1. Article 4, not elixir

Many clients have been asking whether the latest amended Article 4 of China’s Trademark Law could be used to oppose or invalidate a trademark if there is sufficient bad-faith evidence. According to the current practice, the answer is yes and no.

The language of Article 4 is interesting. It reads: “A bad faith application for trademark registration for a purpose other than use shall be rejected.” That means even if a trademark is filed without intention to use, it may still get registered if it is not filed out of bad faith. Another scenario is that even if a trademark is filed out of bad faith, but its owner indeed has intention to use or has already used it, this application may not be refused based on this Article.

This Article aims to solve trademark hoarding or massive trademark filing. It is not designed to attack all bad-faith trademarks. For instance, if a single applicant filed 100 trademark applications and the client’s mark is just one among them, the client stands a good chance of solving the problem by relying on Article 4. However, if that applicant only filed a few trademarks, the client may have to resort to other Articles.

But there are two exceptions: if those marks were assigned from a bad-faith trademark hoarder or this applicant has certain connections with a bad-faith trademark hoarder, Article 4 may still apply.

2. Non-use cancellation as a powerful weapon

When a mark has been registered for over 5 years and there are no other absolute grounds such as genericide to fall back on, non-use cancellation is always worth a try.

The cost of non-use cancellation is low because the burden of proof is totally on the side of the trademark owner and what we need to do is just filing an application. The success rate, however, is extraordinarily high, usually around 50-60%. In most cases before the China Trademark Office (now subordinate to the CNIPA), trademark owners did not file any use evidence at all.

In practice, clients are strongly recommended to use a third-party to file the non-use cancellation. It can avoid retaliation and, meanwhile, increase the chances of purchasing the trademark from its owner. Moreover, if the case is ever brought to court, it would be easier for this third-party, which is usually a Chinese mainland company or a Hong Kong company, to produce authorization documents.

In principle, we also insist that the clients file non-use action even if we are aware that the trademark has been used in commerce, because the adverse party, either may fail to respond to the CTMO’s Notice for various reasons, or will produce evidence showing how and to what extent the mark is being used, which can be of great help to evaluate other possible legal or business options.

3. Changed circumstances and procedural litigations

The TRAB’s latest statistics in early June 2020 reveal in 2019 that the plaintiffs’ success rate in reversing the TRAB decisions is around 23% before the Beijing IP Court. Among those 23% cases that the TRAB lost, 44% were caused by the so-called “changed circumstances”. As you may know, due to the huge workload of the TRAB, examiners usually do not suspend cases even if the result hinges on the status of another pending case. They simply adjudicate those cases very quickly based on the status at the time of their examination. Therefore, when those decisions are brought to the Beijing IP Court, the status of other relevant cases may have changed. For instance, the cited prior marks may have been invalidated during the invalidation so they should no longer block the client’s trademark from registration. Considering that the “changed circumstances” is the number one reason leading to the reversal of the TRAB decision, it is always advisable to appeal the TRAB decisions to the Court if those decisions depend on other pending cases.

Those litigations are known as “procedural litigations” because no party has substantive dispute over the TRAB decision. Usually such “procedural litigations” would buy plaintiffs 4-6 more months before the Beijing IP Court. As those litigations are just procedural, the legal fees are usually quite affordable. That being said, before a mature case suspension mechanism is available, the clients still have to bear such additional costs.

One more observation. Foreign parties usually enjoy higher success rate in the lawsuits against TRAB decisions.

4. Comprehensive actions

In the case where the adverse party’s trademark has already been used, clients are often advised to take additional actions apart from opposition or invalidation. By leveraging tactfully designed administrative raid actions or civil litigations, clients may collect favorable evidence therefrom and supplement these newly acquired evidence in the ongoing opposition or invalidation or vice versa, which could dramatically increase the chance of success. Different from the trademark practice in the US, the Beijing IP Court has exclusive jurisdiction over all the TRAB decisions, and the administrative litigations are separate from civil litigations, which are governed by other local courts. In order to avoid possible conflicting conclusions, the TRAB and the Beijing IP Court usually give weight to the evidence produced in the local administrative or civil actions.

This practice is particularly effective in assessing trademark similarity in opposition and invalidation. We are seeing emerging cases, especially in the fashion industry, where the registered trademark per se is not quite similar to the client’s marks, but is transformed in actual use to heighten the resemblance. If the client can obtain penalty decisions from local administrations or judgments from local courts declaring the defending trademark to be infringing, they can use such decisions as strong evidence in the opposition or invalidation proceedings, even if those legal documents are not final.

5.1 Trademark surveillance

Some multinational corporations opt to use one trademark surveillance service provider to cover global trademark publications. The accuracy of the surveillance results varies — it usually works well for English marks but is less satisfying if Chinese characters and device marks are involved.

5.2 More claims or less claims?

The common practice is to build cases on as many grounds as possible to increase chances of success. However, in some cases where evidence is not sufficient to support a claim, such as well-known trademark status or prior copyright, we should tread carefully and avoid citing such claim in order to avoid being blocked by res judicata in the future. For instance, for copyright, it can be rather complicated and time consuming to collect all the evidence establishing the chain of ownership of the right, from the artist to the current right holder. Chinese courts can be quite demanding in that regard. Therefore, it is wise to restrain from citing such ground unless solid evidence, meeting all the Chinese requirements, have been collected.

5.3 Cases consolidation

Applications could be filed to the CNIPA requesting a consolidated examination of several relevant cases. Oftentimes clients have better chances to have all these cases examined by a single examiner.

5.4 Precedents

Although China is not a common law country, most exemplary Chinese cases are usually quickly codified in the form of laws, judicial interpretations, and guidance, and Chinese courts do value precedents in trademark cases. The Supreme Court publishes guiding cases regularly and the Beijing IP Court has been requiring parties to submit precedents for many years as its practice.

Contributed by:Yongjian Lei, Haiyan Ren