CHINA PATENT & TRADEMARK LAW OFFICE
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    • Why do you need to register a trademark in China
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    • How To Protect Your Intellectual Propery (IP) Rights In China
    • 7 Steps to Protect Your Intellectual Property in China
    • China is strengthening intellectual property protection
    • What should a foreign business know about filing a trademark in China
    • A Guide to the Chinese Trademark Registration Process
    • Why you should file your trademark in China now
    • Why is a Trademark Watch Important
    • Differences Between Trademark and Copyright
    • Avoiding IP Infringement with Chinese Sourcing
    • Cracking down trademark squatters under amended trademark law in China
    • How China is acting to combat bad faith trademarks
    • Intellectual Property protection when doing business in China
    • China's intellectual property rights protection improved to create a sound business environment
    • China’s race to become global intellectual property leader
    • China strengthens intellectual property rights protection prior to Beijing 2022
    • Important Trademark Development from China for 2022: What US Brand Owners Need to Know
    • How to Protect Trademarks in China
    • A simple guide to intellectual property in China
    • An Overview of the Latest Amendment to the Chinese Patent Law
    • What We Do When Trademark Squatters Get Smarter in China
    • The most important patent and IP business developments in China in 2021
    • A simple guide to trademark registration in China
    • Protecting your intellectual property in China
    • How To Enforce Intellectual Property Rights In China
    • What China’s new patent laws mean for life sciences
    • China extends lead over U.S. in global patents filings, U.N. says
    • What Do China’s High Patent Numbers Really Mean
    • How to Protect Your Intellectual Property Rights in China
    • Protecting your intellectual property in China
    • Procedure of filing trademark in China
    • The Importance of Having a Chinese Brand Name
    • Why Does Hong Kong Attract International Businesses
    • What’s the Difference Between Patents, Copyrights and Trademarks
    • How to initiate a trademark infringement civil proceedings in China
    • How to Brand your products for the Huge China Market and Reduce Your Risk
    • 8 Trademark Mistakes Your Start-Up Must Avoid
    • What’s the Difference Between OEM and ODM Products
    • What the amendment to Article 4 of the Chinese Trademark Law means for bad-faith trademark filings
    • China starts rebuff of various metaverse trademark applications amid rush to hype the internet’s next generation
    • China, US and Hong Kong trademarks – A quick guide
    • Working with Chinese Trademark Agencies – A Dangerous Game, or Delicate Tightrope
    • China will improve its IP system
    • 12 Intellectual property Protection Tip
    • How to protect your brand in China
    • China Trademark And Brand Development Index 2021: Which Are China's Top Provinces
    • Must I Register My Company Name as a Trademark in China?
    • What You Need to Know About China Trademark Registration as a Foreigner
    • How to File a Trademark in China
    • How to Register a Patent in China
    • How to effectively deal with the preemptive registered trademark in China
    • China’s Trademark Regime: How to Protect Your Brand in the Mainland
    • China Issues Stricter Rules on Trademark Use
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Trademark squatting is a perennial headache for existing foreign companies and those trying to enter the Chinese market. In China, squatters may not just be local competitors but also syndicates operating as a giant profit-making machine, and they are upping their game as the Chinese government and brand owners have both increased their efforts in defending legitimate trademark rights.

While tackling trademark squatters may seem daunting, a well-devised strategy would go a long way in acting in both offence and defense against bad faith trademark squatting in China. In this article, recent trends in curbing bad faith filings are explored and practical tips on combatting squatters are considered.
Doubling the effort: rejecting bad faith applications without intention to use

The 2019 amendment to the Trademark Law (the Law) sees that a bad faith trademark application that is not filed for the purpose of use shall be rejected. This provision in Article 4 of the Law provides an explicit ground upon which trademark owners may file opposition against a trademark application or invalidation against a trademark registration, but also empowers the China National Intellectual Property Administration (CNIPA) to outright refuse an application if it considers it a bad faith filing.

