By Liao Fei, King and Wood Mallesons’ IP group

With the revision of the Trademark Law in 2014 and 2019, the activities of bulk trademark squatting as well as hoarding trademarks without intent to use have been put to the spotlight of the law. The prohibition of registration “by other unfair means” under Article 44 (1) as an important “catch-all” clause more focusing on public interest, is a critical supplement to those legal clauses like Art. 13, 15 and 32 that are focusing on specific entities’ civil rights. The recent success by King & Wood Mallesons in representing its Australian client in invalidating series of “西瓜忍者(Watermelon Ninja in Chinese characters)” trademarks, is a good example to show how the CNIPA applies Article 44 (1) in such bad faith related cases.

Fruit Ninja is a worldwide popular game developed by the Australian video game producer HALFBRICK STUDIOS PTY LTD in 2010. It’s idea was derived from a TV advertisement on fruit knives and has gained huge success among the global market including China. It was named one of Time magazine’s 50 Best iPhone Apps of 2011 and reached 1 billion downloads in 2015. The game is also called Slice Watermelon (切西瓜) by its fruit slicing fans since watermelon is the most significant fruit in the game and the game’s main logo also features a sliced watermelon.

In 2016, a Chinese individual named Ms. Qiu filed 17 trademark applications for “西瓜忍者” (Watermelon Ninja in Chinese characters) in various classes, and besides, she also filed the slice watermelon logothat is highly similar to the logoover which Halfbrick owns both trademark registration and copyright registration. Undoubtedly, it is a series pirating activity against Halfbrick’s intellectual property in its famous game.

Halfbrick started filing oppositions in 2017 against the bad faith applications by Qiu, but except some success based on Article 30 (right of similar mark filed over same/similar products) and 32 (prior copyright) in part of classes, the oppositions were rejected in various other classes like 16, 25, 28, 29, 30, 32 , 33 and 43, based on the reasons that the designated goods/services by the cited marks of Halfbrick are not similar to those of the opposed marks and the evidences are not sufficient to prove the bad faith by the other party.

Halfbrick was dissatisfied with the opposition decisions and filed invalidations later. In the invalidations, various evidences were submitted, including the search reports from the National Library, articles and news from various magazines and media, over 4 million search results from in relation to “Fruit Ninja”, trademark registration information in China and worldwide, promotional evidences in association with such organizations like McDonald’s and Running Man TV show, downloads from Apple Appstore, precedent cases of being copied or imitated, information on derivative development surrounding Fruit Ninja, dictionary explanation proving the correspondence between Fruit Ninja and its Chinese characters, etc. Moreover, Halfbrick also submitted evidences to show that the applicant Qiu as an individual filed as many as 62 trademarks which cover not only “Watermelon Ninja” but also trademarks identical to the names of celebrities like “王思聪(Wang Sicong)” with over tens of millions fans in social media and “吴海燕(Wu Haiyan)”, as well as OCULUS in Chinese (a VR brand of FACEBOOK).

The CNIPA finally invalidated the “Watermelon Ninja (in Chinese)” trademarks in various classes. In the decisions, it is held that the “西瓜忍者(Watermelon Ninja in Chinese)” mark is similar to those “水果忍者(Fruit Ninja in Chinese)”, “切西瓜(Slice Watermelon)” and “Fruit Ninja” marks with reputation by Halfbrick. Moreover, since the applicant Qiu Jinyan did not make any reasonable explanation on her creation and adoption of marks same/similar to other celebrities’ names and other parties’ brands like “王思聪(Wang Sicong)”, “吴海燕(Wu Haiyan)” and “OCULUS in Chinese”, her filing activities have obviously exceeded the reasonable need in business, carried the intention for unfair competition or seeking illegal interest, disturbed the normal trademark registration administration order, and thus has constituted the situation of “obtaining registration by other unfair means” as prescribed in Article 44 (1) of the Trademark Law of 2013.

The difficult issues of these series cases are that Halfbrick did not own any prior application/registration over those goods/services designated by Qiu’s trademarks, and there is still certain difference between “Watermelon Ninja in Chinese” and “Fruit Ninja in Chinese” due to the different initial words of each mark. However, it is still quite manifest that Qiu’s trademark is a deliberate patchwork of different parts of Halfbrick’s prior marks “Fruit Ninja in Chinese” and “Slice Watermelon in Chinese” and it is likely to be misunderstood as series marks or related marks by consumers. In consideration of the above facts as well as the fact that the same individual also copied the same logo of Fruit Ninja (successfully opposed in separate case), the CNIPA then put focus on the fact that the individual copied in batch other parties’ names or brands, and thus held that she had illegal intention of unfair competition or seeking profits.

