Almost as many trade mark applications are filed in China as in the rest of the World combined.  According to recently published WIPO statistics, Chinese trade mark applications accounted for 46.3% of all global trade mark filing activity in 2017 (a staggering 5.74 million Chinese trade mark applications were filed over the course of that year). The next busiest office was the US which accounted for 5% of global filings.

With so many applications being filed, it is no surprise that some are being filed dishonestly.  In fact, brand piracy in China is a serious problem and has been for some time. The “first-to-file” trade mark system in operation there has led to trade mark squatters registering trade marks which are copies or imitations of well-known or up-and-coming brands before the rightful owner is able to do so, thus blocking the rightful owners’ ability to register or even use its mark in China.  This issue is discussed at greater length in our previous blog post here.

In recognition of this issue, the Chinese trade mark authorities recently announced a number of draft provisions aimed at tackling dishonest trade mark applications.  I have summarised some of the key proposals below:

• The applicant should have an actual need to acquire the exclusive right to use the mark in China for the goods and services applied for.
• Applications should not damage another entity’s existing prior right.
• Applications should abide by the principles of honesty and credibility.
• Abnormal applications should be prohibited. Examples of “abnormal” trade mark applications include: (1) imitating a trade mark application or registration already known to the relevant public; (2) applying to register a trademark which has been used by another entity and therefore has certain goodwill already; (3) applying for a trade mark that you know, or ought to know, somebody else already has rights in; (4) repeatedly filing trade mark applications with an obviously improper purpose; (5) filing an unreasonably large amount of trade mark applications within a short period of time; (6) filing a trade mark application without having a real intention to use it.
• If an application is suspected of being abnormal, the authorities can require the applicant to submit supporting evidence; if the evidence is deemed insufficient or unsatisfactory then the application will be refused.
• A trade mark agency found to have filed abnormal trade mark applications may be ordered to suspend their trade mark agency services if the circumstances are deemed sufficiently serious.

So what does this all mean for brand owners? The fact that the Chinese authorities are proposing additional steps to tackle the issue of dishonest applications is certainly welcome news.  If/when these draft provisions are enacted, life will become much more difficult for trade mark squatters, which in turn ought to make China less of a trade mark minefield for brand owners.  However, for the time being our advice remains the same: if China is a relevant market, file a trade mark application there at the earliest opportunity or else run the risk of a squatter beating you to it.

David Yeomans 9 May 2019