shi Lang in Chinese” trademark (“Disputed Mark”) with reg. no. 18331958 that rejected the CNIPA’s appeal and affirmed the first-instance court’s judgment that the Disputed Mark constituted as a similar trademark used on the same or similar goods with the cited trademark of Osram Co., Ltd. (“Osram”).

Disputed Mark	Cited Marks 1 & 4	Cited Marks 2 & 5	Cited Marks 3 & 6

The court found that: the Disputed Mark “Ou Shi Lang in Chinese” constituted as similar to the Cited Marks 1 & 4 and the Chinese portion of the Cited Marks 2 & 5 in terms of composition and pronunciation. The Disputed Mark also constituted as similar to the Cited Marks 3 & 6 because “OSRAM” corresponds to “Ou Si lang in Chinese.” The Disputed Mark’s approved goods for “video display products” did not fall into the same subclasses with the cited marks’ approved goods for “light-emitting diode, electronic bulletin board, image recording equipment, image transmission equipment, lighting equipment and devices, and lighting equipment,” but were closely associated in terms of function, sales channel, sales target, etc. Considering that the evidence can prove that the cited marks 4 & 6 enjoyed certain fame on lighting equipment, the co-existence of the Disputed Mark and the cited marks were very likely to cause confusion to the relevant public or believe that there were certain association between the goods and the source of the goods. Thus, the Disputed Mark constituted as similar marks to the cited marks on identical or similar goods. The Disputed Mark violated Article 30 of the Chinese Trademark Law. The first-instance judgment was affirmed.

2. Ralph Lauren prevailed in the second instance unfair competition dispute regarding the “POLO” logo and was awarded RMB 3 million in damages

The Beijing IP Court concluded a copyright infringement and unfair competition dispute between appellants Ralph Lauren Corporation (“RLC”), Polo/Lauren Company, LP. (“PLC”) and appellees Guangzhou Gangpai Garment Co., Ltd. (“Gangpai”), appellees Guangzhou Huaren Garment Industry Co., Ltd. (“Huaren”), Beijing Dahongmen Fuhai International Trading Co., Ltd. (“Fuhai”) which revoked the first-instance decision and ordered Gangpai and Huaren to stop use PLC’s corporate name and compensate PLC RMB 3 million in damages and RMB 100,000 in reasonable litigation expenses.

The Beijing IP Court found the following facts in its judgment:

Regarding the first issue, whether the three appellees infringed the two appellants’ copyrighted art works. The two appellants claimed that the artworks involved in this case should be protected by the Copyright, and the two appellants enjoyed the copyright of the artwork, however, there were excessive differences between the racket swinging movements, riding gestures between the accused horse-riding logo and the artwork involved in this case, which did not constitute as similar. The two appellants’ claims that the three appellees infringed its copyright could not be supported. The first-instance court’s decision should be affirmed.

Regarding the second issue, whether the three appellees’ use of the appellants’ packaging and decoration amounted to unfair competition. The two appellants claimed the packaging features of gold metal hooks and wooden hangers, cardboard shopping bags, belt packaging boxes, and a series of its decoration features were existing and common designs in the apparel industry that did not have distinctive features compared to other similar goods. The claimed features did not constitute as packaging or decoration under the Anti-Unfair Competition Law of China (“AUCL”) and the two appellants’ claims shall not be supported. The first-instance court’s decision should be affirmed.

Regarding the third issue, whether the accused Gangpai used unfair means to imitate the two appellant’s well-known trademarks amounted to unfair competition. There are express provisions in the Chinese Trademark Law on the two appellants’ accusations, and according to the legislative intent of the AUCL, the specific law that regulated the alleged action should be applied over the AUCL. The two appellants’ claims shall not be supported.