The provision surely did not disappoint to deliver what trademark owners expect it to do. Since the enactment of this new provision, many brand owners successfully removed bad faith application by opposition and invalidation by prevailing on this ground. More recently, bad faith applications have been outright refused by the CNIPA citing the same ground on its own initiative. From the CNIPA guidelines and decisions, a list of relevant factors being considered with regard to this ground are summarised below:
  • How many marks are filed: when the marks are filed in bulk in a lot of classes by the same person or those that are clearly its affiliates, or if the applicant filed many marks that are similar to many different brands, there is a good reason to suspect that they may be bad faith filings.
  • The transaction history of the mark: As much of the consideration hinges upon whether there is 'intent to use', examiners may also consider the transaction history of the trademarks, e.g. whether the mark or other marks from the same applicant have been offered for sale on trademark platforms.
  • Any previous decisions/judgments against the applicant: if there have been previous administrative decisions and/or litigation judgments on bad faith or infringement that are against the applicant or its affiliates, these records would be cogent evidence of bad faith.
  • Class of goods/services or the industry in which the applicant operates: if the industry in which the applicant operates does not correspond with the goods and/or services as filed, examiners may also consider this a red flag for bad faith.
  • How distinctive/famous is your mark: the more distinctive/reputable your marks or trade names, examiners will be more inclined to infer bad faith if the applied-for mark is identical or highly similar to your marks.
Of course, sophisticated trademark squatters have been finding loopholes to work around these considerations. For example, they may set up shadow companies with a company name that incorporates the name of famous brands, giving the illusion that these marks are filed by their legitimate owners. Some may go as far as setting up foreign companies to disguise as legitimate foreign brand owners. While some may simply use different entity/individual names or names of their family members to ensure they are not flagged up from excessive filing by the same person.

CNIPA examiners may not be able to spot such bad faith filings on their own in these circumstances. As such, it is important that brand owners set up or subscribe to watch services to monitor publication of marks similar to their marks and file oppositions against them. In such opposition (the same applies to invalidation), further investigation must be conducted in order to prove bad faith of the applicant. Such investigation will include thorough company searches against the applicant entity to find out its legal representatives, shareholders and director and to try link them to other bad faith filing activities (e.g. mass filing/trademark hoarding activities, unfavourable decision against them, etc.).
“The highly publicised legal battle between the famed American athlete, Michael Jordan, and the Chinese sportswear company, Qiaodan Sports Co Ltd, saw the former finally claiming victory”
If a foreign company is used as the applicant, a foreign company search will have to be done. It is often revealed that the shareholders or directors of such foreign companies are indeed Chinese individuals, and once the identity of the Chinese controlling parties are revealed, more in-depth investigations can be continued in China to dig out further bad faith evidence. If the applicant is a Chinese individual and the applicant's address is a residential address, online searches will often be futile, and site-visits will have to be conducted at the applicant's address which may assist in revealing information of familial trademark squatting syndicate.

Having identified exactly who you are against, foreign brand owners may then regularly monitor their activities and whether any unfavourable decisions or judgments have been issued against them. Records of trademark sales and domain name bidding/purchase and false representation on social media platforms are also helpful in proving malicious intention of squatters, especially with the advent of digital and blockchain evidence in Chinese courts.

The Article 4 amendment is part of a dedicated effort by CNIPA to function as watchdogs for trademark squatting activities. Rather than just relying on foreign brand owners to initiate actions, this allows the two groups to work in conjunction to tackle bad faith filings. As such, it is pleasing to see that tens of thousands of bad faith applications are indeed rejected based on the Article 4 amendment since 2019 and these decisions and the parties' names are also made available to the public.

