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March 2019
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China Legal Update

On February 26, 2019, Chang Tsi & Partners, along with administrative leaders with the China National Intellectual Property Administration (hereinafter referred to as "Administration"), industrial experts and representatives from other Chinese IP firms was invited to attend the symposium on opinion solicitation of "Regulations on managing trademark application and registration behaviors" (hereinafter referred to as "Regulations"). The "Regulations" is aimed at cracking down upon malicious trademark squatting and hoarding behaviors, purifying the atmosphere of trademark registration, protecting the legitimate rights and interests of businesses, and maintaining normal trademark application order.

Nowadays, with the optimization of the trademark registration procedure, shortening of the registration period, reduction of the registration cost, and decrease of trademark registration resources, free-riding "malicious applications" and profiteering "trademark hoarding" have occurred frequently. Under this circumstances, the Administration attaches great importance to the aforesaid behaviors. By actively conducting researches on trademark legislation to improve trademark laws and regulations, the Administration aims to form a long-term mechanism that curbs the illicit trademark registration in China.

On February 12, 2019, the Administration announced Regulations on managing trademark application and registration behaviors (Draft for Comments) on its official website to solicit opinions from the public.

The announced "Regulations" consists of eight Articles and covers five points.

i. Clarify the purpose of legislation, reaffirm the principle of good faith established by the China Trademark Law and the guiding orientation of trademark application based on the intent to use (refer to Articles 1 and 2);
ii. Define "illicit trademark registration" by listing out specific behaviors (refer to Article 3);
iii. Stipulate the legal consequences of illicit trademark registration (refer to Article 4);
iv. Rectify and manage illicit trademark registration by taking measures in terms of credit records, statists standards, and agency management, and stipulate the corresponding rights of the parties involved (refer to Articles 5 and 6);
v. Clarify the duties of the competent intellectual property authorities at all levels to guide and regulate the registration and use of trademark applications, and mobilize the social public to report and monitor the illicit trademark registration behaviors (refer to Article 7).

The illicit trademark registration stipulated in the Regulations refer to the following behaviors:

i. Applying for trademark registrations which are well known to the relevant public for free-riding purpose;
ii. The rush registration of trademarks that have been used by others and obtained certain influences for the improper seizure of other's reputation;
iii. Applying for trademarks which are identical with or similar to those of the prior right holder, when it really knows or should be aware of the existence of other prior rights;
iv. Refiling trademark applications with obvious improper purposes;
v. Applying for a large number of trademark registrations in a short period of time, obviously exceeding the reasonable limit;
vi. There is no genuine intention to use or no actual need for obtaining trademark exclusive right for goods or services when applying for a trademark registration;
vii. Other trademark application and registration behaviors that violate the principle of good faith, infringe on the legitimate rights and interests of others or disrupt the market operation order;
viii. To provide assistance or agency services to the aforesaid trademark application and registration behaviors as stated in items (1) to (7).

Actually, since 2018, the Administration has demonstrated its determination to combat malicious registration in its trademark registration practices. The official data shows, the number of malicious applications that have been actively rejected by the competent authorities or disapproved for registration in the opposition procedure amounts to over 10,000.

Over the past decades, Chang Tsi & Partners has made constant great efforts to assist trademark owners to crack down upon malicious trademark registration. So far, Chang Tsi & Partners has achieved favorable results in representing the clients in a number of trademark oppositions and invalidation cases, and has made substantial progress in protecting the right holder's trademark rights.

Meanwhile, the Chinese government is actively pushing forward the implementation of the Regulations, which highlights the government's determination and direction to combat malicious registration and protect the legitimate rights and interests of trademark owners.

In this context, trademark holders undoubtedly occupy an advantaged position. So we recommend the trademark holders shall actively carry out right protection actions and strictly crack down upon illicit trademark registration. We recommend the following actions for reference:

i. Keep a close watch on identical or similar trademarks applications filed by the trademark squatter. Once such clues are located, we suggest filing a petition letter to the trademark examination authority, requesting the authority to actively refuse such applications before its publication;
ii. For the copycat trademarks that has been preliminary published or registered, we recommend actively file opposition or invalidation actions in a timely manner, with an emphasis on collecting evidence showing the counter party's illicit trademark squatting or hoarding behaviors;
iii. Establish and improve your own trademark right basis by broadening defensive registrations to effectively prevent trademark squatting.

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