Written By: Zhou Xiaoli, Zhou Xinyi, King & Wood Mallesons’ Intellectual Property group

Recently, the China National Intellectual Property Administration (“CNIPA”) published a Notice on Action Plan for Combating Malicious Squatting of Trademarks (“Notice”). The Notice emphasizes that malicious trademark squatting cause serious damage to the legitimate rights and interests of honest market participants and general public, and seriously harms the order of trademark registration management. In order to strengthen governance from the source and establish an efficient working mechanism for cracking down on malicious squatting, with coordination among different departments, the CNIPA has decided to carry out a special action against malicious squatting from March 2021.  The work focus on the following seven types of trademark malicious squatting seeking improper benefits, disturbing the order of trademark registration and causing relatively adverse social impact:

  1. Malicious squatting of the name of a national or regional strategy, major activity, major policy, major project or major scientific and technological project;
  2. Malicious squatting of word or sign relating to public emergency such as major natural disaster, major accident, major public health incident and social security incident, thereby harming public interests;
  3. Maliciously squatting of the name or sign of major event or exhibition with high popularity;
  4. Malicious squatting of public resources such as the name of administrative division, mountain, river, scenic spot or building;
  5. Malicious squatting of public commercial resources such as generic name or trade term of goods or services;
  6. Malicious squatting of the name of public figure with high popularity or the name of a well-known work or character;
  7. Malicious squatting of other’s trademark or other’s business sign that is high popularity or strong originality, thereby harming the prior rights and interests of the other parties.

The action plan also set up violations of the principle of good faith and public order as underwriting provisions. And at the same time, ” trademark agencies that know or should know a client is engaged in the above-mentioned acts, but still accepts their entrustments or disturbs trademark agency order by other improper means” is set as one of the cracking-down behaviors in the action plan.

The Trademark Office will be responsible for organizing and coordinating the implementation of the special action, including establishing a work mechanism for joint determination of trademark malicious squatting; organizing the joint determination of significant and difficult clues of the special action; refusing the application for registration, which is trademark malicious squatting in accordance with the law; invalidating trademark registration that has adverse influence ex officio; publicizing the relevant examination decisions; transferring the clues found in the examination, which are obvious suspicion of trademark malicious squatting and need to be regulated and investigated, to the Protection Division or the Utilization and Promotion Division ex officio; and inspecting the implementation of the special action operated by local Trademark Examination Cooperation Centers.

Prior to this Action Plan, the CNIPA issued a notification of combating malicious registration and hoarding of trademarks for the purpose not of use. From November 1, 2019, the fourth revision of the Trademark Law came into force. On December 1, 2019, the State Administration of Market Supervision and Administration of the People’s Republic of China issued the “Several Provisions on Regulating Trademark Registration Applications”, which clarifies implementation of the newly amended Article 4 of the Trademark Law “ malicious trademark applications not for the purpose of use, shall be rejected” and set the specific circumstances and factors for consideration of adopting this clause as well as specific penalties for applicants and agents of registration in bad faith. Afterwards the CNIPA also issued the “Guidelines on the Examination and Operation of Malicious Trademark Registration Applications not for the Purpose of Use”; further refining the specific circumstances and factors for consideration of Article 4, effectively combating malicious registration and hoarding of trademarks in the examination stage.

Next, the CNIPA will strengthen overall planning and coordination, timely expose typical cases, individuals, enterprises and agencies violating the law, and timely transfer the cases with adverse influence to the local enforcement departments for punishment, so as to create a good legal, market and social environment of intellectual property for fair competition and actively innovation among various market participants and voluntarily resist trademark malicious squatting.