That said, given that trademark squatters are notoriously adaptable, foreign brand owners should remain vigilant and proactive in their efforts to oppose, invalidate and/or cancel trademarks based on non-use. It is recommended to conduct in-depth background searches to root out the network of squatters, who may exist as affiliates, shareholders, directors and/or legal representatives.
Dropping names: claiming personal name rights in China

Some clients' person names have become so famous that they have turned into a personal brand of high commercial value. This is particularly common amongst famous fashion designer labels, celebrity brands etc., but many clients omit filing trademarks for the same before entering in the Chinese market or more often, squatters already registered the clients' personal names before the brand officially launches in China.

Many squatters also file the Chinese transliteration of such names as trademark in different classes to take advantage of the clients' fame. In this regard, the Law helpfully provides that no trademark applicant may infringe upon another person's existing prior rights, and that include personal name rights. Action may be taken against a bad faith filing on the ground that the disputed mark is identical to one's name, and the protection is not restricted by class.

The highly publicised legal battle between the famed American athlete, Michael Jordan, and the Chinese sportswear company, Qiaodan Sports Co Ltd, saw the former finally claiming victory at the Supreme People's Court (SPC), but also establishing a crucial three-step rule on relying personal name rights:
​a) The name has acquired a high level of reputation in China;
b) The relevant public refers to that natural person by the name; and
c) There is a 'stable corresponding relationship' between the name and the natural person.
In other words, brand owners relying on this right will have to demonstrate not only their well-known status (or at least a certain degree of fame in the relevant field of interest), but cogent evidence such as market surveys, national library search reports, awards and rankings to show that the relevant public actually associate that name to the natural person.

While the 'name' in question does not necessarily have to be the full legal name of the natural person and stage names, pseudonyms and aliases can also be protected, one should note that the personal name right of a English name does not necessarily extend to its Chinese counterpart or its Pinyin, and vice versa. Therefore, foreign brand owners are encouraged to file both its English and Chinese mark to ensure the broadest scope of protection, as bad faith filers very often take advantage of multiple linguistic representations of a given brand in their squatting activities.

As discussed, a squatter may file the mark in Chinese transliteration, which will further require evidence to support that an exclusive relationship have been formed between the clients' names and the Chinese transliteration. As such, national library searches for keywords in both the original language and the concerned Chinese transliteration should be conducted to prove such exclusive relationships. Also, users report using the Chinese transliteration to refer to the clients' names may also be adduced in support to show the exclusive relationship.

If supported by sufficient evidence, the personal name right client can be deployed by the clients as powerful weapon to challenge squatters' applications or registrations in different classes.
Another battleground: malicious online platform complaints

The proliferation of China's e-commerce market is one of the most prominent features of its fast-growing economy. With opportunity also comes impediments: if squatters' marks are not removed from the registry, they can be utilised by some of the more hostile squatters who may file malicious complaints against legitimate merchants on e-commerce platforms, such as Taobao.com and JD.com.
“The proliferation of China’s e-commerce market is one of the most prominent features of its fast-growing economy”
While many of these complaints have no legitimate cause of action by nature, and are unlikely to succeed, they are often made in contemplation to disrupt the normal business of brand owners and act as a leverage to sell their registered marks at a higher price (along with a long list of unreasonable demands). Brand owners will have to expend considerable time and money to dispute these claims.

While it is possible to pursue these activities by arguing unfair competition, it is often more cost-effective to liaise directly with these e-commerce platforms and resolve the matter then and there. Negotiating with reputable platforms whose operation are regulated by the e-Commerce Law is likely more worthwhile than dealing directly with squatters. For example, platforms can take meaningful technical measures that would mean actual ramifications for the business of squatters, such as deleting the links and/or banning their account.

Of course, the best way to prevent such malicious complaints is to remove the squatter's registrations which are their basis for filing such complaints. It should be noted that, in case the opposition is unsuccessful, invalidation actions (other than on the grounds of non-use) should be filed as soon as possible to destabilise the squatter's mark and latest within five years after registration of the squatter's mark.

