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Guest Post: Tackling Bad Faith Trademark Applications or Registrations in China – Part II

This is the second guest post in a 4-part series regarding defeating bad faith marks in China from Beijing East IP authors Yan ZhangMiao Tian, & Austin Chang.

Previously, the authors shared the relevant stipulations regarding bad faith trademarks in the China Trademark Law 2019 (“Trademark Law 2019”), insights on the required factors when applying bad faith, and the current trend and practices. In the next few guest posts, they will share cases with analysis on how the China National Intellectual Property Administration (CNIPA) and the courts apply the laws to tackle bad faith trademark applications or registrations.

  1. Opposition against “CISCO” filed by an individual

A Chinese individual filed an application for “CISCO” on August 27, 2018, designating “Razors, electric or non-electric; Crimping irons; Beard clippers; Hair clippers for personal use, electric and non-electric; Depilation appliances, electric and non-electric; Pedicure sets” in class 8. The applicant filed seven applications in total, including one in class 7 and the others in class 8.

Cisco filed an opposition against the opposed mark before the CNIPA. The CNIPA found that Cisco’s marks bore relatively high originality and the evidence can prove that, through Cisco’s consistent use and promotion, its marks have obtained relatively high fame among consumers. The opposed mark was identical with Cisco’s marks in terms of letter composition, so the CNIPA deemed that the applicant’s filing for the opposed mark showed bad faith of copying and imitating Cisco’s marks, which violated the good faith principle. According to Article 7 and Article 30 of the Trademark Law 2019, the CNIPA ruled to refuse the opposed mark for registration.

Although procedurally, the applicant has the right to file an appeal against the refusal decision, he did not appeal the decision and the opposed mark has been recorded as void.

  1. Opposition and subsequent Appeal against “LAMAZE (stylized)”

A Chinese company filed an application for “” on March 20, 2017, designating “Table cutlery [knives, forks and spoons]; Cutlery; Spoons; Spoons, table forks and table knives for babies; Hand operated hand tools; Knives [hand tools]; Sabres; Graving tools [hand tools]; Nail clippers; Flat irons” in class 8. The applicant has 14 applications in total, designating on goods of baby suits, babies’ pacifiers, toys, cutlery, household linen, etc. in different classes.

Lamaze filed an opposition against the opposed mark. The CNIPA found that, the evidence submitted by Lamaze can prove that, prior to the application of the opposed mark, Lamaze had registered and used the marks of LAMAZE and “LAMAZE in Chinese” and had obtained certain fame. Further, LAMAZE and “LAMAZE in Chinese” were fanciful words that bore certain originality. The opposed mark was identical with Lamaze’s marks in terms of letter composition, which was hardly a coincidence and the applicant failed to make reasonable explanations of its creation source. Thus, the applicant’s filing for the opposed mark showed bad faith of copying other’s famous prior marks and free-riding of the goodwill thereof, which not only was likely to cause consumer confusion, but also impaired the normal order of trademark registration and fair competition, and violated the good faith principle.

Given the above, the CNIPA refused the registration of the opposed mark based on Article 7 and Article 30.

The applicant was not satisfied and filed a registration refusal appeal against the decision. In the appeal, the CNIPA affirmed the above findings and further ruled as follows:

The Applicant filed altogether 14 applications, aside from the opposed mark, the other marks of “Vulli Sophie,” “B toys,” and “OXO tot” are all identical with others’ brands with strong distinctiveness and high reputation. As the Applicant neither made reasonable explanations nor provided evidence of its actual use of the marks, the Applicant’s behavior showed obvious bad faith in copying others’ marks, violated the good faith principle, impaired the normal order of trademark registration administration, and was detrimental to the market order and fair competition.

Therefore, the CNIPA found the opposed mark constituted the circumstance of “obtaining registration by other unfair means” as stipulated in Article 44.1, and accordingly refused the opposed mark from registration.

As the applicant did not further appeal the decision to the court, the opposed mark, as well as other marks filed by the applicant have been recorded as void.

 Comments

In China, the division of class and subclass set in the Similar Goods and Services Classification Guide plays an important role in determining if the goods or services are similar. When the right owner’s mark obtains certain fame but has not yet reached the degree of well-known, it is difficult to obtain cross-class or cross-subclass protection based on the provisions for similar marks used on similar goods and services in the Trademark Law 2019, even if the marks are identical or substantially similar. To combat such copycats, the bad faith clause could be considered as a good alternative.

