China’s Crackdown on Malicious Trademark Registration: A Guide for Foreign Businesses

• China has issued a Special Action Plan to crack down on bad faith trademarks.
• Foreign businesses who seek to register or protect their trademark in China will be affected.
• We offer advice for overseas trademark applicants looking to enter the Chinese market.

On March 24, 2021, the National Intellectual Property Administration of China (NIPA) released a Special Action Plan to Crack Down on Malicious Trademark Registration (the Special Action Plan), which announced that a special campaign will be launched from the month to fight against malicious trademark registration.

In addition to specifying what kind of behaviors are regarded as malicious trademark registration, the Special Action Plan also provided the actions that will be taken to combat such behaviors.

How the Special Action Plan targets bad faith trademarks in China

The Special Action Plan targets malicious trademark registration acts that squat the trademark of others for illegitimate benefits, disrupt the order of the trademark registration administration, and cause significant loss to business besides confusing brand identity among consumers and affecting public trust. To the more specific, the following violations are targeted:

• Malicious registering of the names of national or regional strategies, major activities, major policies, major projects, major scientific, and technological projects.
• Maliciously registering the words and symbols related to major natural disasters, major accidents and disasters, major public health events, social security events, and other public emergencies, thereby damaging the social and public interests.
• Malicious squatting the names and symbols of major events and exhibitions with high visibility.
• Maliciously registering names of administrative divisions, mountains and rivers, scenic spots, buildings, and other public resources.
• Maliciously registering common names of goods or services, trade terms, and other public commercial resources.
• Maliciously registering names of public figures with relatively high visibility, famous works, or roles.
• Maliciously registering other person’s trademark or other commercial mark with high popularity or strong salience, thereby harming the prior rights and interests of other person.
• In obvious violation of the prohibition prescribed in Article 10 of the Trademark Law or in other violation of public order and good customs, which has caused major negative or negative social impact on the public interests and public order of China’s politics, economy, culture, religion, nation, and other social interests.
• Obviously violation of the prohibitions stipulated in Article 10 of the Trademark Law.
• Where the trademark agency accepts the entrustment of the principal or disturbs the order of trademark agency market by other improper means even though it knows or should know that the principal is engaged in the above-mentioned acts.
• Other obvious violations of the principle of good faith.

According to Article 10 of the Trademark Law, the following marks shall not be used as a trademark:

• A mark identical or similar to the country name, national flag, national emblem, national anthem, military flag, military emblem, military anthem, military medal, etc. of the People’s Republic of China, and a mark identical to the name and logo of Central government agencies, name of the specific location where it is located or name or figure of landmark building.
• A mark identical or similar to the country name, national flag, national emblem, military flag of a foreign country, except with the consent of the said government.
• A mark identical or similar to the name, flag, emblem of an international inter-governmental organization, except with the consent of the said organization or where the public is unlikely to be misled.
• A mark identical or similar to an official logo or hallmark, which indicates control or assurance, except where duly authorized.
• A mark identical or similar to the name or logo of “red cross”, “red crescent”.
• A mark that is racially discriminatory.
• A mark that is deceptive, easy to cause the public to be misled over the characteristics such as quality or place of origin of commodities; or
• A mark that is detrimental to socialist morals or has any other adverse impact.
• Geographical names of administrative regions of county level and above or overseas geographical names well known by the public shall not be used as trademarks, except where a geographical name has any other meaning or where it is an integral part of a collective trademark or certification mark; trademarks bearing a geographical name, which have been registered shall continue to be valid.

How are Chinese authorities cracking down on malicious trademark registration?

According to the Special Action Plan, authorities will adopt such measures as legal punishment, administrative guidance, and credit restrictions, including promoting the administrative punishments of malicious registration to be included into the national public credit information.

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Besides, trademark agencies engaged in malicious registrations will be cracked down, and trademark registration applications from unscrupulous trademark agencies will not be accepted by relevant authorities.

The detailed actions will be taken in stages:

