For years, malicious trademark registration has not fully stopped in China. This happens mainly because in China the principle of first-to-file is applicable and the cost for trademark registration is relatively low. For the purpose of enhancing trademark protection and creating a friendly business environment, China has been taking multiple measures and continued efforts from the perspectives of legislation, administrative protection, and judicial protection to crack down on malicious trademark registrations.

From the perspective of legislation, in 2019, China amended the Trademark Law for the fourth time. In particulara comprehensive system to combat malicious squatting and hoarding of trademarks has been established therein. That "malicious applications not intended for use shall be refused" is newly added in Article 4. Article 19 increases the obligations of trademark agents to review applications, and stipulates that agents may not accept malicious applications to register trademarks not intended for use. Articles 33 and 44 together provide for this circumstance as a reason for filing an opposition or invalidation. Meanwhile, the amended Trademark Law stipulates punishments for trademark agents who violate the amended Article in Article 68. Based on the amended Trademark Law, China National Intellectual Property Administration (CNIPA) issued the Several Provisions on Regulating the Application for Registration of Trademarks and Special Action Plan for Cracking down on Malicious Trademark Registration on Oct. 11, 2019 and Mar. 15, 2021 respectively to further provide the authorities with fundament and guideline on how to curb malicious squatting and hoarding of trademarks. Additionally, in 2022, China National Intellectual Property Administration also amended the Guide on Trademark Examination and Adjudication to make sure that each procedure of trademark examination and adjudication will be in line with the current Trademark Law. Especially, how to understand and apply the above Articles is explicitly explained therein and some typical cases are introduced in detail.

From the perspective of administrative protection, the authorities in China have paid more efforts in collecting the clues of malicious trademark registration cases proactively. Meanwhile, in accordance with Article 4 of the amended Trademark Law, examiners are entitled to refuse the malicious trademark applications directly and proactively and the right owners do not need to file oppositions against such applications after they are published. Furthermore, now entities who filed for malicious trademark in extremely bad faith will likely be recorded in the List of Entities with Seriously Illegal and Dishonest Acts. In addition, during the past few years, China has been conducting the “Blue Sky” special rectification actions nationwide, where agents which conducted malicious squatting activities shall be punished and their trademark agency business will be stopped in some severe situations. Moreover, the authorities have also strengthened publicity and education about cracking down on malicious trademark registration, by releasing typical cases and exposing typical infringers. All these measures have turned out to be very effective and successful. In accordance with the statistics released by the State Council Information Office of the People’s Republic of China, there are 482,000 malicious trademark applications in total refused in 2021. Among them, 1,111 squatting applications such as“全红婵(Quan Hongchan in Chinese)”.were refused via quick examination procedures. 1,635 registrations were invalidated by the ex officio actions proactively initiated by CNIPA. Through the “Blue Sky” special rectification actions, in 2021, 23,000 agents in China have completed their self-inspection and submitted the corresponding reports. 130 agents were punished for being the agents of malicious squatters and the trademark agency business of 3 agents were even stopped directly. Around 2,070,000 suspected online transactions about malicious trademarks were removed from the platforms.

From the perspective of judicial protection, there are more and more cases in recent years where the real right owners’ rights are protected and untenable claims made by squatters are dismissed by the courts. First, the malicious trademark registrations, which have not been put into actual commercial use but applied for the purpose of obtaining illegal profits, shall not be protected in trademark lawsuits, such as Ambitmicro Technology Limited v. Ambiq Micro, Inc & Fujitsu Semiconductor (Shanghai)Co., Ltd.. Second, malicious squatting and abuse of trademark prosecution actions can be regarded as unfair competition, such as BRITA GMBH & BRITA China Co., Ltd. v. Shanghai Kangdian Industrial Co., Ltd. Third, for malicious trademark registrations which are invalid during a civil litigation, more courts intend to identify that the use of such registrations during its valid period shall also be recognized as infringing use, such as Cadbury UK Limited v. Yi Kou Lian (Xiamen) Food Co., Ltd & Beijing Hui Fu Yuan Food Trade Co., Ltd. This further enhances the protection of the rights of the real right owners.

Author biography

Michael Fu, Partner | Attorney at Law
E-mail: michaelfu@changtsi.com
Michael Fu has focused his practice on IP law for over 10 years. He excels at advising clients with the enforcement of their IP rights through administrative and judicial channels in China.

Yang Luo | Attorney at Law
E-mail: yangluo@changtsi.com
Luo Yang has engaged in foreign-related IP legal services for 6 years in Chinese market.