Bad Faith and the Coronavirus—China Takes Action

INTA held a webcast to discuss recent cases of COVID-19‒related marks filed in bad faith in China. The speakers, Xianjie Ding and Fang He, both from King & Wood Mallesons, China, shared with the audience recent legislative, judicial, and regulatory trends, which signaled increasingly effective control of bad-faith filings in China. The May 4 event was moderated by Iris Gunther, INTA’s Manager for External Relations – Enforcement.

The presentations began with alarming data on the number of new trademark filings of words relating to the pandemic. Many of these filings have been turned down by the Trademark Office of the China National Intellectual Property Administration, mostly on public interest grounds, which prohibit marks that may be detrimental to socialist morals or customs or have other negative influences. 

Trademark practitioners, however, would like to see more thorough examination of trademark applications when it comes to prior rights by third parties. This is especially the case in light of the concern that “a lack of emphasis on unregistered mark protection/prior use will only lead to a twisted perception of marks into a narrow interpretation of a ‘trademark certificate,’ which can be further used as a weapon to file large-scale malicious lawsuits for more damage awards,” said one of the speakers. The current trend of lower costs (the official fee is as low as around US $40) and faster processing (currently around six months, but the target is to get this down to four months by the end of this year), in tandem with the shortage of experienced trademark examiners, may only worsen the situation.

The Chinese trademark administrative authority is taking bad-faith trademark filings and trademark stockpiling seriously. The latter involves trademarks being filed with no intention to use, but rather for the prospect of selling them to genuine trademark users. New amendments to the law and other government initiatives are aimed to stop or slow the number of trademarks registered in bad faith. Bad faith has been written into the trademark law since April 23, 2019, as a statutory ground for refusal in examination, opposition, and invalidation proceedings, to give just one example. 

Bad faith is generally defined as having no true intention to use. Although a trademark applicant does not need to prove prior use of the mark applied for in China, if the applicant proves not to be the owner of the mark or not to have true intention to use it, it is highly possible that the application will be rejected as having been made in bad faith under the new ground of refusal. 

Parties acting in bad faith either by applying for trademarks or initiating malicious lawsuits are subject to administrative and judicial punishment. The Beijing Chaoyang District Market Supervision Administration recently fined Alibaba, the Internet giant which also operates a self-help, online trademark application platform, US $14,000 for attempting to register multiple coronavirus-related trademarks on behalf of several applicants. The speakers discussed several recent court decisions that sought to tackle the problem of malicious lawsuits. They were optimistic that the trend in Chinese legislation to enable judges to provide more protection to genuine trademark owners from parties acting in bad faith will continue.

Although every effort has been made to verify the accuracy of items in the INTA Bulletin, readers are urged to check independently on matters of specific concern or interest.

© 2020 International Trademark Association