April 24th 2019 has been a long awaited date, when changes eventually occur, after years of expectations. On such date, the new PRC, Trademark Law has been promulgated, taking effect on November 1st 2019.
We have been striving for years and years against the so-called “Chinese trademark squatters”: agents, entrepreneurs and companies who registered in China trademarks, actually belonging in other countries, if not worldwide, to other entities, who created, developed, use and promote such trademarks, with great investments and efforts.
Chinese consumers have been so many times cheated, convinced to purchase a given well-known brand, instead buying a “made in China”, “designed in China” item, with absolutely no relation with the style, quality and soul of the identical international brand.
Such absurd situation was compliant to the PRC, Trademark Law, because the “first-to-file” rule was grating exclusive right of use of a trademark to the first entity registering it with the China Trademark Office, whatever the situation of the identical trademark could be abroad.
Bad faith registrations are regulated under the currently effective PRC, Trademark Law, but within such a narrow scope that it has always been actually impossible to make recourse to such clause of the law to recover a “squatted” trademark. According to the current PRC, Trademark Law, no bad faith would be ascertained and could prevent registration of a trademark or cause its cancellation, unless the applicant could prove the specific relationship occurred between him and the owner of the trademark in China. When no relation ever existed (because the Chinese registrant simply heard about the international trademark at some exhibition or found it by travelling abroad or by searching on the web), no bad faith could be ascertained to provoke cancellation of such Chinese trademarks.
The spirit of the New Trademark Law goes in a different direction.
From the very first few articles of the amended Trademark Law, while stating the very basic principle of trademark registration (“If a natural person, legal person or other organization needs to obtain the exclusive right to use a trademark for its goods or services in its production and business activities, it shall apply to the Trademark Office for trademark registration”), the amended law specifies that “When the applications for registration of a trademark is not filed for the purpose of utilizing it, such malicious application shall be rejected.¹” It might seem a peculiar clause, addressing the purpose for which a trademark application is filed, but it is actually aimed at tackling those entities who register other’s trademark, not to use it, just waiting for the foreign owner to claim it and pay to purchase it back (art. 4).
Of course not all squatted trademarks remain unused and can be cancelled on such new legal basis, some of them are e exploited, leveraging on their international fame, but in most cases they remain unused, because the only purpose of registration is retaliating the foreign owner.
Malicious registrations under art. 4 have now became one of the legal basis upon which opposition may be filed against an application to register a trademark as well as cancellation may be required.
Penalties for counterfeiting have been increased (even if yet not to amounts which could really be deemed satisfactory) and an act of registration of malicious trademark under art. 4 may give rise to criminal responsibility.
Last but not least, in case of malicious registration of a trademark, administrative penalties such as warnings and fines shall be given according to the circumstances and, if a lawsuit is filed in connection with such malicious trademarks, such penalties shall be imposed by the people’s court. The intention is clearly that of preventing those entities who succeeded in registering others’ international trademark, with no intention to use it, to even seek protection of such trademark in court.
The rules are not detailed, penalties not clearly quantified and, to define a trademark registration “malicious” only on the basis of the lack of the intention to use it, seems quite a simplification of a much complex problem; however, those who have been fighting to recover “squatted” trademarks for years, with no weapons at all, other than the impossible attempt to prove a certain degree of fame of the international trademark in China, to gain the right to some protection, will have a new ground of action and attack against such registrations. We except the competent authorities, like CTO and Trademark Review and Adjudication Board, as well as the competent courts, to impose onto owners of such malicious registrations the burden of proving, at least, utilization of the trademark.
We thus consider the latest amendment to the PRC, Trademark Law a very welcome change in the law, a step forward eliminating certain unfair and unbalanced situations and a new weapon made available by the law against trademark “squatters”.
¹ 不以使用为目的的恶意商标注册申请，应当予以驳回。