Regarding the fourth issue, whether the three appellees use the two appellants’ corporate names without authorization amounted to unfair competition. First, before the infringement of its corporate name, the two appellants continued to promote and use the “POLO” logo on clothing products in China through media reports and the establishment of retail stores. The “POLO” logo enjoyed very high reputation among the relevant public in China. “POLO” was the main part of the trade name that the two appellants have been using since their establishment. According to the relevant public’s long-term exposure of the term “POLO,” the relevant public was accustomed to using the “POLO” logo to refer to the appellants, which constituted as the abbreviation of the appellants’ corporate name. Therefore, “POLO,” as the appellants’ name and abbreviation, should be protected under the AUCL. Second, the appellants accused the Gangpai and Huaren of unauthorized use of the infringement marks “LEYUDN POLOPOS,” “POLO SIMON, “POLO SIMON,” and “Paul Simon in Chinese & POLO SIMON.” Gangpai and Huaren argued that these were legally registered trademarks, however, these marks were invalidated by the people’s courts. According to Article 47 of the Chinese Trademark Law 2019 and Article 30 of the Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Administrative Cases for the Authorization and Confirmation of Trademarks (Amended in 2020), the above-mentioned trademarks were not protected by the exclusive right to use from the beginning. Therefore, Huaren’s arguments were untenable. Third, the accused clothing products such as T-shirts, casual pants, belts, etc. were identical or similar to the appellants’ famous clothing products; the alleged infringing luggage had strong relevance to clothing goods in terms of function, use, sales channels, target consumer, etc., especially in this case, where these products were all placed and sold in the same retail store, which had caused consumers to be confused, bought and misidentify the goods. Thus, the alleged infringing goods constituted as similar goods. The use of “LEYUDN POLOPOS,” “POLO SIMON,” “POLO SIMON,” “Paul Simon POLO SIMON,” and other marks containing the words “POLO” on the above-mentioned accused infringing goods constituted as similar to the appellants’ corporate name “POLO” in terms of overall visual appearances, which was likely to cause the relevant public to misidentify and constituted as use other’s corporate name as goods without authorization. According to the corporate name marked on the packaging and tag of the infringing goods, it can be determined that Huaren was the manufacturer and seller of the goods, and Gangpai was the authorized licensor of the infringing mark. The company registry of Gangpai showed that its legal representative was former Huaren shareholder and supervisor, which proved its association. Therefore, Gangpai and Huaren shall be jointly and severally liable. Consider that when the alleged infringement occurred, RLC’s corporate name did not include the “POLO” logo, the claim of unauthorized use of its company name were not supported, that is, the court only found that Gangpai and Hauren’s use of PLC amounted to unfair competition. Gangpai and Huaren were ordered to stop using the infringing logo, to publish news to eliminate negative impacts, and to compensate for losses. The first-instance judgment erred in application of law and this court amended.

Regarding the issue of compensation for losses, since PLC did not provide direct evidence of the actual losses suffered due to the infringement and the infringer’s gains due to the infringement, the court referred to the duration of the infringement involved, scope of implementation of the infringing actions, sales price of infringing goods, and other subjective infringing factors to ascertain an economic compensation within the scope of statutory compensation. Especially considering the fact that the official website of the Gangpai introduced that “the brand “POLOSIMON” has been created since 2010, and there are nearly a hundred stores across the country,” it can prove that its infringement duration was long and the profits were huge; Gangpai has never applied for the registration of a separate “POLO” word mark, but clothing displayed in its business premises has a separate “POLO” logo, and its official website emphasized that its products “incorporate American style,” which proved that the Gangpai had obvious bad faith in taking advantage of other’s goodwill. Although the appellants filed a separate lawsuit against Huaren and Gangpai’s infringement of its trademark rights and claimed financial compensation, the above facts were sufficient to prove that Huaren and Gangpai have made huge profits from the infringement and its gains obviously exceeded the amount of economic compensation claimed by the appellants. Therefore, the Beijing IP Court fully supported PLC’s economic compensation. At the same time, supported the appellants’ request for reasonable litigation expenses including notarization fees, copy fees, and lawyer fees.

Since Fuhai was a marketing organizer, the existing evidence proved that it has fulfilled its duty of reasonable duty in selling the alleged infringing goods to the merchants, and had no subjective fault, so it shall not assume legal responsibility.

