The China National Intellectual Property Administration (CNIPA) recently released its work plan for the years 2023 to 2025, which sets out 30 action points, with most focused on four areas of primary concern:
- Bad faith trademark applications and registrations;
- Abusive repeat filings of non-use cancellations;
- The use of marks deemed inherently unregistrable – including those deemed likely to cause deception, as well as those creating “unhealthy social effects”; and
- The need to allow suspension of cases where there are co-pending disputes involving bad faith actors.
As noted below, virtually all of CNIPA’s action points draw upon existing rules and policies, but are still of interest in that they highlight CNIPA’s priorities over the next few years.
Key Concern: Prohibition on Use of Unregistrable Marks
Point 6 of the CNIPA action plan indicates that relevant authorities will at some point begin actively monitoring to determine whether trademarks rejected as unregistrable and thereby prohibited from use are indeed in active use. The risks in this regard will no doubt be increased where a trademark owner has filed an appeal with CNIPA’s Trademark Review and Adjudication Division (“TRAD”), supported by evidence of use intended to prove fame and explain the way the mark is used.
Articles 10.1.7 and 10.1.8 of the PRC Trademark Law prohibit the registration, as well as use of trademarks that are deemed deceptive or misleading to consumers, as well as those that are deemed to cause “unhealthy social effects,” with penalties theoretically including significant fines and an order requiring rectification — essentially an injunction on further use of the mark.
Although these prohibitions were introduced decades ago, to date, national and local enforcement authorities have only rarely enforced them. As a result, foreign companies that have had applications for registration rejected on these grounds will often continue using them in China. This is of course likely to change, assuming CNIPA follows through with its action plan in this regard.
Point 6 of the CNIPA work plan does not set out a concrete timeline for implementation or otherwise clarify the method of detection. But if experience is any guide, CNIPA will at some point soon implement a broad campaign and pursue a substantial number of cases to encourage voluntary compliance.
SIPS has begun monitoring for signs of such a campaign and will report on developments as news becomes available.
Possible Enforcement Mechanisms
It remains unclear for now how CNIPA will begin enforcing Articles 10.1.7 and 10.1.8. Very likely, it will rely upon local IP enforcement authorities – the Market Supervision Bureaux or “MSBs” — to conduct most investigations and impose sanctions. But CNIPA may well begin referring cases for investigation to local MSBs following the issuance of new decisions once they are final. Worst-case, CNIPA will comb its records for earlier decisions and ask local MSBs to commence investigations against a much larger number of companies.
Regardless, trademark owners will also need to consider the risk that competitors or unhappy consumers will report their use of prohibited marks to local MSBs on an ad hoc basis.
Suggested Preventive Measures
Brand owners that have had their applications or registrations rejected or invalidated based on Articles 10.1.7 and 10.1.8 are strongly advised to review the history of their applications and the current scope and scale of use of their marks.
Where there appear to be grounds to argue, consideration could be given to filing new applications, and once rejected, supporting appeals with more robust arguments and evidence.
Otherwise, depending on the circumstances, it may be more prudent to either amend the mark in question or replace it for use in China. Filing through the Madrid system may also be worth considering in appropriate cases.
Bad Faith Registration
As noted below, the Action Plan provides few specifics as to how CNIPA will strengthen its efforts to address bad faith trademark filings. However, Points 14 and 15 offer very specific measures to help victims of piracy to address abusive attacks by pirates in the form of repeated non-use cancellations and “malicious litigation” – both common steps by bad faith actors intended to increase pressure on victim brand owners to pay higher ransoms to settle.
Point 14 states that where a trademark owner is the target of repeated malicious non-use cancellation actions, the Trademark Office can proactively consider evidence of use that the victim brand owner submitted in cancellation actions within the prior 12 months – thus saving victim brands resources and resulting in faster decisions.
Point 15 of the Work Plan states the after a Chinese court has already confirmed bad faith by a pirate and the same pirate has engaged in “malicious litigation”, CNIPA may accelerate invalidation and non-use cancellation actions that remain pending, and otherwise deal with them more strictly. Point 15 also reminds that CNIPA enjoys the right to invalidate registrations held by bad faith pirates on an ex officio basis where Article 44.1 of the PRC Trademark Law is deemed to have been violated.
Overview of CNIPA Work Plan
|Noteworthy Action Points
|Point 6 – Prohibited Marks
Authorities will begin monitoring the use of trademarks that have been refused based upon provisions in the PRC Trademark Law prohibiting the registration and use of marks deemed deceptive (Article 10.1.7) and those causing “adverse social effects” (Art. 10.1.8).
If a trademark owner is found to be using a mark that it clearly knows is prohibited from use, local authorities shall impose severe punishment.
(it can be translated as “ZERO DEFECTS”).
(a Buddhist symbol, but also used as an emblem of Nazi Germany)
|Point 8 – Bad Faith
CNIPA will strengthen the investigation and collection of evidence in cases involving bad faith filings, improve the mechanism for handling reports of cases, improve the channels for reporting complaints, and enhance the supervisory role of society (likely through greater media coverage of disputes).
|Point 11 – Prohibited Marks
Consistent with Point 6 above, Point 11 states that CNIPA will crack down on trademark applications that can create significant adverse effects and those that are “obviously deceptive” under Articles 10.1.7 and 10.1.8, through the following measures:
|Point 12 – Bad Faith
When reviewing oppositions and invalidations involving bad faith filers, CNIPA may consolidate related cases and hold oral hearings in major cases.
|Point 13 – Bad Faith
To improve efficiency, where a bad faith filing submits multiple applications without intent to use, these applications will be subject to special consolidated examination.
|Point 14 – Malicious Non-Use Cancellations and Applications Filed on Same Day
When dealing with abusive non-use cancellations by bad faith filers, to alleviate the administrative burdens on victim brands, after notifying the parties, the Trademark Office may proactively obtain and consider evidence of use that the trademark owner has submitted in response to non-use cancellation actions involving the same mark filed by the same petitioner within the past year.
Separately, the Action Plan also takes aim at parties that file two applications on the same day in the names of different entities, knowing that the applications will then be subject to a longer examination period (currently three years). The Action Plan indicates CNIPA will address this phenomenon by expending examination of trademarks filed on the same day to combat this bad faith behavior.
|Point 15 – Bad Faith
Where a court has determined in a final judgment that a trademark registrant has acted in bad faith, other related invalidations and non-use cancellations are pending against the pirate’s marks, CNIPA will handle these more strictly.
CNIPA may also invalidate registrations on an ex officio basis where the pirate is deemed to have violated Article 44(1) of the PRC Trademark Law.
|Point 21 – Trademark Application Fees
CNIPA will conduct research on the optimization of trademark fee standards, and promote the establishment of a tiered fee system.
|Points 23 and 25 – Suspension of Cases
CNIPA will commence research leading to the introduction of procedures that will allow the suspension of pending cases in a manner that will bring greater benefits to rights holders, and address the problems created by bad faith filers that submit multiple applications for the same mark.
|Point 26 – Bad Faith
While cracking down on malicious behavior, CNIPA will respect the rights of parties that have a genuine intent to use their marks, as well as those that have used their marks for an extended period of time.