China makes a step in the right direction to prevent brand hijacking but will any action come to pass?

Proposals have been put forward for changes in respect of Chinese Trade Mark laws.  One such change which we believe to be of great importance is in respect of Trade Mark hijacking Applications.

It has unfortunately become prevalent practice in China for bad faith Applications to be filed whereby companies apply to register a number of brands which belong to third parties. 

This practice has arisen often as a result of the fact that the Chinese Trade Mark Office operates a sub class classification system, whereby goods/services of a class are further divided into very specific categories.  Whereas in the UK, the term “clothing” would be accepted per se in a specification, in China it would be necessary to specifically define the types of clothing, as per a predetermined list of subcategories.  This has meant that there can be instances where a Mark covering what are arguably similar goods/services to an earlier Mark will be accepted for registration.

This has meant that companies will file an Application for the identical Mark in a different sub category of goods/services.  If the Mark is then accepted, the genuine Trade Mark proprietor has to look at their options in preventing the Mark progressing.

Predominantly it seems that the purpose of these Applications is to try and force the brand owner to purchase the same at an inflated price especially as it is often more cost effective to purchase the Mark than pursue an opposition against the same.

The draft proposals have added several stipulations in an effort to regulate the practice of Chinese Trade Mark Attorneys and to try and curb the number of bad faith Applications being made. 

Under the new proposals, Chinese Trade Mark Attorneys will be obliged to advise their client when an Application may fall under one of the non-registrable circumstances under the Chinese Trade Mark laws.  In addition, the proposals state that Chinese Trade Mark Attorneys will be required to turn down cases where they know, or should know, that the client’s Trade Mark is a bad faith pre-emptive attempt to register another person’s Trade Mark or where such Mark will infringe another’s rights. 

If a firm violates the regulations or the principle of good faith and the circumstances are  justified, the Chinese Trade Mark Office and the Trademark Review and Adjudication Board (China) may refuse to accept any cases handled by that firm and will publicise their decision.

How can Barker Brettell help?

We have a great deal of experience in working with our clients when brand hijacking takes place and employ a variety of different strategies depending on the circumstances. 

We look to work with the client to take steps to try and prevent such Applications for example, by carefully reviewing the specification in line with the Chinese Trade Mark Office’s sub categories of goods/services.  We also have experience in advising as to the best options to the client when such Applications are encountered.  We also work with our clients to set up suitable Watching Services to monitor such Applications being made.   

Other changes

Some of the other proposed changes include:

Single colour Marks – The latest draft amendments exclude the possibility of applying for a registration for a single colour Mark.

Well known Trade Marks – The draft states that where a Trade Mark proprietor has been continuously using their Mark for a long time and the Mark is recognised by the relevant public as denoting that proprietor, he may request that his Mark is granted the status of being a well known Trade Mark.

However, it will not be possible to identify to the consumer that the Mark is a “Well-known Trade Mark” for example, by adding a note to this effect on the product packaging, in advertising etc. 

Time limits – the proposals suggest that the examination of a Chinese Application should be completed in six months (as opposed to nine months at present) and a decision in an opposition case should be issued within nine months.

Assignments – When assigning a Registered Trade Mark, the owner will have to simultaneously assign any identical or similar Trade Mark which they also own for the same or similar goods/services.  Also, the Chinese Trade Mark Office will not approve an application to record an assignment, if the assignment will create confusion. 

Maximum statutory compensation – The amount of maximum statutory compensation has increased from RMB 1 million, as suggested in the previous draft to RMB 2 millions.    

Please contact your usual Attorney if you have any issues in China you would like to discuss with us.