If you say China and trademarks, you probably think counterfeit and squatting. A new judgement of the Minhang District (Shanghai) Court might put a serious break on these practices. It forms a precedent in the fight against trademark squatting, in which someone else registers your trademark and suddenly prevents you from using your own trademark in China.
Trademark squatting
The World Intellectual Property Organization (WIPO) defines trademark squatting as “the registration or use of a generally well-known foreign trademark that is not registered in that country or is invalid as a result of non-use.”
Trademark squatters might file a large number of trademark applications similar to your trademark, either in countries where you do not currently own a registration or in different classes of goods and/or services in which your trademark is not registered. These actions force the owner of the well-known trademark to file multiple opposition or cancellation actions, spending significant costs in order to protect its IP rights.
BRITA v DEBRITA
BRITA GmbH, a German market leader in portable point-of-use drinking water systems, is the trademark owner of the mark BRITA an its Chinese transliteration. These trademarks were registered for water filter systems in class 11.
Shanghai Kangdian Industrial Company filed in turn the trademark application DEBRITA in the same class, as well as 21 other classes on the basis of which Shanghai Company challenged the registration and/or use by BRITA GmbH of its own trademark in different sectors.
To defend its earlier rights, BRITA GmbH filed numerous actions to finally, after 8 years, obtain the invalidation of the DEBIRTA trademarks. These proceedings and the harm that was done by Shanghai Company by filing infringement actions against BRITA GmbH, brought about very high costs for the latter. To find compensation for these costs, BRITA GmbH sued Shanghai Company before the Minhang District Court.
One of the main questions in this case was whether the use of administrative trademark procedures could be considered incriminating and an act of bad faith.
The Court ruled that multiple trademark registrations and abuse of administrative trademark procedures of the Shanghai Company were indeed an act of bad faith. Therefore, the Shanghai Company performed an act of unfair competition.
This Judgement, together with the new Trademark Law of November 1, 2019 will make it easier for companies to recover trademarks registered in bad faith. With higher compensation and the possibility to destroy tools and raw materials, it will also become less attractive for squatters to pursue their actions.
The importance of Chinese registrations
In China, like in the EU, the principle of “First come, first served” applies. In other words: the person who is the first to register a trademark in China will acquire the exclusive right to it. It does not matter that you are the rightful owner or that you already own a trademark outside China. This leaves the door wide open for Trademark Squatters to register your trademark before you.
The above Judgement is a new weapon in the fight against counterfeit and trademark abuse. It can allow you to retract all the costs you have endured fighting off these squaters. However, you will still face a long procedure. For that reason, it is important to register trademark names in China as quickly as possible in order to stay ahead of the abusers.
It is therefore advisable to think ahead and register trademarks to cover:
- Core goods and/or services;
- Goods and/or services that could be offered if the business expands; and
- Goods and/or services, for which your company wishes to prevent third parties from registering.
IFORI is happy to assist you with your trademark application or expansion to China. If you’d like to know more about trademark protection or want to register your trademark, do not hesitate to contact us!