3. The decoration of “Yuan Qi Sen Lin” shall be protected and Yuan Qi Sen Lin was awarded RMB 650,000 in damages

The Beijing IP Court concluded a second-instance unfair competition judgement involving appellants Yuan Qi Sen Lin (Beijing) Food Technology Group Co., Ltd. (“Yaun Qi Sen Lin”), Zhejiang Quanshui Dingdong Food Co., Ltd. (“Quanshui Dingdong”) and appellees Beijing Jingdong Sanbailushi Du E-Commerce Co., Ltd. (“JD.com”) and Zhejiang Tmall Network Co., Ltd. (“Tmall”) that rejected the appellants’ appeal and affirmed the lower court’s decision.

Regarding the first issue, whether Yuan Qi Sen Lin’s products constituted having certain influential product name, packaging, and decoration. The Beijing IP Court found that starting from June 2018, Yuan Qi Sen Lin has promoted its products through various online and offline methods to make its products known to the relevant public in a relatively short period of time. According to the notarization and audit submitted by Yuan Qi Sen Lin and other evidence can prove that Yuan Qi Sen Lin’s products had a large sales volume before July 2019 and were highly ranked. Therefore, based on the sales, the duration, extent, and geographic scope of its products, its products can be deemed to have a certain impact. According to the first-instance’s fact findings of the packaging and decoration of Yuan Qi Sen Lin’s products, its products were unique in design, fonts, color, shape, arrangement and combination. The evidence was insufficient to prove that the packaging and decoration have been commonly used by relevant products. As mentioned, after the continuous promotion of Yuan Qi Sen Lin, the relevant public has assocaited the products that use its packaging and decoration with Yuan Qi Sen Lin, which has the function of identifying the source of the goods, and can be regarded as the distinctive packaging and decoration of Yuan Qi Sen Lin’s products.

Regarding the second issue, whether the alleged infringement of Quanshui Dingdong amounts to unfair competition. The packaging and decoration of Quanshui Dingdong’s products were highly similar to Yuan Qi Sen Lin’s products in terms of color, main composition of pattern, layout, product text introduction, and shape. Although there were differences in details, there was no obvious overall differences, which was likely to cause confusion to the relevant consumer. Therefore, the first-instance court did not err in finding that Quanshui Dingdong’s actions amounted to unfair competition.

Regarding the question of whether the amount of compensation ordered in the first-instance judgment is reasonable, since Yuan Qi Sen Lin and Quanshui Dingdong did not submit sufficient evidence to prove Yuan Qi Sen Lin’s actual losses and Quanshui Dingdong’s infringement profits, the first-instance court comprehensively considered the degree of fame, operation duration, scope, and sales methods of Yuan Qi Sen Lin’s products, and the subjective fault of Quanshui Dingdong, its operation duration, scale, and sales in ascertaining that Quanshui Dingdong shall compensate Yuan Qi Sen Lin for economic loss of RMB 650,000 (USD 101,000) was appropriate. Moreover, it is not inappropriate for the first-instance court to support Yuan Qi Sen Lin’s claim of a reasonable enforcement expenses of RMB 70,000 (USD 1,087).

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

Ms. Yan Zhang, the partner of Beijing East IP Law Firm, participated as a presenter at Strafford live video webinar “Trademark Doctrine of Foreign Equivalents” on September 15, 2021. Brett Heavner, the partner of Finnegan, Henderson, Farabow, Garrett & Dunner, LLP and Yinfei Wu, the attorney of Finnegan, Henderson, Farabow, Garrett & Dunner, LLP also joined in the panel. The panel examined the doctrine of foreign equivalents in the context of trademark prosecution, clearances and trademark infringement in different languages, also reviewed recent cases and discussed the lessons from those decisions.

Ms. Zhang started with the explanation on Chinese equivalents of foreign language trademarks, and then discussed the importance and urgency of trademark protection of Chinese equivalents. Based on examination practices of the Chinese Trademark Office and courts applying the doctrine of foreign equivalents, Ms. Zhang further summarized the factors and criteria of judging the similarity between foreign language trademarks and Chinese equivalents in prosecution and litigation.

