China Tackles Bad Faith Trade Marks

China currently operates a first-to-file trade mark system, meaning that the first person to file a trade mark application in China is considered the owner.  As a result, foreign and domestic brand owners have long suffered the problem of trade mark squatters filing for their own brands in China, preventing their registration and use of the mark. These applications filed by non-legitimate owners, who do not have any intention to use the mark, are considered bad faith trade mark applications.

New provisions to China’s trade mark laws come into effect on 1 November 2019 which aim to address this issue of bad faith applications.  In particular, the China National Intellectual Property Administration has made some key amendments to its Trademark Law which provides that “applications made in bad faith for trade mark registrations that are not intended for use shall be rejected”.   Importantly, this amendment empowers the trade mark registration authority to reject bad faith applications at the examination stage. This is anticipated to be far more effective than current provisions which requires bad faith applications to be challenged only through lengthy and expensive opposition and invalidation proceedings by brand owners. The new provision can also be invoked in an opposition proceeding or invalidation action. Bad faith trade mark applicants can face penalties by way of warnings or fines.

An additional key amendment is that authorities can impose fines and penalties not only on bad faith applicants but also on trade mark agencies. This imposes an obligation on trade mark agencies to censor bad faith applications. In particular, trade mark agencies should not accept instructions if it knows, or should know, that the application is being filed in bad faith. This shift in legislation is a positive sign that China is increasingly recognising the value of intellectual property.

Noting that in 2018, 7.37 million trade mark applications were filed in China, if you have any interest in trading in China in the future, it is increasingly important to file for your trade mark as early as possible. If you require any advice regarding registering your trade mark in China, please contact a member of our team on 1300 851 138 or email trademarks@actuateip.com.au and we’ll be happy to assist.