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.