The overriding objective of the revised Trademark Law of
2014 (the Law) is to streamline procedures associated with
obtaining trade mark rights, enhance protection for rightful
owners and alleviate problems caused by trade mark squatters.
Since the revision, detailed regulations, judicial
interpretations and examination standards have been implemented
to further such objectives. In this article, we highlight the
trends in the application of law and practices associated with
the key changes.
Bad faith and the latest trend in cases
Trade mark squatting has long been a major concern for
foreign companies who wish to enter the Chinese market. The
Chinese first-to-file trade mark system grants protection to
those who file first in China, and no proof of use is required
to register. Trade mark squatters or bad faith filers register
up-and-coming brands in China anticipating their entry into
China, with the intention of profiting from selling the marks
back to the international brand owner, or riding on the
reputation of the international brand to advertise their own
products or services.
International brand owners who do not already have a trade
mark registration in China in respect of the goods or services
to which the dispute relates will have to resort to Article 32
of the Law (Article 31 of the 2001 Trademark Law) to oppose or
invalidate trade marks filed by trade mark squatters. Under
this article, the opponent has to provide evidence that its
mark has attained a certain degree of fame in China, which is a
significant hurdle, especially for brands that do not yet have
a strong presence in China.
The revised Trademark Law, however, also introduces
alternative routes for brand owners to fight against trade mark
squatting, especially in the most common circumstance where a
trade mark is pre-emptively filed.
Mixed application of the good faith principle
The general principle of good faith was first introduced in
Article 7 of the Law and states: "The application for trade
mark registration and the use of trade marks should follow the
principle of honesty and credibility."
Nearly four years after its implementation, we can see that
administrative authorities consider this article as an
overarching principle and are reluctant to rely on it alone to
reject or invalidate a trade mark.
Occasionally, however, the authorities have taken a more
flexible approach, taking into account different factors to
find a violation of the principle of honesty and
For example, in the Chinese Trademark Office (CTMO)
Opposition Decision No 0000012861 (2016), we were able to
persuade the CTMO to reject registration of the markon the
basis that the applicant applied for registration of many marks
which were all identical or similar to others' registered marks
and was therefore acting in bad faith and in breach of the
general principle in Article 7.
In the CTMO Opposition Decision No 0000001877 (2017), we
were again successful in persuading the CTMO to reject
registration of the mark AMWAY & device based on Article 7,
taking into account the fame of the opponent's mark in China,
the high level of similarity between the mark in dispute and
the opponent's mark, the close connection between the
designated goods/services and the fact that there was no
reasonable explanation from the applicant on why it adopted the
However, more often, the notion of bad faith is used as a
factor in support of other specific provisions, especially on
the ground of "deceptive or other improper means" under Article
44(1), and in finding similar marks on similar goods/services
under Article 30.
Use of Article 44(1) against large volume squatters
Article 44(1) of the Law provides that any trade mark that
has been registered through deceptive or other improper means
may be invalidated. Although this article was already in the
2001 Trademark Law, prior to the revision, it was considered to
be applicable only to invalidate registered marks, but not as a
ground to oppose trade mark applications.
However, after the implementation of the Law, we see
increasing reliance on this article to reject or invalidate
trade marks where the applicant has copied many famous trade
marks of others. In practice, the CTMO, the Trademark Review
and Adjudication Board (TRAB) and the courts occasionally use
Article 44(1) in combination with Article 7.
Where a trade mark application is subject to a
preliminary refusal due to a prior similar mark, the
most common tactic for the applicant is to file non-use
cancellation, opposition or invalidation against the
In the TRAB Decision No 0000055952 (2017), we successfully
obtained a ruling that the fact that the registrant applied for
over 300 marks identical or similar to other distinctive or
well-known trade marks led to the finding that the registrant
intended to copy others' well-known trade marks through
improper means pursuant to Article 44 of the Law, and that such
improper trade mark registration would disrupt the normal order
of trade mark registration and fair competition and is
therefore in breach of the principle of good faith.
The CTMO rarely adjudicates cases together. Each case is
generally adjudicated on its own merits. However, the CTMO
unified the adjudication of cases against Guangzhou 4399
Information Technology Co Ltd, who applied for more than 9000
trade marks, among which 210 applications were challenged by
different right owners. The CTMO adjudicated 39 opposition
cases together and rejected all applications on the basis that
the massive trade mark squatting by the applicant was an act of
Foreign brand owners may be comforted by this trend as many
trade mark squatting activities are operated by professional
entities holding hundreds of trade marks. However, more
recently, more sophisticated squatters have registered a number
of companies to hold trade marks, thereby lowering the total
number of trade marks held by each company. Brand owners may
need to prove that the applicant is related to well-known
squatters, which may be difficult as the syndicate may use
different individuals (mostly relatives or friends) to act as
directors of the trade mark holding companies.
