Q: What is bad-faith registration of a trademark?
A: The term “bad faith registration of a trademark” means the act of using improper means to preemptively register the trademark of another that is already being used and has a significant influence in the relevant sector, for the purpose of profiting from it.
Article 31 of the Trademark Law specifies that, “An application for the registration of a trademark may not prejudice the existing prior right of any third party nor may improper means be used to preemptively register a third party’s trademark which is already in use and which has a certain degree of influence”
Q: What judicial remedies are available once the bad-faith registration of a trademark has occurred?
A: Pursuant to the current Trademark Law and related regulations, the main means of judicial remedies available to the rights holder are as follows:
Administrative procedure: the second paragraph of Article 41 of the Trademark Law specifies that, “If a registered trademark violates Articles 13, 15 or 31 hereof, the owner of the trademark or any interested party may, within five years from the date the trademark is registrated, request that the Trademark Review and Adjudication Board make a ruling to cancel the registered trademark. However, the owner of a well-known trademark shall not be subject to such five-year time limit if the trademark was registered in bad faith”. Accordingly, once improper means have been used by another to preemptively register a trademark, the rights holder may request the Trademark Review and Adjudication Board to cancel the registered trademark within the time limit.
Litigation procedure: if the Trademark Review and Adjudication Board renders a ruling upholding the registered trademark and the rights holder is dissatisfied with that ruling, he may institute an administrative action in a People’s Court within 30 days from the date of receipt of the notice issued by the board. If the People’s Court upholds the administrative ruling at first instance, the rights holder may appeal to the People’s Court at the next higher level.
If the board renders a ruling cancelling the registered trademark, the rights holder may institute a legal action in a People’s Court demanding that the bad-faith registrant compensate him for the losses he incurred. Article 36 of the Implementing Regulations for the Trademark Law specifies that, “damages shall be payable if bad faith on the part of the trademark registrant caused another person to suffer losses”.
Grievance procedure: if, after the trials in the two courts at different levels, the administrative ruling is ultimately upheld, the rights holder may institute a grievance procedure with the People’s Court that rendered the original effective judgment, or the People’s Court at the next higher level, within two years after the entry into effect of the final judgment.
Q: What are new provisions of the third amendment to the Trademark Law (draft) addressing the bad-faith registration of trademarks?
A: On 2 September 2011, the Legislative Affairs Office of the State Council issued the Trademark Law (Draft for Comments on the Bill of Amendment). The Trademark Law Amendment Bill (Draft) was deliberated on for the first time at the 30th Session of the Standing Committee of the 11th National People’s Congress on 24 December 2012, and has now been published for public comments.
The draft bill addresses the phenomenon of the registration of trademarks in bad faith. It prohibits the pirate registration of trademarks of which one is well aware of the prior use by another due to business relations, etc. Additionally, the draft bill adds the revealing provision that application for the registration of, and the use of, trademarks are required to comply with the principle of good faith. This will have a significant effect on halting those other pirate registrations of trademarks where the situation falls between the cracks in legislation, but where bad faith is clearly involved.
The bill also provides that if the registration of a trademark was obtained through fraud, or other improper means, the Trademark Office will declare such registered trademark invalid; furthermore another entity or individual may request that the board declare such registered trademark invalid. The bill stipulates where a trademark, the registration of which was maliciously pirated, is declared invalid, the exclusive right to use it ceases to exist. The relevant decision or ruling declaring a registered trademark invalid will not retroactively affect any judgments or rulings in a trademark infringement case rendered and enforced by a People’s Court, any handling decision in a trademark infringement case rendered and enforced by the administration for industry and commerce, or a trademark transfer or licensing contract performed prior to the declaration of invalidity. However, where failure to refund trademark infringement damages, trademark use fees or trademark transfer moneys would clearly violate the principle of fairness, all or part of the amount will be refunded. Where the bad faith on the part of the trademark registrant caused another to incur a loss, he will be required to pay compensation.
Q: How does a court come to a finding of bad-faith registration of a trademark?
A: The First Intermediate People’s Court of Beijing Municipality held a news briefing on 3 December 2012, at which it gave a summary report to the public on its trial of bad-faith registration of trademark cases and proposed concrete measures on how to stop the out-of-control phenomenon, for example by: recommending appropriate expansion of the scope of protection of famous trade names; stringent application of the rule under which an order for rectification within a specified period of time is given or the registered trademark is cancelled if use thereof stops for three years in succession; increasing the cost of maintaining trademarks the registration of which has been maliciously pirated, etc. The First Intermediate People’s Court of Beijing Municipality publicly pronounced on six well-known trademark protection cases (including “Tsinghwa”, “Taitaile”, “Dumex” and “Jeep”) that have all been the subject of bad faith registrations at one time.
Cheng Bing and He Jing are intellectual property partners at Anjie Law Firm