Trademark owners are enjoying increasing success in using civil litigation strategies to address bad faith trademark filings in China.

This East IP report offers a brief survey of reported civil decisions since 2018 against registry pirates, particularly those that have used the victim’s mark, together with best practices that have emerged from these cases.

Recent Government Measures to Address Bad Faith Registration

Since 2019, Chinese judicial and administrative authorities have introduced a range of measures to stop and deter applications and registrations for trademarks filed in bad faith. Many of these measures are quite aggressive in comparison with the tools available to legitimate trademark owners in other jurisdictions. These measures include:

• Creation of an informal blacklist of bad faith filers.
• Rejection of applications filed by blacklisted applicants.
• Administrative fines against bad faith filers.
• Fines against and the revocation of operating licenses of trademark agents that represent registry pirates.
• Shifting of the burden of proof requiring bad faith filers to prove their good faith intent.
• Easing of the burden of proof on victim brand owners to prove the bad faith of trademark applicants.
• Relaxation of the five-year time bar for filing invalidation actions where the registry pirate is deemed to have violated Article 44 of the Trademark Law (prohibiting “improper registration”).

The latest draft amendment to the PRC Trademark Law circulated by Chinese authorities in 2023 would further protect victim brand owners by allowing authorities to order the transfer of pirated marks to the rightful owner, and in especially serious cases, to impose criminal sanctions. (See East IP’s White Paper explaining the contents of the draft law and relevant background here.)

For additional details, see prior articles on bad faith filing in our Knowledge database.

Civil Actions Based on Unfair Competition

Since 2018, Chinese civil courts have been providing a new and often game-changing remedy by allowing victim brand owners access to damages and other relief by recognizing bad faith filing as a form of unfair competition. As of this writing, East IP has identified 22 such cases. Details are set out in a chart here. 

As indicated, the damages awarded by the courts in these cases have been substantial. While the quantum of damages normally correlates to the level of the defendants’ sales of infringing products, courts have made clear in most cases that the compensation covers the plaintiff’s legal and other costs incurred in dealing with registry actions, particularly oppositions and invalidation actions. 

The civil decisions are also significant in that they have sent a message to registry pirates that local courts will no longer necessarily adhere to the earlier practice whereby judges suspend handling of civil actions until there is a final decision or administrative judgment in co-pending oppositions or invalidation actions against the pirate’s trademark applications or registrations.

Creative Remedies

A few of the courts in the cases listed below have granted additional forms of relief that warrant particular attention. These include:

• Decisions holding trademark agents representing registry pirates jointly and severally liable with their clients based upon contributory liability.  

• Decisions ordering defendant registry pirates to voluntarily de-register registrations or withdraw pending applications for pirate marks – thereby helping to avoid further costs for victim brand owners in dealing with registry proceedings in Beijing. 

See East IP case notes on relevant judgments here (ReFa), here (TINA & TONY) and here (In-Sink-Erator).

The cumulative effect of the judgments issued to date has helped East IP trademark attorneys in achieving settlements with registry pirates and also increased the effectiveness of C&D letters.

Toward Unified Practice

Chinese courts are not entirely in alignment on the remedies they are willing to grant.

Most notably several judgments by courts in Beijing have explicitly rejected the notion that bad faith filing constitutes a form of unfair competition.

Meanwhile, two Chinese courts have imposed liability for unfair competition against infringers based solely (or nearly so) on their bad faith filing behavior, without evidence that the defendants had used the pirated marks in a substantial manner or sought to enforce their registrations against the plaintiff or its distributors. Please see the Joy and In-Sink-Erator cases below (the latter is also discussed in East IP case note here).

It is possible that the Supreme People’s Court will take steps soon to bring consistency to local court practices through a judicial interpretation or a decision in a retrial request. However, access to civil remedies is likely to remain available in the longer term, as evidenced by the 2023 draft amendment to the PRC Trademark Law, which explicitly recognizes the right of victim brand owners to seek compensation from bad faith filers. The timeline for enactment of further revisions to the law remains unclear, but East IP estimates amendments could be introduced to the legislature in 2026 or 2027.

Best Practices

Where the risks from bad faith filers are substantial, East IP recommends that brand owners carefully evaluate cases with counsel to determine whether steps should be taken beyond the usual registry proceedings. These measures will include the following:

• Commissioning investigations to gather more persuasive evidence of bad faith, as well as the scope and scale of any use of marks by the pirate.

• C&D letters to the pirate and its trademark agent.

• Complaints to the China National IP Administration (CNIPA) and local Market Supervision Bureaux (MSBs), which have the authority to conduct their own investigations and impose administrative sanctions against pirates and their trademark agents.

• Filing civil actions at an earlier stage of disputes, targeting not only pirates but also their trademark agents.

• Including in requests for relief (i) compensation for all documented legal and investigation costs, and (ii) a court order for the de-registration or withdrawal of pirated registrations and applications.

• Selecting the most favorable venue for such civil actions, i.e., localities where the courts have already issued judgments recognizing bad faith filing behavior as a form of unfair competition, and otherwise where the judges are more likely to encourage infringers to settle quickly during pre-trial mediation proceedings.

See here for a Civil Judgments Summary Table