As we advised in Part I, several circumstances can be deemed sufficient to show bad faith:

  • hoarding massive trademarks in various un-related classes;
  • applying for many trademarks identical with or similar to multiple business signs with certain popularity or high distinctiveness;
  • applying for a large number of trademarks within a short period of time and obviously beyond reasonable need; and
  • having been found of being a squatter in earlier trademark cases.

A mark’s life depends on its use. In order to apply the bad faith clause, the easiest way is to prove that the other party does not have the intent to use the target mark and is hoarding trademarks for future profits through sales. For example, a large number of marks filed that designated a broad range of goods and services obviously exceed the reasonable need for regular business. These marks filed without genuine intention to use would usually turn into items for sale.

Accordingly, it would not be difficult to convince the CNIPA to find that the applicant of an opposed mark has bad faith, if it applied for hundreds or thousands of trademarks, or if its applications are all copies of numerous famous brands and designated in all 45 classes, or it is selling the marks via public platforms or private channels.

In the above two cases, however, the applicants filed a limited number of marks and designated goods for their core business, so the “hoarding” argument won’t be as persuasive as these marks appear, on its face, to have “genuine intention to use.” Not to mention that in reviewing and adjudicating administrative trademark cases, the CNIPA is rather prudent and strict in applying bad faith articles, especially at the opposition stage.

Accordingly, to overcome these downsides, one can:

  1. Demonstrate with solid evidence the cited mark’s strong distinctiveness and high fame;
  2. Illustrate the copied brands with great details;
  3. Find and demonstrate “unique traits” of the opposed mark’s applicant.

Demonstrating the cited mark’s distinctiveness would minimize the likelihood of coincidence in creating an identical mark. At the same time, the cited mark’s high fame implies the possibility that the opposed mark’s applicant has access to the opposer’s marks and the potential benefits from securing such a copied or imitated mark.

As for demonstrating applicant’s copying of the marks, the devil lies in the details and clarify on presenting to the CNIPA and courts with facts and evidence showing the applicant’s copying behavior, the clearer the more likely that they will reward you with a favorable decision.

In the CISCO case, among the seven marks filed by the applicant, six are imitations of Cisco, Philips or Siemens, whose distinctiveness and fame are well acknowledged. In the LAMAZE case, all the 14 marks filed by the applicant are copies of brands in the baby products industry.

Last but not the least, “unique traits” of the opposed mark’s applicant could turn out to be the more crucial factor that successfully offset the lack of “hoarding” in these two cases.

In the CISCO case, the applicant is an individual as opposed to a corporation. In China, any natural person who applies for trademarks should be a responsible person running an individual business or a leaseholding rural household, or someone with the permission to engage in business operation. Compared with legal persons, natural person is required to file trademarks with designated goods or services limited to the business scope set in their business certificates or to their own agricultural products.  Hence, it can be legitimately presumed that an individual, different from corporations who may have multiple brands and carry out various business operations, should have less need for filing multiple trademarks in various goods and services. Accordingly, though the absolute quantity of seven marks is not large, the fact that the applicant is an individual and the ratio of 6 copies and imitations out of the total 7 marks applied should overcome the lack of evidence of “hoarding” trademarks.

In the LAMAZE case, the special trait of the applicant is being a “peer” – the applicant is engaged in the baby products industry, the marks it copied are from the brand owners in baby products industry, the applied-for goods under the copied marks are related to baby products. A player in the same industry not only indicates a high possibility of awareness over the copied brands, but also increases the likelihood of consumer confusion if the copied marks are to be registered and used on the identical goods.

Accordingly, the fact that the applicant resides in the same line of business and the odd proportion of copied trademarks to overall applications serve to offset the shortage of evidence of “hoarding.”

Like we stressed in Part I, there is interdependence among the relevant factors for bad faith, and that a relatively small number of trademark filings may be offset by 1) a greater degree of earlier marks’ distinctiveness, 2) a greater degree of the proprietaries’ fame, 3) a higher level of association of the professionalism of the designated goods or services, etc. Similarly, a lesser degree of similarity between the marks may be offset by 1) a closer distance of two parties’ domicile, 2) a closer relatedness of the two parties’ lines of business, 3) a larger amount of the applicant’s trademark filings, etc.

 

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Author:
Director of China Intellectual Property Practice

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