As for the protection of Chinese equivalents of foreign language trademarks in China, it is quite common that oversea brand owners do not have “official” translations for foreign language trademarks, nor do they use and promote the trademarks in Chinese. Chinese distributors, public and media often use Chinese versions to refer to brand owners. Ms. Zhang shared her experiences from multiple perspectives, such as passive use, distributors’ squatting, brand owners denying corresponding Chinese equivalents, sufficiency of evidence and time of evidence formed. By combining with the specific cases represented, Ms. Zhang elaborated some issues and lessons regarding the corresponding relationship between foreign language trademarks and Chinese equivalents, and provided practical advices for oversea brand owners doing business in China.

Strafford is a leading continuing education provider offering CLE and CPE webinars presented by renowned professionals in the legal, corporate tax, accounting and tax return preparer professions. For the details of programs, please refer to

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Ms. Yan Zhang, the partner of Beijing East IP Law Firm, gave a keynote speech on “Strategy on how to respond to bad faith trademark registration and malicious lawsuit” at an online seminar hosted by the US-China Business Council (USCBC) on June 17, 2021.

Ms. Zhang analyzed the problems of trademark squatting in China, and discussed about the legal regulations on trademark squatting under the fourth revision of the Chinese Trademark Law. Ms. Zhang further shared the views and strategies on how to respond to bad faith trademark registration and malicious lawsuit from the perspectives of administrative and civil proceedings.

As for the legal regulations on trademark squatting, Ms. Zhang summarized the applicable requirements of relevant legal provisions, presented the specific cases represented by our firm, and discussed the factors of determining bad faith trademark registration in judicial practices.

As for the malicious lawsuits initiated by trademark squatters, Ms. Zhang shared her experiences from multiple perspectives, such as responding to online platform complaints and Customs seizures, negotiations and settlements. By combining with the specific cases represented, Ms. Zhang elaborated in detail the strategies of defense against trademark infringement and claim for the declaratory judgment for non-infringement, and further provided valuable practical advices for enterprises to respond to malicious lawsuits.

In the question-and-answer session after the speech, Ms. Zhang actively answered questions from participants, and communicated with participants on hot topics such as evidence preservation and damages in intellectual property litigation, and won unanimous praise from the organizers and participants.

The USCBC is a private, nonpartisan, nonprofit organization of over 200 American companies that do business with China. Founded in 1973, the USCBC has provided unmatched information, advisory, advocacy, and program services to its members for over four decades. Through its offices in Washington, DC, Beijing, and Shanghai, the USCBC is uniquely positioned to serve its members’ interests in the United States and China. For the details of activities, please refer to

https://www.eventbrite.com/e/protecting-your-ip-in-china-early-stage-ip-strategy-planning-and-litigation-registration-157460074321

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

Quarterly China Trademark News Updates

April – June 2021

1. Notable trademark and anti-unfair competition cases

a. LEGO won RMB 30 million in a trademark infringement dispute

The Guangdong High Court rendered the final decision regarding the trademark infringement and unfair competition disputes between the “LEGO in Chinese (乐高)” mark owned by LEGO Juris A/S (“LEGO”) and the “Le Pin in Chinese (乐拼)” mark owned by Meizhi Zhijiao Technology Co., Ltd. (“Meizhi”). The court held that Meizhi and other defendants infringed upon LEGO’s trademark right and their acts amounted to unfair competition, and awarded LEGO economic loss and reasonable legal cost of RMB 30 million (USD 4.58 million).

The court acted as the second instance court found that Meizhi’s “Le Pin in Chinese (乐拼)” mark was highly similar to the “LEGO in Chinese (乐高)” mark in terms of color combination, presentation, and overall appearances, which was likely to cause confusion to the relevant public and weakened the distinctiveness of “LEGO in Chinese,” and damaged LEGO’s market reputation.

Meizhi had been copying LEGO’s products for more than four years, infringed upon eight of LEGO’s registered trademarks and one influential trade name. Between September 11, 2017, and April 23, 2019, Meizhi’s infringing products collected unjustifiable income of RMB 330 million (USD 50 million), and combining with the sales records provided by Taobao, it can be reasonably presumed that “Le Pin in Chinese (乐拼)” products collected over RMB 500 million (USD 76 million) unjustifiable income. Using the industrial profit as a scale, the overall profit of the infringing products was over RMB 160 million (USD 24.4 million).

