China clarifies what is bad faith trade mark filing

Trade mark hijacking in in China has been a big issue for the businesses we work with for some time. A combination of low filing costs and the first to file system in China has fuelled an industry in rogue filings. Many businesses have faced problems and had to pay off individuals or companies that have filed with the specific purpose of extorting money from the rightful brand owner. And it’s not just new and small businesses that get tripped up, big businesses including the tech giant Apple have found themselves scrambling to try and claw back a name that they considered they should be able to own.

For these reasons we often recommend to businesses, even when they are quite small, that they file a mark in China to avoid them coming up against a rogue filing further down the line and suffering the expense and frustration of paying to recover the mark.

China is not completely complacent to the problem.  In 2014 it introduced into its trade mark law the right to challenge a mark that has been filed or acquired in bad faith. While this has been helpful there is no prescribed list of facts which are agreed indicators of bad faith, rather each case is decided on its facts and the petitioner must investigate thoroughly and set out all relevant facts and matters. For this reason we welcome a recent case in the Supreme People’s Court of China that has clarified that hoarding a large number of trade marks without the intention to use falls within the scope of bad faith as prohibited under China’s trade mark law. In this case the trade mark owner whose marks were under attack had hoarded over 1000 trademarks over a period of 6 years. While it is possible that such activity could be legitimate, in this case a large percentage of the marks were similar to better known marks of other brands. The Supreme Court found that that the actions of the trade mark owner in this case have interfered with the trade mark system and misappropriated public resources. It also found that the action of the trade mark owner had undermined fair competition and in so doing had been in bad faith. For all those reasons the marks in question should be invalidated.

This case sends encouraging signals of the facts that china is serious in its efforts to crack down on rogue filings is a useful illustration of the evidence that the court will take into account. We must not however become complacent as the costs of fighting to retrieve a mark wrongly taken is much more than the cost of making a preventable early filing and avoiding the problem altogether.

Writer Margaret Briffa