Good News – Chinese Trademark Office Starting to Enforce Against Squatters

In the wake of Chinese athletes’ excellent performance at the Tokyo Olympic Games, there has been a surge in trademark squatting, in an attempt to take advantage of the athletes’ names and related terms.

The China National IP Administration (CNIPA) has cracked down on the squatters and announced the rejection of 109 applications, with both the squatters and representing agencies being listed.

The Chinese authorities and courts are cracking down on bad-faith trademark applications. Nevertheless, some bad-faith applications had matured into registration, the owners of the defected trademarks sometimes “enforce” their pirated trademarks against the victims of the bad-faith applications. Such owners are categorized as IPR abusers. Now that the Supreme People’s Court (SPC) permits the victims or defendants to claim compensation for their reasonable expenses, it will be harder for the abusers to profit from trademark squatting. Instead, the squatters shall compensate for the loss caused by the abuse if they maliciously initiate lawsuits. The Interpretation will make trademark squatting or IPR abuse less profitable or riskier, which is certainly helpful to purify the IPR environment in mainland China.

The CNIPA’s current fees were set very low to ensure people were not shut out of the application process. But this had the unintended consequence of dramatically increasing trademark applications and piracy. In an attempt to readjust to an optimum fee rate, the CNIPA has sought public input on fee structures.

On August 25th they officially responded to proposals from the All-China Federation of Industry & Commerce’s (ACFIC) and have suggested the following changes to Chinese trademark law:

1) To limit the scope of entities qualified to file trademark opposition and invalidation in order to prevent bad-faith oppositions. The CNIPA suggests the possibility of permitting the third party’s opinions and adding the non-use cancellation applicant’s burden of proof;

2) To lift the threshold of opposition. The CNIPA will consult with other authorities about the fee structure for trademark matters and newly design liability of compensation;

3) To improve delivery procedure of opposition documentation;

4) To publicize evidence and have hearings in oppositions; and

5) To strengthen crackdown on bad-faith applications and representation and build fair, honest and creditable market environment.