The trademark squatting in dissimilar classes has been troubling many brand owners for many years in China due to the underlying principle of first-to-file, and the Watermelon Ninjia cases is a typical example of the successful enforcement of trademark rights in such sort of cases in recent years. Many trademark owners have always found that their trademarks are pirated by others in various irrelevant classes over which though they enjoy no prior application/registration or use of mark, no such other rights like copyright, personal name or trade name, and there is not any prior business connection that can prove the bad faith of the other party, etc. This has been a typical situation for trademark owners and if dating back to several years earlier, they would have to resort to the only left remedy of seeking well-known trademark recognition which may however even prove much more difficult. With the strengthening cracking down on bad faith registration in China however, it could be gladly seen that in more and more cases recently, the CNIPA and the two instances courts in Beijing have been no longer limiting their examination on those prior rights, but more flexibly relying on such legal clauses of absolute grounds like Articles 4, 7, 10 and 44 aiming protection of public interest and principle of honesty and credibility. Especially when the owner of a disputed mark simultaneously has several other marks copying or imitating the famous earlier rights of other parties, the negative finding of such bulk pirating will likely lead to the finding of bad faith over the specific disputed mark itself, and thus triggering application of “obtaining registration by other unfair means” as prescribed in Article 44 (1) to reject the disputed mark.

Usually the application of Article 44(1) over cases involving such bad faith circumstances will have to meet several conditions, including first, the cited mark or other types of right shall enjoy relatively high reputation in China; second, there should be reasonable ground for the bad faith of the other party relating to the current disputed mark; third, the other party shall have filed or registered several different marks aiming at copying or imitating the earlier reputable rights of different third parties, and sometimes even the total number of its trademark applications and registrations are abnormally high. Among the three indispensable conditions mentioned, the first two are usually easy to be met, but there has always been ambiguity or dispute relating to the third condition about the minimum number of trademarks infringing other parties’ rights owned by the same trademark squatter. According to information obtained through different channels and different precedent cases in recent years, we found that the starting number under such circumstances may vary from several to dozens of marks in different cases. Actually in deciding such cases involving Article 44, instead of being sticking to what should be the threshold number of bulk pirating marks by one entity and following any unified quantitative index, the examiners and judges will usually more focus on the specific facts in the specific case and more rely on whether is any reasonable finding of “bad faith” and/or “violation of principle of public order and good custom”. For applying Article 44 in such cases, the various factors as the reputation of the cited mark, the bad faith of the applicant and the quantity of trademarks infringing various different earlier right owners may have some interaction with each other. For instance, if the cited earlier trademark is highly reputable and the bad faith of the disputed mark is much obvious, then there is less minimum number of pirating different other parties’ rights required, and vice versa. The total number of trademark applications/registrations under the name of the applicant of the disputed mark may also have impact upon the case, for example, if the trademark squatter is an individual or a small business but with over hundreds of trademarks obviously exceeding its normal business need, then even the finding of several limited number of reputable marks owned by different third parties will be sufficient to trigger the application of Art. 44.

However, despite the more flexibility and possibility of cracking down on bad faith registrations provided by Article 44(1) of the Trademark Law, we need to be vigilant against any possibility in the inconsistency or the lack of objectivity and fairness in flexibly applying the said article in some special circumstances. For instance, some owners of a large number of trademarks may have justified need for defensive registrations or future commercial use and it would not be fair to regard them as having no genuine intention of use and/or occupying the public resources; moreover, it would remain skeptical and needs to be checked specifically as to whether the bad faith of one or several trademarks of one entity will definitely lead to the establishment of bad faith over any other trademarks owned by the same entity but challenged by someone else who may not have a strong and solid prior right. Moreover, with more and more reported cases applying Article 44 by both the administrative and the judicial authorities, it can be predictable that some trademark squatters may try to circumvent the law by using more different entities and avoiding filing many marks under one entity. Under such circumstances, how then should we fight against the trademark squatting activities that, on the face of it, are not conducted in bulk? This may be a new challenge to the application of Article 44 (1) in the future.