(By Wang Ting) In China, the Trademark Law applies the Principle of First Filing and when the Trademark Office reviews these applications, they usually examine whether there are prior applications or registrations existed, but not the intentions of filing such prior registrations. It means they don’t consider the bad faith during trademark registration procedure. Many foreign companies have applied and obtained the trademarks for their own products and services at the beginning. However, as so-called villains can always outsmart, besides the malicious registrations of others’ un-registered trademarks, there are lots of cases in which the trademark squatters register the well-known or popular trademarks on different goods or services. Thus foreign companies suffered from such consequences. Today, in our introduced case, we are going to discuss about the situations that the acts of malicious registrations under different classes are finally determined as improper means as stipulated in the Trademark Law.

Case Introduction

Appellant (Defendant at first instance): Trademark Review and Adjudication Board (the “TRAB”)

Appellant (Third Party at first instance): Hubei Daohuaxiang Wine Industry Co., Ltd. (the “DHX”)

Respondent (Plaintiff at first instance): Anguo Jintai Subsidiary Food Co., Ltd. (the “Jintai”)

Court of First Instance: Beijing No.1 Intermediate People’s Court  No.: （2014）一中知行初字第6431号

Court of Second Instance: Beijing High People’s Court  No.: （2015）高行（知）终字第659号

Jintai filed an application for the trademark of “清样” numbered 8078350 ( the “Disputed Trademark”) under Class 32 for products including beer and juice on February 22^nd, 2010. The Trademark Office approved its application of this Disputed Trademark during the primary review and then published the decision. During the publication period, DHX filed an opposition against the Disputed Trademark but the Trademark Office decided to approve the registration.

Thus, DHX filed an application to the TRAB for a review. The TRAB disapproved the registration of the Disputed Trademark for following reasons: (1) The Disputed Trademark was obviously registered with the malicious intentions of copying and plagiarizing the well-known trademark; (2) Jintai has the history of malicious registrations, such as trying to register “关汉卿” under six other classes, “关家园” under three other classes and “斯巴鲁” under two other classes (Oppositions have already been filed against the above three trademarks). Such kind of malicious registrations will not only cause confusions to the public but also disrupt the order of trademark management. Furthermore, it will damage the fair competition in market and violate the principle of good faith.

Dissatisfied with the decision of TRAB, Jintai then filed an administrative lawsuit. The court of first instance reversed the decision of TRAB, so that DHX and the TRAB appealed. Then the court of second instance holds the opinions that:

1. The Article 41 of the Trademark Law (2001 VERSION) prohibited the registrations of trademarks if “its registration is obtained by deceptive or other improper means” and this shall be fulfilled throughout the whole process of trademark review, opposition and lawsuits.

2. Jintai has maliciously tried to register trademarks under other classes, which indicates its intentions of copying and plagiarizing well-known trademarks, and to disrupt the order of trademark management. Furthermore, it will damage the fair competition in market and violate the Public Order and Good Customs. The TRAB shall refer to but not directly apply the Paragraph 1, Article 41 of the Trademark Law (2001 VERSION). Though there are certain defects in the process about the laws and regulations being quoted, the decision of dismissing the registration for the Disputed Trademark is correct.

Therefore, the court of second instance reversed the original judgment and dismissed all the claims filed by Jintai.

Lawyer’s Comment

1. The prohibition on malicious registrations stipulated in Article 32 of the Trademark Law

The Article 32 of the Trademark Law stipulates that “It is prohibited to forestall the registration, through any improper means, of a trademark that is already used by another party and has produced a certain influence.” This Article is mainly to regulate the acts of forestall registrations for trademarks with certain influence.

But what calls for special attention is that this Article only applies to the trademarks with certain influences instead of any prior used trademarks. There are still no standard to identify trademarks with certain influence. According to our experience, while the identifying standards are complicated, the Trademark Office is more inclined to enhance the burden of proof of right holders. Otherwise the Trademark Office may decline to apply this Article 32. In the case of “清样”, though the right holders has submitted relevant evidences, the TRAB and courts still didn’t quote this Article to cancel the registration for the Disputed Trademark.

2. The restrictions about the trademarks obtained by deceptive or other improper means, as stipulated in Article 44 of the Trademark Law

The Article 44 of the Trademark Law also stipulates that “A registered trademark shall be declared invalid by the Trademark Office if it is in violation of Article 10, Article 11 or Article 12 of this Law, or its registration is obtained by deceptive or other improper means. Other entities or individuals may request the Trademark Review and Adjudication Board to declare such registered trademark invalid.” This Article is mainly to regulate the registrations by deceptive and other improper means.

(1) Situations of “improper means”

Improper means refer to the acts that will disrupt the order of trademark management, damage the interests of the public, improperly take advantages of public resources and gain illegal interests through other means. Generally, it refers to the massive acts of non-use-oriented trademark registration. The malicious registration of large quantities of trademarks violates the principle of good faith and disrupts the order of the economy. So such acts shall be identified as “improper means”. In this case, the court accepted the evidences proving the malicious registration of large quantities of trademarks.

(2) The procedure of applying this Article

As stipulated, this Article is applicable to the revocation procedure of registered trademarks, but not during the processes of trademark application and ratification. While referring to the judicial practice, lots of courts hold a negative attitude towards this Article, and dismissed the evidences about forestall registrations.

In this case, the court could apply the article of “by deceptive or other improper means” during the processes of trademark application and ratification. But the court also noticed that such attempts of regulations application shall be deliberative. Generally, when other laws and regulations have failed to prohibit such improper registrations, then we may refer to this article.

In our website, we have introduced about:

1. How Venture Companies Should Deal with Trademark Squatting?
2. China’s Courts Won’t Prohibit a Trademark Squatting with Post-Approval
3. Summary of Administrative Case Verdict on “Britney Spears” Trademark Squatting (I)
4. Summary of Administrative Case Verdict on “Britney Spears” Trademark Squatting (II)

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You Yunting：86-21-52134918  youyunting@debund.com/yytbest@gmail.com

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