The court ordered a high damage not only because Meizhi had obvious bad faith in copying and imitating LEGO’s trademarks, but also because Meizhi’s long-term, extensive, and highly-profitable infringements of LEGO’s trademarks.

b. Bulgari won against fake Serpenti jewelry trademark disputes

The Beijing Intellectual Property Court (“the Beijing IP Court”) recently held that the “snake head design” mark owned by an individual Liu with reg. no. 15911982 (“Disputed Mark”) infringed upon Bulgari S.P.A.’s (“Bulgari”) copyright and should be cancelled. The court found that Bulgari’s Serpenti design was a pictorial and unique design that can be protected under the Chinese Copyright Law as an artwork. Bulgari submitted sufficient evidence proving that it enjoyed copyright for the snake head design before the Disputed Mark’s application date. Moreover, Bulgari’s evidence showed that Liu once owned a business related to “purse,” which overlapped with Bulgari’s scope of business and suggested that Liu may or should’ve known about Bulgari’s Serpenti design. Considering both the Disputed Mark and Bulgari’s Serpenti design have drawn ideas from snake head, the overall appearance, composition, visual effect, and expression were all similar, the Disputed Mark constitutes as a similar mark to Bulgari’s Serpenti copyrighted design.

Infringing Mark	Bulgari’s Serpenti Jewelry

c. Alibaba was fined for RMB 18.22 billion for abuse of market dominance

On April 10, 2021, the State Administration of Market Regulation (“SAMR”) rendered a decision finding Alibaba Group Holding Limited (“Alibaba”) abused its market dominance, imposed a fine of RMB 18.22 billion (USD 2.79 billion), and requested Alibaba to conduct full rectification and operate in compliance with laws and regulations.

In its decision, the SAMR found that Alibaba’s operations have “occupied a relatively high market share for a long period of time, which enjoys a very high market recognition and consumer awareness, and there is a high cost for operators to move away from Alibaba’s platforms.” Alibaba had a dominant position in the online retail service market in China.

Since 2015, in order to restrict other competitions, maintain and strengthen its market position, Alibaba abused its market dominance by not allowing business operators on its platform to operate or participate in sales events on other competing platforms. Further, Alibaba imposed various awards and punishments in order to carry out its “choice between the two” (business operators can only choose either Alibaba or other competing platforms but not both) implementation.

Alibaba’s actions not only maintained and strengthened its market position, but also deviated from the development concept of economic openness, tolerance, and sharing. Such actions excluded and restricted relevant market competition, harmed the interests of business operators and consumers on the platform, and weakened innovation and development vitality. Alibaba’s actions also hindered the healthy development of platform economy in a standardized, orderly, and innovative manner.

Click here for SAMR’s official press release and its administrative decision and guidance in Chinese.

d. “PENFOLDS in Chinese” recognized as an unregistered well-known trademark

Southcorp Brands Pty Limited (“Southcorp”) sued Huaian City Huaxia Manor Brewing Co., Ltd. and Hangzhou Zhengsheng Trading Co., Ltd. (together as “the Defendant”) for trademark infringement. The court held that Southcorp’s “PENFOLDS in Chinese” mark constituted as an unregistered well-known mark, and the defendants’ use of “PENFOLDS in Chinese” mark infringed upon Southcorp’s right to the unregistered well-known mark. Meanwhile, the “Penfunils” mark used by the Defendants constituted as a similar mark to Southcorp’s “PENFOLDS” mark in terms of letter composition, order, and pronunciation, and such use infringed upon Southcorp’s registered trademark right for “PENFOLDS.” The court ordered the defendant to compensate Southcorp’s economic lost and reasonable enforcement costs of RMB 1 million (USD 154,100).

e. Michelin won in a trademark infringement retrial

Compagnie Generale Des Etablissements Michelin (“Michelin”) sued Ningbo Jaiqi Handicraft Co., Ltd. (“Jaiqi’) for trademark infringement. The Guangdong High Court found that the only differences between the two Micheline’s Cited Marks was its gestures, the rest of Michelin Man’s characteristics were identical, which suggested that the Michelin Man’s characteristics were the heart of its Cited Marks’ distinctiveness. Through long-term promotion and use, the Michelin Man’s characteristics grew more prominent and triggered the relevant public to associate Michelin upon seeing the Michelin Man.