• Mobilization and deployment stage (March 2021): All regional intellectual property administrative departments shall collect the case clues within their respective jurisdictions, which shall be summarized by provincial (autonomous region, municipal) intellectual property offices; all local trademark examination and cooperation centers shall collect clues in their own trademarks pending examination, and the above clues shall be reported to the Trademark Office before March 30.
• Implementation stage (April-October 2021): The Trademark Office shall guide the local trademark examination and cooperation centers to examine the clues of cases in the trademark registration process according to law. As for the clues of cases in the procedure of trademark objection and invalidation, the Trademark Office shall examine and hear the case according to law and screen a number of typical trademarks for invalidation. The Department of Protection shall transfer the clues of major cases that are obviously suspected of malicious trademark squatting, as well as the relevant trademark information involved in major public emergencies or emergencies of general concern to the society, to the relevant regional intellectual property administrative departments for work. With respect to the case clues of the trademark agency as determined by the effective administrative decisions, rulings, or judicial judgments to engage in malicious squatting of the above-mentioned typical trademarks, the Application Promotion Department shall transfer them to the local intellectual property law enforcement departments and guide them to investigate and deal with according to law. Local intellectual property administrative departments at various levels shall concentrate on carrying out special rectification according to the case clues transferred by the higher authorities. Administrative punishment shall be imposed on those who illegally engage in the act of malicious trademark squatting. The situation of case investigation and policy self-examination and adjustment shall be reported to the superior authorities in time.
• Summary and supervision stage (November-December 2021): The Trademark Office shall inspect the implementation of special operations by local trademark examination and cooperation centers. The intellectual property offices of all provinces (autonomous regions and municipalities) shall supervise the implementation of special actions within their jurisdiction, and follow up and supervise the case clues and investigation and handling of cases transferred or assigned; summarize the special actions carried out in the jurisdiction, and summarize the special actions carried out in the center by the local trademark examination and cooperation centers, and report to the Trademark Office before December 10, 2021. The NIPA shall evaluate and notify the implementation of the special actions and their effects.

China’s efforts in intellectual property protection

During the annual Two Sessions meeting in early March 2021, enhancing intellectual property (IP) protection was one of the core points reiterated by the Government Work Report.

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The protection of trademarks (TM), as a typical type of IP, has also become essential under current market internationalization trends.

In recent years, China has made efforts to improve and strengthen its trademark protection system from almost every layer to better guarantee trademark applicants and owner’ rights and benefits. These include:

• Legislative improvement: Trademark Law of the People’s Republic of China (Revised in 2019), regulating the malicious and hoarding trademark registration, mainly embodying below aspects:
• Strengthen the obligation of trademark use, adding the provision that “any malicious trademark registration not intended for its use shall be rejected”, which firstly applies in the trademark registration application reviewing process (realizing the cracking down of malicious registration ahead of schedule) and successively, applies in the trademark opposition and invalidation of trademark registration procedures (providing another explicit reason for raising trademark opposition and invalidation application).
• Regulate the acts of trademark agency, stipulating that “the trademark agency shall not accept the entrustment if it knows or should know that the trademark applicant has malicious registration acts, and shall be investigated for responsibility according to law once it is found”.
• Stipulate penalty measures for malicious trademark registration and malicious litigation by applicants and trademark agencies.
• Administrative enforcement: Formulate standards for judging trademark infringement; organize special actions to enforce and protect trademark rights, destroy infringing and counterfeit commodities, and crack down on violations of intellectual property rights; carry out special enforcement actions against unfair competition in key areas to severely crack down on acts of unfair competition that infringe intellectual property rights, such as trademark counterfeiting and confusion.
• Judicial efforts: Punish the malicious infringer, strictly protect the right to exclusive use of the trademark and give more adequate compensation to the right holder. Increase the amount of compensation for malicious infringement of the right to exclusive use of a trademark from one to three times to five times, raise the upper limit of legal compensation for trademark infringement from RMB 3 million (approx. US$457,800) to RMB 5 million (approx. US$763,000).

Tips for overseas trademark applicants entering the Chinese market

In light of the administrative measures targeting bad faith trademarks, what are the steps to be taken by overseas trademark applicants?

1. If you are going to enter Chinese market, get your trademark registered via a qualified trademark agency. Tips: for word trademark, not only register the version in the original language, get the translation in Chinese characters registered as well.
2. If you are entering Chinese market, but find your trademark has been maliciously applied for registration by others but it is still under substantive examination period, report to the trademark office immediately for asking a rejection of the application; in case it is announced as preliminarily approved but still within the 3 months of opposition period, raise your opposition against the preliminary approval in due course; in case it’s registered already, apply for invalidation of trademark registration accordingly.
3. If you have already gotten your trademark registered in China, then make sure you use it widely and frequently, including but not limited to use on goods, packaging, containers, service places, and trading documents or use in advertising, exhibitions, and other commercial activities.
4. If you find your trademark is being infringed by others, report to the trademark office immediately, or seek professional advice from qualified IP attorneys for better protecting your rights via multiple legal channels.

Dezan Shira & Associates is capable of providing professional support to overseas clients, and if you have queries with regards to IP issues, you are welcome to reach us for further discussion at any time. You may email us at china@dezshira.com.

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