Defining malicious preemptive registrations of trademarks

The legal concept of malicious preemptive registrations of trademarks is not explicitly defined in the Trademark Law. However, the law contains provisions that deal with such cases, and one of the core provisions is article 32.

As an effective supplement to the trademark registration system, article 32 is designed to prevent malicious preemptive registration by improper means, with specific reference to protecting trademarks already in use by other persons and with certain influence.

A case handled by the author’s firm underlines the key points and difficulty in applying article 32, which is determining “certain influence” and “improper means”.

Determining certain influence

Article 18 of the Opinions on Several Issues Concerning the Trial of Administrative Cases Involving the Authorisation and Determination of Trademark Rights provides that where there is evidence that the prior trademark has certain duration of use, geographical area of use, sales volume, or advertising and publicity, it can be deemed as having certain influence.

In practice, in identifying malicious preemptive registration of a trademark, the criteria for having certain influence are generally less stringent than requirements for well-known trademarks. A trademark only needs to be known to the public within a specified geographical area or industry, and does not have to be known to the larger general public.

The prior user can prove popularity of the prior trademark by providing direct and indirect evidence such as contracts, invoices, bills and advertising material under relevant business contracts.

In an administrative litigation for the invalidation of the trademark “Ercros”, the lawyer pieced together a chain of evidence – submitting contracts, invoices and bills between the plaintiff and its distributor in China – to prove that goods marked with the prior trademark were continually sold in large quantities within China.

In addition, the lawyer also submitted online publicity material and media coverage, along with National Library of China search reports, to substantiate the prior trademark’s publicity, use and industry position in China.

Ultimately, the court held that the media coverage and publicity material, sales documents, online sales screenshots and other evidence proved that before application for registration of the disputed trademark, the plaintiff had used the “Ercros” trademark on paraformaldehyde and other goods, constituting certain influence.

Identifying improper means

Article 23 of the Provisions of the Supreme People’s Court on Several Issues concerning the Trial of Administrative Cases involving Trademark Authorisation and Confirmation provides that where a prior user claims the trademark applicant uses improper means to preemptively register a trademark already in prior use and with certain influence – and the trademark applicant knows or should know the prior use of the trademark – such registration should be deemed preemptive registration by improper means.

Clearly, whether the applicant knows or should know prior rights of other owners is an important consideration for determining whether the applicant has malicious intent.

A variety of factors such as originality and popularity of the prior mark, geographical area of the trademark applicant and the industry in which it operates, can be factored in determining whether the applicant knows or should know the prior trademark.

To prove awareness of the applicant in the above-mentioned “Ercros” case, the lawyer screened all the contracts with the plaintiff and found that affiliated companies of the trademark applicant had repeatedly purchased paraformaldehyde from the plaintiff.

By submitting supporting documents for transactions and a relationship diagram between the applicant’s affiliated companies and the plaintiff, and relevant evidence, the lawyer proved that the trademark applicant – as a business operator in the same industry as the plaintiff – knew or should have known the prior trademark when applying for the disputed mark.

In addition, the lawyer also explained the origin of the plaintiff’s prior trademark “Ercros”, to prove its originality.

Since “Ercros” is the plaintiff’s trade name that enjoys certain popularity across the chemical industry, the court upheld the claim of malicious preemptive registration of both trade name and trademark on the grounds of obvious malicious intent.

Two essential elements

Having a certain influence and using improper means are two essential elements under article 32 of the Trademark Law.

In practice, the relationship between the two elements is adjudicated case by case. The more popular the prior trademark is, the more likely the trademark applicant should know the trademark. This suggests a complementary relationship between having certain influence and using improper means.

When the evidence of malicious intent is less direct, there is a need for substantial evidence regarding popularity of the prior trademark to establish presumption that the applicant knew or should have known about it.

However, if the malicious intent is obvious, the requirement for establishing popularity of the prior trademark can be lowered. As long as the trademark in prior use can be proven to have an influence over the applicant for preemptive registration, the prior mark is deemed to have a certain influence.

At present, malicious trademark registration can be solved not only through the administrative procedures of trademark authorisation and confirmation, but also have precedents for resolving such disputes through civil litigation channels.

Because China adopts a first-to-file registration system, before entering or planning to enter the Chinese market the rights holder (especially foreign enterprises) should arrange for a trademark application in China as soon as possible to prevent malicious preemptive registration by other persons.

Otherwise, rights holders may have to spend a lot of time and money in defending their rights.

Even if a trademark application is not filed in a timely manner, the rights holder should diligently preserve evidence of the trademark’s publicity, usage in China and business transactions to protect themselves from malicious preemptive registration of their trademarks.

Wang Hanmei is an associate at Wan Rui Law Firm. Wan Rui Law Firm is a member of Sanyou IP Group