Malicious Trademark Registration Further Regulated by the Revised Trademark Law in China

The trademark application in China follows the principle of “Earlier Application, Earlier Being Granted”. In reality, due to the weak awareness for IP protection, many companies including oversea companies have frequently found their business marks squatted in China. Once the business mark is squatted, the party suffered will have to spend long time and high cost to take legal action. However, even so, the result is not guaranteed.

The revised Trademark Law coming into effect on May 1^st, 2014 further regulates the behavior of malicious trademark registration, including:

I. Clarifying “Good Faith” as the basic principle governing the trademark registration and the use of trademark. 

Article 7 of the revised Trademark Law clarify that the application and use of trademark shall follow the principle of “Good Faith”. Such principle will be legal ground for regulating various behaviors in respect to malicious trademark registration.

II. The behavior of malicious registration by agents or representatives is prohibited.

In many cases we handled, we found a lot of trademarks being squatted happen to international business partners. For example, some Chinese agents will seek to register its business partner’s trademarks without prior consent of the partner. The revised Trademark Law has clarified that the registration of trademark by a business agent/representative without consent of the trademark owner is prohibited.

In addition, even if the agency relationship does not exist, as long as one party is aware of the existence of other party’s prior used trademark due to their contractual, business or other relationship, the registration application by such party will not be granted if the other party raises opposition.

III． The prior trademark user’s interest is protected

In consideration of the fact that a lot of business marks are used without being registered, to avoid the impact brought to an innocent user due to malicious registration by others, the revised Trademark Law specifies that if a trademark has been already used by one party on goods/service on the same or similar class prior to the registration of the trademark by others, such party is allowed to continue using the trademark within the original scope. However, a special mark shall be added to avoid confusion upon request by the trademark applicant.

Such rules, to some extent, allow the legal use of the squatted trademark by the innocent party. However, we believe this is an alternative measure for protecting the interest of the innocent party who fails to protect its own benefit in time. Obviously such protection is not perfect to the party whose business mark is squatted. Anyway, this is the balance between the principle of “Earlier Application, Earlier Being Granted” and the principle of “Good Faith”.