Infringing Marks	Michelin’s Marks

When comparing the disputed cartoon character with the Cited Marks, although the disputed cartoon character only had a smiling face, the component and details of the smiling face were nearly identical with the Cited Marks’ characteristics. Considering Michelin Cited Marks’ distinctiveness and fame, such smiling face was likely to cause the relevant public to associate the Michelin Man image presented in the Cited Marks and cause confusion. Thus, the disputed cartoon character  shall be deemed as similar to the Cited Marks. Additionally, the disputed inflatable doll also closely reassembled the Michelin Man’s characteristics and shall be deemed as similar with the Cited Marks. The court concluded that Jaiqi infringed upon Michelin’s trademark rights and ordered compensation for economic loss and reasonable legal costs of RMB 100,000 (USD 15,416).

f. First criminal copyright infringement case involving an artwork came into effect with RMB 410,000 in penalty in Shenzhen

Recently, the Shenzhen Longgang District Court (the “First Instance Court”) concluded that the defendant WANG infringed upon the plaintiff’s copyright. The Shenzhen Intermediate Court rendered the final decision as the second instance court which rejected WANG’s petition to appeal and affirmed the First Instance Court’s decision. In the First Instance Court decision, WANG was sentenced to 3 years and 8 months in prison with penalty of RMB 410,000 (USD 63,675). The infringing toys used as evidence during the trial were confiscated and destroyed. This is the first criminal copyright infringement case involving an artwork in Shenzhen.

Between October 2016 and November 2018, without authorization from CCA and B, LLC. (“CCA”), Wang purchased the infringing Christmas genie dolls and reindeer dolls that he knew were infringing CCA’s copyright. WANG made unjustified profits from selling the dolls on its Alibaba and Amazon online stores.

On October 31, 2018, Longgang Branch of Shenzhen Municipal Administration for Market Regulation seized 8,340 “Christmas genie dolls” and 215 “reindeer dolls” for sale in WANG’s company. Identified by the Copyright Appraisal Committee of Copyright Protection Center of China, these dolls constated as copies of the “Christmas genie dolls” and “reindeer dolls” owned by CCA. They were infringing copies of “Christmas Genie dolls” and “reindeer dolls.” On July 15, 2019, the case was transferred to Longgang Public Security Bureau.

It was verified that from May 31, 2017, to October 30, 2018, WANG sold the infringing products through three online stores and earned a total amount of RMB 557,000 (USD 86,500). The value of the seized infringing products for sale was about RMB 213,000 (USD 33,000). The total unjustified profit was RMB 771, 000 (USD 119,700).

After hearing, the First Instance Court concluded that WANG’s operation purpose was to obtain unjustified profits by copying and selling copyrighted artworks without authorization, which amounted to RMB 771, 000 (USD 119,700). Such circumstance was particularly serious and constituted as a crime of copyright infringement.

 g. Weibo sued Toutiao for unfair competition and won a RMB 20 million verdict in compensation

Beijing Weimeng Chuangke Network Technology Co., Ltd. (“Weibo” a.k.the Chinese Twitter) sued Beijing ByteDance Technology Co., Ltd. (“Toutiao”) based on the grounds that Toutiao’s relevant content constituted unfair competition before the Haidian District Court of Beijing. The court found that displayed content and disseminated information of the Weibo content involved in this case was not purely user-generated, the information involved were added with Weibo’s resources and services, which constituted as the “legal interests” of Weibo according to Article 2 of the Chinese Anti-Unfair Competition Law. Toutiao targeted Weibo’s contents and transferred the said contents without authorization, particularly with those Weibo accounts that had large number of fans, more market impact, celebrities’ accounts, and major VIP accounts. Toutiao’s actions substantially substituted Weibo and damaged its business interests. The court ruled in favor of Weibo for economic loss of RMB 20 million (USD 3.14 million) and reasonable legal costs of RMB 1.15 million (USD 180,000).

h. Land Rover prevailed against Landwind X7

On May 27, 2021, the Beijing IP Court concluded the final decision of an unfair competition lawsuit between Jaguar Land Rover Limited (“JLR”) and Jiangling Holdings Co., Ltd. (“JLH”) and Beijing Dachang Landwind Motor Sales Co., Ltd. (“Landwind”). The court ordered JLH and Landwind to immediately stop all unfair competition acts, publish a statement to eliminate negative impacts, and compensate for losses and reasonable expenses of RMB 1.5 million (USD232,200).

