Bad Faith Trademark Registration in China: Good Luck With That

China trademarks. Don’t wait. Every few months, one of my law firm’s International IP litigators gets contacted by a Western company that wants us to pursue a bad faith trademark case against a company in China. The Western company usually wants sue a Chinese company for having registered in China what the Western company perceives to be its trade name or trademark. These cases usually range from very difficult to just plain impossible.

Below are some examples of why.

1. Someone Registers “Your” Well-Known Mark in China.
China considers a trademark to constitute a well-known mark if it is well known in China. Coca Cola and maybe now Starbucks would qualify under this standard. AT&T might not. Your trademark almost certainly does not. If you really have a well-known mark and someone in China registers it, you have a bad faith filing. I cannot even imagine what company would think it better to sit back and wait for someone to register “its” trademark in China and then sue that registrant for bad faith filing, as opposed to simply going ahead and registering that trademark in China. It will always be cheaper, easier and more certain to register your trademark than to bank on being able to prove that the entity that now legally owns “your” trademark in China secured it illegally because it is a well-known mark in China.

2. Your Agent Registers “Your” Trademark in China.
China’s trademark law states that when “any agent or representative registers, in its own name, the trademark of a person or entity for whom it acts as agent or representative, without an authorization therefrom, and the latter raises an opposition, the trademark shall be rescinded and prohibited from use.”

China’s Trademark Office states that “agent or representative” should be very broadly construed and that the authorization must be unambiguous and in writing. This all sounds good and the problem here is not the law itself. The problem is proving that the person or company that registered “your” trademark in China was your agent.

The most likely person to register “your” trademark in China is someone on the inside. The person best positioned to know the value of your trademark is going to be someone at your China manufacturer, someone at your joint venture partner, or one of your own employees. Under the law, none of these people should be allowed to register your trademark on their own behalf and it is very likely none of them did. This law has been around long enough in China so that if your OEM manufacturer, joint venture partner or employee has any brains at all, they will not register your “trademark” in their own name; they will instead have their cousin in Xi’an register it, leaving you with the near impossible task of showing the linkage.

It will always be cheaper, easier and more certain to register your trademark than to bank on being able to prove that the person who now legally owns “your” trademark in China secured it illegally.

3. Someone Preemptively Registers “Your” Trademark in China in Bad Faith.
China’s Trademark Law also provides that a trademark application shall not be allowed if done to “preemptively register by unfair means a trademark that has already been used by another person where such mark has achieved some degree of influence.” China’s Trademark Office states this provision applies to trademarks that have not yet been registered in China and it defines “some degree of influence” to mean the mark has been used on a product in China and Chinese consumers have come to identify that mark with a particular product in China. This means this provision will probably never apply to foreign marks used outside China. China’s Trademark Office defines “unfair means” as having a motive for filing that violates the principle of good faith and fair dealing, as defined in China’s civil code.

Factors for determining bad faith in this situation are:

a. Whether the parties had prior business dealings with each other.

b. Whether the parties have had past disputes.

c. Whether the registration was for an unfair motive, such as to force the other party to enter into a business relationship, to force the other party to assign over its mark or to force the other party to pay for having allegedly infringed on the mark.

Again, the law sounds good, but the proof problems are certain to be substantial. And again, it will always be cheaper, faster and more certain just to secure your own trademark in China.

Most of the time, when someone has sought to retain my law firm to pursue a bad faith trademark claim in China, we counseled against it as the costs were too high as compared to the likelihood of success. And in every single instance when someone has sought to retain my law firm to pursue a bad faith trademark claim in China, about all I can think about while I am telling them of how difficult their case will be is “why the heck didn’t you just get a China trademark in the first place?” Usually, it is because they simply did not know the importance of doing so. One of our China trademark lawyers describes getting a China trademark as “one of the only no-brainers in international IP law.”

‘As we have said on here many times, the only real solution to protecting your mark in China is to register every mark you will be using in China, in both any foreign language and Chinese language you will use. If you wait to file, you are simply inviting a competing registration that will cause you major problems in China. China is a first to file jurisdiction and it must be approached that way. If you wait to file your China trademark until after your brand is already established in China, you are inviting trouble. There is a good chance someone else will have registered your mark and it is almost certain you will not be able to do anything about it.

Do you feel lucky? Do you?