The legal framework surrounding trademark invalidation in China,
particularly the restrictive five-year limitation period, has long posed
challenges for brand owners. However, we have achieved a breakthrough at the
CNIPA level which signifies a welcoming shift in the CNIPA’s attitude on such
timeframe. It is hoped that this development will empower brand owners in their
fights to reclaim their marks from squatters beyond the five-year limitation
period.
The China's Trademark Invalidation Legal framework
The grounds and timeframe for filing invalidation are
stipulated under the following articles of the Chinese Trademark Law:-
- Article 44: “The
China National Intellectual Property Administration (CNIPA) shall invalidate the registered trademark if it violates the
provisions of Articles 4, 10, 11, 12 or Paragraph 4 of Article 19 of the Law,
or it was acquired by fraud or any other improper means. Any unit or
individuals may request the CNIPA for a ruling to invalidate such registered trademark...”
- Article 45: “Where a registered trademark stands in violation of the provisions of
Paragraphs 2 and 3 of Article 13, Article 15, Paragraph 1 of Article 16,
Article 30, Article 31 and Article 32 hereof, the prior right owner of
interested party may, within five years upon the registration
date of such trademark, apply to the CNIPA for invalidation the same. In
the event of malicious registration, owners of well-known trademark may exempt
from the aforesaid five-year duration.”
While the grounds for filing invalidation within 5 years from
registration of the disputed mark are clearly outline in the above articles, when
it comes to the requirements for filing invalidation after five years from registration,
the wordings of the law are not entirely clear. It is generally believed that
the disputed registration must be registered in bad faith and that the applicant filing the invalidation must rely on a well-known trademark
under its name to file the invitation beyond the five-year time limit.
Given that the bar for the CNIPA to recognize the well-known
status of a mark is set very high, successfully invalidating a trademark
registered for more than five years has always been highly difficult. It is generally
accepted that there is a five-year limitation period for invalidation in China
even when the disputed mark was filed in bad faith.
Such five-year limitation period is easily exploited by
squatters and infringers, and legitimate brand owners often find themselves in
a situation where they have to pay exorbitant amounts to buy back their own
trademark, especially when the squatters/infringers have been using trademark
and would be able to defend any non-use cancellation filed against the
registration.
The Court's Attitude Shifts to Empower Brand Owners
To cope with such problems, in recent years, there has been a
noticeable shift in the Chinese court's attitude towards the five-year
limitation in trademark invalidation cases. The landmark BOBDOG (China)
Children's Articles Co., Ltd. v. Quanzhou Babudou Children's Products Co., Ltd.
et al. (Civil Judgment No. 696 [2020]), which was listed as one of the 50 Model
Intellectual Property Cases tried by Chinese Courts in 2021 as published by the
Supreme People's Court, demonstrates such shift.
In the above case, despite the expiration of the 5-year
limitation period, the Beijing Higher People's Court allowed the invalidation
of the squatter’s mark. While the Court did not explicitly state that the
requirement of well-known status under Article 45 shall no longer apply, it
upheld the invalidation decision based on the grounds that the disputed mark
was filed in bad faith and that the brand owner’s mark has acquired “a certain
degree of reputation in China”, which is a much lower standard than the well-known
status.
Despite such instances at the Court, the CNIPA has generally exhibited its
reluctance in doing so, and invalidation beyond the five-year limitation period
has still been challenging at the CNIPA level.
Triumph Against All Odds: Our Groundbreaking Victory at the CNIPA
Level
We have however, in a recent case, successfully persuaded the
CNIPA to invalidate the squatter’s mark that had been registered for over five
years. This decision is a highly welcoming sign for brand owners.
Our client, an internationally renowned luxury fragrances and
cosmetics company, faced a difficult situation where a local Chinese cosmetics
company had registered a mark incorporating the Chinese name of our client’s famous
perfume brand and was identical to our client’s product name under such brand. Not
only does the squatter’s registration blocks the client’s application for such
mark, given that the squatter has also been using the mark, the same would also
easily mislead the public into believing that the squatter is authorized by or
otherwise affiliated with the client, thereby causing huge damage to the
client’s reputation in China. Invalidating the squatter’s registration was
therefore of paramount importance to the client.
However, the challenges of the invalidation were that the
squatter’s mark had been registered for more than 5 years when it came to the
client’s attention. This situation is especially common for Chinese names, as
foreign brands used to focus more on its original Latin name. Further, the
client does not have prior registration for the Chinese name of its fragrance
brand incorporated in the squatter’s mark. That said, we successfully persuaded
the CNIPA to recognize that the client’s marks have been used for a certain
scale on perfumes and related goods in China and that the squatter’s mark was
filed in bad faith. Despite the expiry of the 5-year limitation period and that
the client’s well-known status was not expressly recognized, the CNIPA invalidated
the squatter’s mark.
Way Forward: Hope Unleashed for Brand Owners in Trademark
Battles
This successful case signifies a positive change
in the CNIPA's approach, demonstrating their willingness to consider evidence
of bad faith of the registrant and substantial use of the brand owner’s mark in
invalidating squatter’s registration beyond the five-year period. The decision
establishes a promising precedent for brand owners facing similar
circumstances, and bring hope and encouragement in the challenging process of
getting back their marks squatted for a long period of time.
© Vivien Chan & Co., Newsletter issue 15, December 2023
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Vivien Chan & Co. is a full-service law practice with offices in Hong Kong (1985) and Beijing (1993). We are consistently recognized as a premier law firm for and in Greater China. With over 35 years of doing business in Greater China, our Hong Kong and China teams have an in-depth understanding and knowledge of the legal culture and market dynamics.
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