In this case, JLR claimed five design features of its “Range Rover Evoque” had the characteristics that were different from the common exterior design of ordinary cars, and these designs were distinctive as product decorations. JLR’s evidence were also sufficient to prove that its “Range Rover Evoque” car enjoyed certain fame and influence in China’s car industry. Accordingly, Range Rover Evoque’s exterior decoration when used as product shape decoration satisfied the “decoration with certain influence” as stated in the Chinese Anti-Unfair Competition Law. The shape and decoration used by JLH on the “Landwind X7” car was enough to confuse and mislead the relevant public with JLR’s “Range Rover Evoque,” which constituted as unfair competition.

The first instance court calculated the damages based on the sales volume and unit profit of the infringing product, while referring to the 2015 domestic vehicle industry sales profit of domestically funded vehicle companies published by “National Passenger Car Information Exchange Association,” the sales data and the lowest unit price published on the official website of JLH. Also considering the duration of the unfair competition in the case, the role of the car product shape and decoration played during sales of “Landwind X7,” the range of sales, and the popularity of the “Range Rover Evoque” car shape, the second instance court affirmed the first instance court’s calculation methods.

i. Unauthorized use of New Balance’s “N” logo amounted to unfair competition

The Beijing IP Court affirmed the first instance court judgment regarding an unfair competition lawsuit between New Balance Trade (China) Co., Ltd. (“NB”) and Jiangxi Xinbailun Sports Goods Co., Ltd. (“Jiangxi Xinbailun”), Guangzhou Xinbailun Leading Footwear Co., Ltd., Guangzhou Xinbailun Enterprise Management Co., Ltd. (together as “Guangzhou Xinbailun”) and its executive director and general manager Lelun Zhou.

In the first instance judgment, the Beijing Dongcheng District People’s Court found that NB lacked evidence to support its claims that the “New Balance in Chinese” was an influential trade name or was a special name for the “New Balance” sneakers products. However, the uppercase bold “N” letters in the upper side of the shoes constituted as unique decoration. Thus, the use of the “N” logo on its sneakers products by Jiangxi Xinbailun and Guangzhou Xinbailun amounted to unfair competition for using other’s unique decoration without authorization.

Regarding the amount of compensation, the first instance court considered the fame of NB’s sneakers, uniqueness of decoration, subjective bad faith of Guangzhou Xinbailun and Jiangxi Xinbailun, the nature, method, duration, influence area involving the unfair competition behavior, related products sales prices and other factors, and ordered Guangzhou Xinbailun and Jiangxi Xinbailun compensate NB for economic loss of RMB 1 million (USD 154,700) and reasonable costs of RMB 100,000 (USD 15,470).

Guangzhou Xinbailun and Jiangxi Xinbailun were unsatisfied with the judgment, and NB was unsatisfied with the court’s findings of “New Balance in Chinese” and the compensation amount ordered. All parties appealed the first instance judgment to the second instance court, the Beijing IP Court. The Beijing IP Court affirmed the first instance court’s judgment.

2. Notable trademark laws, regulations, and news updates

a. The CNIPA: Enlist bad faith applicants into blacklist

From the beginning of 2021, the China National Intellectual Property Administration (“CNIPA”) has rejected more than 10,000 bad faith trademark applications citing the 2019 Chinese Trademark Law. The CNIPA has also created a blacklist system to include applicants who filed more bad faith applications and registrations. This is to closely supervise new trademark applications. So far, there are about 1,000 bad faith trademark applicants added into the blacklist.

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

b. The CNIPA issued the Notice of Deepening “Deregulation, Innovation, and Service” in the Intellectual Property Industry on Optimizing and Improving Innovation Environment and Business Operation Environment

On May 11, 2021, the CNIPA issued the Notice of Deepening “Deregulation, Innovation, and Service” in the Intellectual Property Industry on Optimizing and Improving Innovation Environment and Business Operation Environment. The notice includes the following news.

