New amendments to the Chinese Trademark Law entered into force last November 1st 2019 with the main goal of curbing bad faith in trademark filings.
For this purpose, article 4 has been completed with the following wording: “trademark applications filed in bad faith without intent to use shall be rejected”. This means that the Chinese National Intellectual Property Office (CNIPA) could reject such bad faith trademarks outright during the course of their examination if the examiner deems that the mark has been filed in bad faith and if the applicant fails to demonstrate an intention to use the mark.
This new ground can also apply as basis of opposition (art. 33) and invalidation proceedings (art. 44).
On the other hand, this revision prohibits trademark agents to handle any bad faith filing if the agent knows or should have known that the applied mark is not intended for use or other specified circumstances such as copying or imitating a well-known mark. Thus, any trademark agent who files bad faith trademark applications will be subject to warnings, fines, administrative punishments and court sanctions.
Additionally to the new liability for trademark agent, the penalties applied to applicants have been also increased, as the applicant can respond for statutory damages from 428,000 USD up to 708,500 USD and punitive damages from 3 times to 5 times of the actual damages based on the rights holder’s losses, the infringer's illegal profits or a reasonable multiple of the trademark license fees.
It is quite usual that Chinese trademark pirates apply for a large number of trademarks with the intention to sell or obtain any improper benefits, instead of putting them for actual use. We must point out that, while “bad faith” is not defined, the provisions have set out various factors that should be considered when determining this bad faith:
- The number or the nature of trademarks filed by the applicant.
- The applicant’s industry and business status, and
- Administrative or judicial decisions that have taken effect, where the applicant has been found to have engaged in other bad faith filings or infringements.
In view of the aforementioned, the revised Law can be seen as another huge step forward that provides additional legal grounds for challenging bad faith filings and help trademark owners that are struggling with squatters in this country. However, we must point out that it is still unclear if this revised law can apply against trademarks registered prior to November 1st 2019, but it is unlikely that these new grounds have retroactive effect.
Despite the fact these new amendments are an important progress, the best way of protect your trademark for squatters in China is to obtain your trademark registration in China as soon as your company plans to commercialize products or services in the country, or just to manufacture them there.