Legislation & Policy

Defensive PRC Trademark Filings Recognized as Legitimate

SIPSKnowledge, Legislation / Policy

Defensive registrations can be a critical tool for securing protection against piracy and preserving business opportunities for new lines of goods and services. This is particularly the case in China, where bad faith registration is rife and the register is increasingly crowded.

To date, the legitimacy of defensive trademark registrations has not been addressed in the PRC Trademark Law or its implementing regulations. The question of whether such filings are permissible in China became more urgent following amendment of the Trademark Law in 2019, when the following new language was added to Article 4:

Bad faith applications for registration of a trademark that are not made for the purpose of using the trademark shall be rejected.

The main purpose of this provision was to strengthen the legal basis for rejecting or invalidating pirated marks as well as those registered for the sole purpose of resale. But owners of trademarks with defensive filings in non-core classes questioned whether Article 4 might one day also be used as a basis to invalidate their defensive registrations.

Fortunately, the discussion draft of the Trademark Examination and Review Standards (“Standards”), circulated by the China National IP Administration (“CNIPA”) in June 2021 suggests that defensive filings will not fall afoul of Article 4. (See SIPS’ article here for more information on the discussion draft.)

The draft Standards, which are likely to be issued in final form by the end of 2021, include a chapter on the scope and applicability of Article 4 of the Trademark Law. In addition to setting out 10 examples of situations where Article 4 will apply, the Standards also refer to situations where Article 4 will not apply. Legitimate defensive filings, i.e., where an applicant registers  its trademark for defensive purposes (in order to prevent others from pre-emptively registering its registered trademark), are excluded from the scope of Article 4.

It is of course important for a trademark registrant to demonstrate that its defensive filings are “legitimate”. In a case referenced in the draft Standards, defensive filings are defined to include applications for trademarks that (1) are already in commercial use, (2) have gained a definite degree of fame, and (3) were filed with the intent of preventing trademark piracy by third parties.

Assuming the Standards are published in the same form as the current draft, the language excluding defensive filings from the scope of Article 4 of the Trademark Law should provide solace to owners of defensive registrations, at least in cases where the trademarks concerned are already widely known in China in relation to other goods or services.

The reference to the trademark in question having a “definite degree of fame” is not tantamount to the trademark having been recognized as a “well-known mark” in China. The former is a much lower standard, and if a company is sufficiently active in the PRC market that it has gone to the expense of registering its trademark defensively, its trademark will very likely meet this standard.

As such, and again assuming the provision on defensive filings in the draft Standards remains unchanged, brand owners that have registered their trademarks defensively should breathe a sigh of relief.