1. Continue to reduce trademark examination period. Aim to regulate trademark examination time within four months. The entire trademark application proceeding will be reduced from eight months to seven months. At the end of 2021, examination time for trademark assignments, oppositions, rejection appeals, and invalidations will be reduced to one and half months, twelve months, five and half months, and nine months, respectively. Examination time for trademark applications and renewals filed electronically will be reduced by one fifth.
2. Strengthen trademark examination supervision. Rigorously crack down on bad faith trademark registration and refuse to accept or fast-reject trademark applications with significant adverse effects according to the law. Promptly disclose typical bad faith trademark registration cases in time. Include bad faith trademark registration without intent to use into credit supervision according to the law.
3. Fully implement electronic trademark registration certificate, accelerate the use of the electronic trademark registration certificate on e-commerce platform, enforcement, proffer evidence and other fields.
4. Establish and improve the green channel acceleration model of trademark examination. Priority examination for qualified trademark rejection appeals and oppositions in order to assist applicant in obtaining trademark certificate and safeguard legal rights and interests.
5. Strengthen the crack down on illegal agency. Rigorously crack down on the forgery of legal documents and seals and disrupt the order of the agency market by fraud and false publicity. Strengthen the credit supervision and punishment of illegal agency in accordance with the laws and regulations.

Fully exploit the value of intellectual property information. On the basis of data security, fully release basic data of intellectual property right, and fully employ the strategic resource value of intellectual property information.

c. The Supreme People’s Court issued the Official Reply of Defendant’s Request for Compensation for Reasonable Expenses due to Abuse of Rights by the Plaintiff in IP Infringement Litigation

On June 3, 2021, the Supreme People’s Court (“SPC”) has issued the Official Reply of Defendant’s Request for Compensation for Reasonable Expenses due to Abuse of Rights by the Plaintiff in IP Infringement Litigation (the “Reply”) to be implemented immediately.

The Reply confirmed that, in an intellectual property infringement litigation, if the defendant can provide evidence to prove that the lawsuit brought by the plaintiff constitutes the abuse of rights according to the law, the people’s court should uphold the defendant’s request that the plaintiff should compensate for the reasonable attorney fee, transportation fee, accommodation fee, and other expenses. The defendant may also file another separate lawsuit to require the plaintiff to compensate the said reasonable expenses and fees.

d. The CNIPA: Trademark Examination and Adjudication Standards (Draft for Comments)

The CNIPA launched the revision of the current Trademark Examination and Adjudication Standards in July 2020 and published the draft for comments from the public. The revised content mainly includes two aspects: the first is to add new standards on trademark formality examination and trademark affairs examination; the second is to revise and improve the substantive standards of trademark examination and adjudication. The first aspect includes the standard for applying Article 4 of the Chinese Trademark Law, clarifying the applicable factors, considerations, and applicable circumstances for malicious trademark applications filed without the intent to use. The second aspect includes revision and improvement of applicable standards of other provisions in the Chinese Trademark Law, including the applicability of prohibited filings and prohibited use, standards and considerations for determining identical or similar trademarks, standards for determining distinctiveness for 3D marks, color combination marks, sound marks, etc.

3. Trademark Practices Series – Bad Faith Application in China

Bad faith trademark applications, a constant headache for foreign brand owners due to China’s first-to-file system. In this new series, we will provide our experiences to decipher the laws, regulations, and actual practices on how to tackle the bad faith trademark applications. We will begin with the relevant stipulations in the Chinese Trademark Law of China (2019 Version), 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. Tackling Bad Faith Trademark Applications or Registrations In China – Part I
2. Tackling Bad Faith Trademark Applications or Registrations In China – Part II

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

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

On the occasion of the World Intellectual Property Day, Beijing East IP Law Firm gained another good news and achievements, and one of its cases was selected as “Top 10 Typical Cases of Trademark Administrative Protection in 2020” by the National Intellectual Property Administration, and Beijing East IP was highly recognized by clients for its professional skills, meticulous planning, quick response and professionalism in this administrative law enforcement case.