China IP Judges Forum (4th Episode) Focuses on the Definition of Malicious Trademark Registration

By Nina Tian, China IP

On Jan 28, China IP Judges Forum (4th Episode) held by China IP Magazine successfully convened in Beijing. China IP Judges Forum is one of the series off-line activities elaborately designed by China IP Magazine since 2017 for the purposes of building a professional platform for judges to interact with scholars, experts and industries in the field, discuss hot and difficult topics professionally and guide the industry towards a more virtuous development path. In the previous China IP Judges Forums (total three episodes), China IP invited many well-known judges from the frontline of trials as guests, sharing and discussing some hot-spot topics in the IP industry.

The theme of China IP Judges Forum (4th Episode) was Definition of Malicious Trademark Registration in Judicial Trial, which was exactly what enterprises care most. Different from the previous forums which only invited one judge speaker, the forum (4th Episode) invited three judges from the front-line of trials: they are Zhou Bo, judge from Civil Third Tribunal of Beijing Higher People's Court, Zhang Lingling, judge of Beijing IP Court, Chen Yang, judge of Shenzhen IP Tribunal and they all delivered keynote speeches. In addition, the forum also invited Li Yang, professor of Law School of Sun Yat-sen University, to preside the discussion session, many renowned people in the concerning filed attended and they had a heated discussion on the topic of malicious trademark registration, the people attended are as following: Yao Bingbing, presiding judge of Civil Third Tribunal of Nanjing Intermediate People's Court, Rui Songyan, judge of Beijing IP Court, She Chaoyang, judge of Guangzhou IP Court, Yu Hui, president of Beijing Municipality Haidian District Yuanjian IP Innovation Institute and Xu Yan, general manager of IP Department of Tencent.

Defend the bottom line of stopping malicious trademark registration

How to effectively regulate the malicious trademark registration is a crucial focus in the judicial trials of current authorization and confirmation of trademark rights. With regard to this topic, Zhou Bo, judge from Civil Third Tribunal of Beijing Higher People's Court, firstly pointed out that to address this issue, we need to not only rely on the leading role of judiciary but also hold the boundary of judicial rights, this is the prerequisite of solving the issue of malicious trademark registration.

 In terms of the definition of malicious trademark registration behaviors, Zhou Bo said that according to the current Trademark Law, malicious trademark registration is not a legal concept, the definition of the malicious trademark registration should be understood in the following three aspects: (1) Whether or not the behaviors violate the principle of integrity. (2) Whether or not there are behaviors of massive accumulation of trademark registration. The current Trademark Law does not regulate the quantity of trademark registration for the appliers, as long as the applier passes the formal examination then he or she can get the certificate for trademark registration. However, if there is one single subject applies hundreds or even thousands of trademark registration, usually this kind of behavior can be defined as malicious trademark registration. (3) Whether or not there is occasion that the behavior of trademark registration is for the purpose of undermining or restricting competitors despite of few applications for trademark registration. Two competitors take turns to apply for trademark registration which is exactly what each other are using in practice, this occasion should also be taken into consideration as the factors of malicious trademark registration.

When it comes to the goal of stopping malicious trademark registration, Zhou Bo pointed out that the behaviors of malicious trademark registration can not be wiped out in reality. To address this issue, we should adopt a way of systematic solution, by exerting the dynamic and leading role of judicature as the bottom-line, at the same time exerting the role of legislation and obligee.  

When it comes to the role of judicial adjudication in the process of preventing malicious trademark registration, Zhou Bo said that the court is also responsible for protecting the current law system when solving the issue of malicious trademark registration in the judicial trials. China still adopts the registration system for the trademark registration, under no circumstances can we undermine this system even for preventing malicious trademark registration. The courts should apply the seventh article (principle of integrity) of Trademark Law in the specific clauses and demonstrate it in single case, and this kind of application should be within the regulation of current law and under the prerequisite of protecting registration order. If there are occasions beyond the regulation of law, therefore this kind of state of empty law benefits caused by the development of technology should be vested in the public.

Judicial verdict to the behaviors of malicious trademark registration

Correctly determining the behaviors of malicious trademark registration is the prerequisite of conducting judicial regulation over this kind of behaviors. When it comes to this issue, Zhang Lingling, judge of Beijing IP Court, listed four elements of defining the behaviors of malicious trademark registration. (1) preempting the trademark registration on the costs of other's rights and interests, and this kind of rights and interests must be marked with popularity and notability. (2) Preempting behaviors are not based on the purpose of directly applying trademarks to the production and operation. (3) taking advantages of the legal loopholes of trademark registration system to use the trademark without authorization or permission. (4) subjectively wanting to make profits by freeriding or accumulating trademarks. Meanwhile, she also mentioned that when determining the behaviors of malicious trademark registration, the courts would also take the notability and popularity of the trademark itself, the similarity between the controversial trademark and proving trademark, the correlation between the products and the way of using controversial trademark after it was being applied into consideration.

Then, Zhang Lingling listed some typical examples of malicious trademark registration, she also pointed out that in the practical trials of malicious trademark registration cases, it's common to encounter the occasions concerning the verdict to the similarity and prior rights of the trademark. With regard to the protection of prior rights, she said that the 32th article of Trademark Law guarantees protection to influencial and already used trademarks, and article 59th of Trademark Law also requires the appliers for trademark registration to leave space for those who used the trademark already and ensure the latter can use the trademark within the original scope, but the trademark appliers can request certain symbols to distinguish the trademarks. These articles of law exert great influence on the judicial practices of trialing malicious trademark registration behaviors. To apply these articles of law properly under the same system, we need wisdom from judges.

