In China, as elsewhere, owners of ‘well-known’ trade marks are keen to profit from the valuable reputation they have built up in their marks, and to protect their marks from misuse by third-parties.

One of their major concerns is to prevent dilution of the well-known mark’s reputation as a result of misuse by third parties in the marketplace. Another, less often discussed, is dealing with bad-faith third party trade mark applications. Unfortunately, China is a jurisdiction where bad-faith applications are far too common. Many bad-faith applicants have learned to navigate their way round the trade mark law and secure rights to well-known trade marks by applying for the right to use the mark in association with goods and services that are far removed from the goods or services with which the well-known trade mark is usually associated.

This article focuses on how the owners of well-known trade marks can address the issue of bad faith trade mark applications for registration in relation to dissimilar goods or services.

China Trademark Office and Well-known Trade Marks

China has adopted the Nice Classification of Goods and Services that divides goods and services into 45 classes. Each class is further divided into sub-classes: for goods, these sub-classes are determined by function, raw material, and sales channels; for services, by content and target consumers. Generally goods/services falling into the same sub-class will be considered similar to each other. Likewise, goods/services falling into different sub-classes will be considered not similar. This will not, however, always be the case: goods in different subclasses, or even in different classes, can be considered similar to each other.

In China, the protection afforded to a ‘well-known’ trade mark does not automatically extend to goods and services across all 45 classes. In disputes concerning a third party trade mark application or registration, the courts will consider the similarity of the goods and services on a case-by-case basis.

Where the third party application or registration is in relation to similar goods or services, the well-known trade mark owner will rely on evidence of the extent of the mark’s reputation. With regards to bad-faith applications for registration in relation to dissimilar goods and services, there are, generally, two approaches that can be adopted.

Defensive Trade Mark Filings

As China has adopted a first-to-file regime, defensive trade mark registrations in all 45 classes may be an effective tool. If the defensive registration has an earlier filing date than the bad-faith trade mark application, it will serve as an obstacle to registration.

The cost of covering multiple classes can, however, be high. There are also a number of other factors that brand owners should consider when determining the feasibility of defensive registrations.

First, a trade mark registration can be cancelled on the basis of non-use. China’s Trade Mark Law provides that anyone may apply to cancel a registered mark that has not been used for any three consecutive years after registration. The newly-amended China Trade Mark Law (2013), which will take effect on 1 May 2014, maintains this ‘use’ requirement. The mere presence of the registration may deter third party applicants, but for the strategy to be fully successful, it may be necessary to ‘use’ the mark in relation to goods or services in each class.

Another disadvantage of defensive registrations is that they will actually serve as an impediment to obtaining well-known trade mark recognition. Both the Chinese trade mark authorities (the China Trade Mark Office and Trade Mark Review and Adjudication Board (TRAB)) and the courts have the authority to recognize a mark as ‘well-known’ and, therefore, entitled to ‘cross-class’ protection; however, they work on granting ‘well-known’ status only when necessary. For example, where a mark has been registered in one class only, it would be necessary to grant ‘well-known’ status in order to achieve cross-class protection. If, on the other hand, the owner of a well-known trade mark has defensive registrations for its well-known trade mark, the CTMO, TRAB or court will decide the case on the basis of the relevant defensive registration. It will not be necessary for it to recognize the mark as a ‘well-known’ mark.

Defensive trade mark registration can, therefore, be a two-edged sword. Where owners are confident of being able to establish the ‘well-known’ status of their mark, it will usually be advisable to seek to have the mark recognized as a ‘well-known’ mark by the trade mark authorities or the courts rather than rely on defensive registrations. In some situations, however, particularly where a trade mark owner may not be confident of being able to establish ‘well-known’ mark status, defensive registrations will be a useful weapon against bad-faith applications.