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Image: Bottega Veneta

For decades, well-known consumer-facing companies have suffered a similar fate. Upon building their brands in the West and amassing trademark rights there in connection with their names, logos, and potentially other branding assets, such as elements of their product packaging, they look to expand internationally, including in China, where they are met with a common-but-unfortunate reality: a native Chinese entity or individual has beaten them to filing and receiving trademark registrations for the same name as their brand, either in English or in the Chinese transliteration. This is precisely what some of the world’s most well-known brands – from Tesla and Pfizer to Apple and Hermès – have grappled with. 

China’s trademark system has long-garnered criticism among international rightsholders for this exact reason, for enabling a practice that is largely characterized as trademark-squatting. As Akin Gump attorneys William Leahy and Stephen Kho note, “The structure of China’s trademark system is ripe for abuse by squatters.” This is because China is “a first-to-file jurisdiction for trademark registration, [and] its system does not require evidence of prior use or ownership when filing, leaving registration of popular foreign marks open to third parties” that are not the otherwise rightful owners of such marks, but that are looking to piggyback on – and profit from – the goodwill associated with well-known brands. 

Faced with mounting pressure from brand-owners and even from within the China National Intellectual Property Administration (“CNIPA”) to better address the rampancy of trademark-squatting, China’s trademark body moved to incorporate squatting-specific language in the national Trademark Law by way of amendments that went into effect this time last year. Among the provisions that came into force on November 1, 2019: a particularly closely-watched one that provides – in Article 4 – that “[a]ny bad faith trademark applications without intent to use shall be refused.” (This provision is bolstered by other additions to the Trademark Law, as well as existing provisions in China’s General Principles of the Civil Law and Anti-Unfair Competition Law). 

In the year since the new amendments came into effect, the CNIPA has, in fact, started to refuse trademark applications based on Article 4, according to Bird & Bird LLP attorney’s Hank Leung, Dawn Hui, and Ivy Dai, which suggests that the amendments “have improved the CNIPA’s practice in examining bad faith applications.” They point to two proceedings that have come in the wake of the so-called “bad faith filing” amendments, one involving Kering-owned brand Bottega Veneta and another centering on Italian automaker Maserati, which are demonstrative of this new approach to bad faith filings.

Bottega Veneta and Maserati

In the first case, the CNIPA refused to register “葆蝶家BOTEGA” for use in Class 10 – which covers medical and dental devices, among other similar goods – in December 2019 on the basis that the Chinese characters “葆蝶家” are pronounced as “BAO-DIE-JIA” in Mandarin and represent the official Chinese name adopted by Bottega Veneta. While the Italian luxury brand did not at the time (and still does not) maintain a registration of its own for its word mark in Class 10, as it is in the business of luxury apparel and accessories and not “surgical and medical apparatus,” the CNIPA, nonetheless, refused the application. The trademark body found it significant that the trademark filing party, Yimei Yiyao (Guangdong) Co., Ltd. had filed more than 50 trademark applications in China, many which were “identical or similar to” the marks of famous brands. 

“The CNIPA decided that the application for ‘葆蝶家BOTEGA’ was filed in bad faith without intent to use and refused it based on Article 4,” Leung, Hui, and Dai assert, noting that the CNIPA had previously agreed to register the same “葆蝶家” character mark for use in Class 10 just four years prior in June 2015 when an another third party filed an application for the same mark. Even though the previous applicant “filed a total of 43 trademark applications in China, including 40 applications for the mark ‘葆蝶家’ in various classes within only 3 days,” they claim that the application in Class 10 was approved and was registered in 2016.

A more recent example came in March 2020 when the CNIPA refused to register “玛莎拉” – symbols that translate to Maserati – in Class 5, which includes “pharmaceuticals, medical and veterinary preparations,” among other things. According to the CNIPA’s decision, the application that Guangzhou Xingkuang Smart Card Technology Co., Ltd. (“Guangzhou Xingkuang”) filed for the “玛莎拉” mark was too similar to a previously-issued registration for Maserati, which extended to some – but certainly not all – of the goods covered in Class 5. Beyond that, the trademark body determined that the application was problematic in that it fell within the realm of bad faith under Article 4. According to the CNIPA, the application triggered Article 4 in large part because Guangzhou Xingkuang had filed more than 100 trademark applications in China since July 2019, most of which were for famous brand names and the names of celebrities. 

Leung, Hui, and Dai note that the “bad faith” finding was significant since “only part of the goods” that Guangzhou Xingkuang claimed in its application were similar to those covered by Maserati’s prior marks. Nonetheless, they state that “with the amended Article 4 in effect, the CNIPA could rely on bad faith and refuse the entire application.” 

In much the same way as in the Bottega Veneta case, “contrary to the above refused application, another third party had successfully registered “玛莎拉蒂” in Class 5 back in January 2012,” per Leung, Hui, and Dai. “Even though the applicant had filed up to around 1,000 applications at that time with many of them being imitations of other famous marks, the application was approved for registration, [and] the mark was only subsequently revoked on the basis of non-use in 2018.” 

One Year Later

Leung, Hui, and Dai claim that the foregoing examples, among others, indicate that under the amended Trademark Law, the CNIPA “now plays a much more active role in guarding against bad faith applications,” particularly for non-native entities, which have been traditionally at a disadvantage due to their lack of proximity to the market, itself, and to the Chinese trademark body. In the past, they note that for brand owners that did not adequately and/or proactively register their marks, “it was rather inevitable that those famous marks would be copied and registered by trademark squatters for other goods and services, thereby resulting in dilution of the distinctiveness of their marks and difficulties for the brand owners to expand protection of their trademark rights in other classes of goods and services in the future.” 

“The amendments of the Trademark Law now confer a clear power for the CNIPA to refuse bad faith applications on absolute grounds to reject imitations of famous trademarks even if a brand owner has not registered its marks for the same or similar goods and services,” which they say “offers some assistance and comfort to brand owners, in particular those which may not have the resources to register their trademarks extensively in many or all sub-classes in China for defensive purpose.” 

Despite such advances, brand owners are still encouraged to file applications for well-known trademarks in China as early as possible, according to CHOFN IP’s Shumin He and Tingxi Huo. While brand owners are in a better position than in the past to prevail against bad faith trademark-filers due to the amendments to the Trademark Law (and thus, the resulting outcomes in proceedings before the CNIPA) and based on a string of favorable decisions in bad faith trademark litigations, they aptly note that even if a party is ultimately victorious, the relevant legal proceedings can be time- and resource-consuming, oftentimes making “an earlier and wider registration far more cost-efficient than a passive lawsuit” after the fact.

He and Huo also note that the CNIPA is in a position to refuse bad faith marks, but “the examiners cannot absolutely filter all of the [applications for] confusingly similar or identical trademarks for use on similar or identical goods or services.” With that in mind, “it is thus highly advisable for the brand owners to watch the Chinese trademark register and duly file oppositions, a particularly important [way] to prevent squatters’ trademark applications from turning into registrations.”