In the last part of the remark, Zhang Lingling shared some issues making her confused in the judicial practice about the malicious trademark registration. She sumed up that because the current Trademark Law in China adopts the pre-apply registration system and classifiable registration system, which doesn't regulate the demand for using trademark and the limitation of the quantity for applying a trademark, to offset the negative impact caused by this system, in the judicial practice, the courts usually need to apply some clauses such as "trademark already used and with popularity", "under the circumstances of trademarks with popularity, the definition of similarity of products or trademarks gives certain discretion, at the same time, the courts also need to take "accumulating trademarks by unfair means" into consideration. Without changing the current trademark system, we should use these above means to offset the negative costs of the system within the Trademark Law, and judges should make full use of their judicial wisdom in specific cases, so as to strike a balance.

Judicial regulation on civil tort behaviors of trademark squatting

Chen Yang, judge of Shenzhen IP Tribunal, maked the final keynote speech. In his remark, Chen Yang firstly concluded the reasons contributing to the current trademark maliciously squatting phenomenon, and he summarized it with five points: (1) In the legal aspect, the Chinese trademark registration system is too loose. (2) In the economic aspect, the commercial reputation brought by the trademark will promote the selling of products and services and further bring huge profits, therefore making some people thumb a lift. (3) In the administrative aspect, some local governments blindly encourage the application and registration of trademark only in pursuit of performance appraisal. (4) In the moral aspect, some market subjects violate the principal of integrity in their business activities. (5) In the judicial aspect, the costs for losing a lawsuit in cases of trademark administrative litigation and civil tort of trademark squatting are relatively low for the trademark squatter, therefore the judicial deterrence is not guaranteed.  

Later, Chen Yang also sumed up the legal features of trademark squatting behaviors in four aspects: (1) The commercial trademarks already used have certain market popularity. (2) The trademark applied by the appliers are identical or similar to the symbols already used by other people and can confuse the public. (3) The purpose of trademark registration is not for use but to accumulate trademarks and make profits. (4) Appliers subjectively know the existence of the symbols already used. The subjective knowing should be judged by similarity of registered trademarks and other aspects.

Then, Chen Yang teased out some judges' opinions from trademark infringement cases in other courts in China and shared his own opinion. When it comes to the factors the judges taking into consideration when trialing the trademark squatting cases, he stressed two factors which are popularity and possibility of making the public confused. Last, he summed up some new trends in trademark squatting cases, for example, some malicious trademark registers keep attacking the pre-users of trademark by claiming copyrights even after the former's trademark is nulled, and some malicious trademark registers combine the maliciously registered trademarks with the products and directly apply for the design patent so as to protect their series rights. Chen Yang discussed these new issues with attendees.

Factors in defining malicious trademark squatting

After three judges all finished their speeches, the forum entered the discussion section. Li Yang, professor of Law School of Sun Yat-sen University, presided the discussion section, and the guests had a heated discussion on topics concerning malicious trademark squatting.

According to the statistics from State Administration for Industry and Commerce of the PRC, by the end of 2017, the amount of trademark applications in China accumulated to 27.842 million, accumulated number of registration is 17.301 million，and the number of valid trademark registration is 14.92 million. It's reported that the average valid number of trademark owned by per 10,000 market subjects is 1520, which is 41.53 percent higher than that of 2011 (1074 pieces). In 2017, the number of application for trademark registration in China is 5.748 million, which is 55.7 percent higher than that of the previous year, and the growth rate is the highest in years. However, behind the dramatic growth of the applications for trademark registration, there are the disturbing problems such as trademark squatting, passing off renowned-brands, which are denounced by the insiders. Thus when it comes to the defining factors of malicious trademark squatting, Deng Hongguang and Rui Songyan stressed the importance of whether the trademark is used or not, Yu Hui, president of Beijing Municipality Haidian District Yuanjian IP Innovation Institute, mentioned the importance of timely improve law and regulation system for trademark and avoiding rigidity, Xu Yan, general manager of IP Department of Tencent shared the actions Tencent takes over the past few years in the defense of malicious trademark registration, and pointed out that the rampant behaviors of malicious trademark registration have seriously intervened the normal operation order of market, She Chaoyang, judge of Guangzhou IP Court also expressed his support on the improvement of law and regulation system for trademark, and stressed that the judicial resources should not be wasted in the large quantity of simple infringement litigations, Yao Bingbing, presiding judge of Civil Third Tribunal of Nanjing Intermediate People's Court said that the administrative department for the trademark should not only focus on quantity while neglect the essence of trademark system when reviewing the applications for trademark registration, likewise, the judicial authorities also need to maximize its role in curbing the phenomenon of malicious trademark registration under the current framework of law. Other attendees also shared their opinion during the discussion section. After the discussion, participants all agreed that when curbing the behaviors of malicious trademark registration, we should not abandon the precondition in the law articles, to address the issue of malicious trademark registration, it's better to strike a balance between fastchanging market and relatively stable judicial practice.

Curbing the malicious trademark registration requires joint efforts from the improved system and all social supports. China IP Magazine will invite representatives from government departments, experts, scholars, and enterprises managers to share the latest news in malicious trademark registration, so as to make a contribution to safeguarding a sound economic order for the market and protecting the legitimate rights for each market subject. (Translated by Li Ansong)

Review of Previous China IP Judges Forums

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Typical Cases Analysis of Trade Secrets

Definition of Malicious Trademark Registration in Judicial Trials

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