The Law also expanded the circumstances where the
authorities may reject or invalidate a trade mark for the
reason that it was squatted by a party related to or who has
had prior dealings with the rightful owner.
Article 15(1) of the Law provides that a trade mark which is
squatted by its agent without the rightful owner's
authorisation will be refused. Agent is further defined in
Regulation 15 of the 2017 Supreme People's Court's
Interpretation on Issues Relating to Administrative Trademark
Litigation Involving the Grant and Determination of Trademark
Rights (the SPC Interpretation) to include trade mark agent or
representative, sales agent or distributor and persons having a
family relationship with the mentioned agent or
Article 15(2) of the Law expanded this principal-agent
relationship, so that any attempt to register a mark by a party
who (a) has a contractual relationship, business relationship
or other relationship with the trade mark owner and (b) should
have known the mark of the trade mark owner in registering an
identical or similar mark, will be refused. "Contractual or
business relationship" includes a wide range of activities.
According to Part 11.3 of the Examination Standards issued by
the TRAB in 2016 (Standards), the relationship encompasses sale
and purchase, a contract for manufacture, a franchise (trade
mark licence), investors, sponsors or co-organisers in a joint
event, business visits or negotiations, advertising agencies,
other commercial dealings and family relationships. Further,
pursuant to Regulation 16 of the SPC Interpretation, "other
relationships" include family kinship, employment relationships
and geographical proximity of business addresses.
The above would include circumstances where the parties are
in negotiation for a principal-agency relationship or
commercial relationship but have not established a legal
Part 11.3 of the standards has further given examples of
evidence required to prove the existence of such a special
relationship for example, contracts; letters, transaction
documents and procurement information which may show an
agreement or business dealing; corporate payroll, labour
contracts, social insurance, medical insurance materials or
household registration certificates.
In practice, in the common scenario where a former
shareholder or director of the original equipment
manufacturer/distributor sets up a new shadow company in Hong
Kong and registers the brand owner's trade mark in China,
rightful owners may be able to convince the court via a
detailed chain of evidence. An example of a complete chain of
evidence to show a prior relationship would include: (1)
distribution contract between the original equipment
manufacturer/distributor and brand owner; (2) employment
contract or other documents between the current trade mark
applicant and the manufacturer; (3) documents showing
communication between brand owner and current trade mark
applicant to demonstrate knowledge of the brand on the part of
the applicant; (4) when the trade mark applicant is a company,
evidence showing the relationship between the former
shareholder/director of the original equipment
manufacturer/distributor and the current applicant.
While the above provisions have expanded the legal scope of
protection to the rightful owners, it remains difficult to
obtain evidence to show that the applicant of the trade mark is
a family member of the person who has been in contact with the
rightful owner. Personal information such as marriage
certificates and personal identification cards showing a family
relationship are very difficult to obtain.
Creative use of Article 10(1)(7) against marks obviously
benefiting from other parties' fame
Article 10(1)(7) of the revised Trademark Law prohibits the
use of deceptive marks which would mislead the public as to its
features including the place of origin. It was originally meant
as an absolute ground for all refusals, preventing marks that
contain misleading or deceptive elements. In practice, the
authorities have in many opposition decisions extended Article
10(1)(7) to circumstances where the opposed mark is found
misleading in connection to the trade origin.
For instance, in the CTMO Opposition
Decision No 0000011239 (2016), we successfully
persuaded the CTMO to reject registration of(ELAN ENGLISH
EDUCATION TO HARVARD and design) in Class 41 on the basis that
the word Harvard in the opposed mark was likely to mislead the
consumers into believing that the applicant was related to
Harvard University which is well-known in the education field.
It is therefore misleading as to the trade origin.
Similarly, in the CTMO Opposition Decision No 0000040841
(2016), we obtained a successful CTMO recognition of the
reputation of Alticor's marks including 安利 (Amway
in Chinese) and 安利Amway among consumers in China.