Again, defensive filing strategies would ensure enough 'ammunition' for brand owners to act on e-commerce platforms. It is therefore advisable to curate a strong trademark portfolio by closely monitoring any squatting activities and proactively remove such filing as soon as possible, and keep a good relationship with these platforms and work in tandem to weed out these unfair trade practices.

As demonstrated in the above, trademark squatters come in all shapes and forms, and their strategies malleable to the ever-changing legal and business environment. While the CNIPA and Chinese laws have stepped up effort in combating trademark squatters, brand owners shall not let their guards down and should take proactive actions to file their trademarks defensively and monitor and protect its legitimate interests against rapacious squatters.
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  • Home
  • About
  • IP Services
    • Trademark
    • Patent
    • Utility Model
    • Design
    • Copyright
  • Translation
  • News
    • Why do you need to register a trademark in China
    • What do you need to do to register a Chinese trademark
    • The Difference Between Copyright, Trademark and Patent
    • How And Why To Trademark In China
    • How do I protect myself from Intellectual Property Theft in China
    • How To Protect Your Intellectual Propery (IP) Rights In China
    • 7 Steps to Protect Your Intellectual Property in China
    • China is strengthening intellectual property protection
    • What should a foreign business know about filing a trademark in China
    • A Guide to the Chinese Trademark Registration Process
    • Why you should file your trademark in China now
    • Why is a Trademark Watch Important
    • Differences Between Trademark and Copyright
    • Avoiding IP Infringement with Chinese Sourcing
    • Cracking down trademark squatters under amended trademark law in China
    • How China is acting to combat bad faith trademarks
    • Intellectual Property protection when doing business in China
    • China's intellectual property rights protection improved to create a sound business environment
    • China’s race to become global intellectual property leader
    • China strengthens intellectual property rights protection prior to Beijing 2022
    • Important Trademark Development from China for 2022: What US Brand Owners Need to Know
    • How to Protect Trademarks in China
    • A simple guide to intellectual property in China
    • An Overview of the Latest Amendment to the Chinese Patent Law
    • What We Do When Trademark Squatters Get Smarter in China
    • The most important patent and IP business developments in China in 2021
    • A simple guide to trademark registration in China
    • Protecting your intellectual property in China
    • How To Enforce Intellectual Property Rights In China
    • What China’s new patent laws mean for life sciences
    • China extends lead over U.S. in global patents filings, U.N. says
    • What Do China’s High Patent Numbers Really Mean
    • How to Protect Your Intellectual Property Rights in China
    • Protecting your intellectual property in China
    • Procedure of filing trademark in China
    • The Importance of Having a Chinese Brand Name
    • Why Does Hong Kong Attract International Businesses
    • What’s the Difference Between Patents, Copyrights and Trademarks
    • How to initiate a trademark infringement civil proceedings in China
    • How to Brand your products for the Huge China Market and Reduce Your Risk
    • 8 Trademark Mistakes Your Start-Up Must Avoid
    • What’s the Difference Between OEM and ODM Products
    • What the amendment to Article 4 of the Chinese Trademark Law means for bad-faith trademark filings
    • China starts rebuff of various metaverse trademark applications amid rush to hype the internet’s next generation
    • China, US and Hong Kong trademarks – A quick guide
    • Working with Chinese Trademark Agencies – A Dangerous Game, or Delicate Tightrope
    • China will improve its IP system
    • 12 Intellectual property Protection Tip
    • How to protect your brand in China
    • China Trademark And Brand Development Index 2021: Which Are China's Top Provinces
    • Must I Register My Company Name as a Trademark in China?
    • What You Need to Know About China Trademark Registration as a Foreigner
    • How to File a Trademark in China
    • How to Register a Patent in China
    • How to effectively deal with the preemptive registered trademark in China
    • China’s Trademark Regime: How to Protect Your Brand in the Mainland
    • China Issues Stricter Rules on Trademark Use
    • News
    • News
  • Contact