It therefore rejected the registration of the same mark
安利 by an applicant in Class 35 (drug retail or
wholesale) as consumers were likely to be misled into believing
that the services provided by the applicant with the mark were
provided by Alticor or related to Alticor in some other
This article is useful for brand owners with a strong
reputation, helping them to combat other business entities
trying to benefit from their fame by using similar marks in
related industries, yet with a mark that does not fall squarely
within the similarity framework for both the mark and the goods
and/or services, or the strict requirements of other
Combating trade mark squatting: a prime initiative of the
Aside from the above application of law, the CTMO has
emphasised combating trade mark squatting as its prime
objective in various events, including putting forward the
The CTMO has actively rejected trade mark applications at
substantive review stage when they are obvious bad faith
filings. For example, the CTMO rejected an application where
the applicant had applied for over 200 marks which were similar
to well-known marks used on the same or similar goods or
services including, and, ruling that the applicant intended to
benefit from others' reputation and was in breach of the
principle of good faith.
The CTMO is considering the development of a database for
suspected bad faith trade mark applicants, and referring to
such a database in their official examination.
Examination timelines prescribed by the new law
The Law has prescribed in detail the statutory time limits
for the CTMO and TRAB to deliver decisions. The CTMO must
complete preliminary examination of new applications in nine
months, non-use cancellation cases in nine to 12 months and
opposition cases in 12-18 months. The TRAB must issue review on
refusal of application and non-use cancellation review in nine
to 12 months, and opposition review and invalidation decisions
in 12-18 months.
In practice, the CTMO and TRAB have met such timeframes, and
most recently have returned decisions even earlier than the
prescribed deadlines. The CTMO and TRAB are still continuing
their efforts to shorten the timeframe for trade mark
prosecution. In December 2017, the CTMO announced its new goal
to cut down the trade mark examination period to six months and
refusal review period to seven months by the end of 2018.
Suspension in review cases
The above statutory timeline is, however, also affecting the
suspension practice of the TRAB. Where a trade mark application
is subject to a preliminary refusal due to a prior similar
mark, the most common tactic for the applicant is to file
non-use cancellation, opposition or invalidation against the
As such, it is a common practice to file a review against
the refusal at the TRAB, and at the same time apply for a
suspension on the examination of the review pending the outcome
of any invalidation or non-use cancellation procedure regarding
the cited mark. However, whether to grant the suspension is
solely at the discretion of the examiner. As the TRAB is under
pressure to complete the review process in nine to 12 months,
the TRAB is reluctant to grant such suspensions. Currently, if
the actions against the cited marks are initiated only when the
applicant is officially informed of the citation in the
Notification of Refusal issued by the CTMO, the suspension
request will not be accepted.
The TRAB would usually only suspend the review process if
the non-use cancellation procedure against the cited mark is
filed at the same time or shortly after the trade mark
application and if the non-use cancellation procedure is
expected to be concluded within half a year. Applicants are
advised to conduct a pre-filing search and take action against
potential cited marks before filing.
TRAB to issue all decisions online
The TRAB launched an online database in December 2017 making
all its decisions public and immediately available online,
except for those concerning trade secrets, personal privacy or
other inappropriate elements.
This is a watershed moment for Chinese trade mark practice,
as the use of precedents will likely become more prevalent and
important. It is expected that decisions will be published on
the site within 20 working days of being issued to the relevant
Although China is yet to adopt a binding precedent system
and each TRAB review case is decided on its specific facts,
such a database may allow parties to refer to the evidence or
arguments made by the counterparty in previous cases. It is yet
to be seen how the court considers inconsistent evidence,
self-admission or different positions adopted by a party in
different cases. Nevertheless, such a system may ensure the
authorities act more consistently in arriving at decisions.
The law continues to evolve with practice four years later.
The first four years have brought many improvements and we
expect there to be many more changes with practice, as the
authorities move towards a higher degree of transparency when
it comes to decisions.
||Anna Mae Koo is a
partner at Vivien Chan & Co, where she practises
non-contentious, contentious and transactional
intellectual property law. She advises on all areas of
intellectual property, including licensing, franchising,
due diligence, prosecution and unfair competition law in
China and Hong Kong.
Ms Koo is a Techstars mentor and is involved in the
litigation committee of the International Bar Association
and the internet committee of the International Trademark
Association. She is consistently named as a Rising Star
in intellectual property in Asialaw Leading Lawyers. She
was a Prince Philip scholar at the University of
Cambridge, where she graduated with an MA in law.
||Ann Xu is a trade mark
attorney at Vivien Chan & Co with more than 20
years’ experience in intellectual property
cases in mainland China. She has trade mark, copyright
and designs expertise. She regularly advises on
prosecution and portfolio management.
Ann is consistently nominated as an International
Who’s Who Trademark Lawyer.