Guest Post: TACKLING BAD FAITH TRADEMARK APPLICATIONS OR REGISTRATIONS IN CHINA – PART III

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This is the third guest post in a 4-part series regarding defeating bad faith marks in China from Beijing East IP authors Yan ZhangMiao Tian, & Austin Chang.

Previously, we shared our insights on the application of bad faith clause with exemplary cases. This time, we are going to share cases to show how we identify the bad faith and how we present the evidence to convince the CNIPA and the courts to achieve favorable outcomes!

  1. Devil lies in the details – everything submitted when filing trademark applications counts

A Chinese individual filed an App. No. 10558333 for “facebook”on March 2, 2012, designating “doors of metal; metal door device; door casings of metal; insect screens of metal; metal furniture parts; ironmongery; locks of metal, other than electric; safes; props of metal” in class 6. This registrant only owned this particular disputed mark.

Facebook filed both an opposition and an invalidation against this mark successively, but neither proceedings could remove the disputed mark from the registry successfully. In these proceedings, the examiners found that hardware was distant from networking and no harm was placed against public interest or order.

Unsuccessful before the CNIPA, Facebook appealed to the Beijing Intellectual Property Court. Facebook focused its claim on further demonstrating the registrant’s bad faith. In addition to the evidence already collected and submitted in the invalidation, Facebook managed to find a valuable piece of evidence which was only available at court proceeding – the application materials of the disputed mark on file at the Trademark Office. In its judgment, the court reasoned that, as required by the law, trademark applications should be filed in the name of a responsible person running an individual business or a lease holding rural household, or someone with the permission to engage in business operation. Here, the registrant submitted a copy of a business license which showed him as the operator of a solely owned business engaging in wholesale of doors and construction materials. However, according to the information revealed in the National Enterprise Credit Information Publicity System, this solely owned business was run by another individual that provides housekeeping services. During the court hearing, the examiner from the CNIPA also admitted that when examining trademark applications, they only conduct a formality check on the materials but will not verify the authenticity of the content therein. Given the discrepancies, the copy of the business license submitted when filing the application for the disputed mark was obviously forged.

The court further reasoned that the mark “FACEBOOK” bore high distinctiveness as it is neither in Chinese characters nor an existing English word, and the mark owner Facebook was the operator of the famous social networking site “FACEBOOK.” Considering the facts that the registrant provided forged materials when applying for trademark registration, the disputed mark was identical with “FACEBOOK”, and the registrant refused to appear in court to explain despite the court’s subpoenas, the court found the forged business license hardly a coincidence. The court concluded that the registrant used deceptive or other unfair means in obtaining the disputed mark’s registration. Such trademark application was filed with obvious intention of infringing on other’s prior rights and disturbing trademark registration order. If left uncurbed, such behavior will inevitably hinder the normal operation of honest operators and impair the market order of fair competition. Therefore, the disputed mark should be invalidated.

Although procedurally, the registrant has the right to file a second instance appeal against the judgment, he did not appeal, and the judgment became effective. The CNIPA later re-visedan invalidation decision based on the Beijing Intellectual Property Court’s judgment to invalidate the disputed mark for violating Article 44.1 of the Chinese Trademark Law 2013.

  1. Massive filings without justified reasons can never be tolerated

A Chinese investment management company filed App. No. 18919877for “FBMENTIONS”on January 18, 2016, designating “radio broadcasting; message sending; mobile phone communication; computer terminal communication; computer aided transmission of messages and images; providing user access to global computer network; voice mail services; transmission of digital files; videoconferencing services; video-on-demand transmission” in class 38.

Facebook filed an opposition against this mark, arguing for similarity with its mark “FACEBOOK” in class 38 and for the applicant’s bad faith. The CNIPA, however, disagreed noting the differences between the marks and the lack of malicious evidence.

Facebook did not stop at this unfavorable outcome but, further brought the mark to the invalidation stage. Based on the evidence gathered during the opposition, Facebook’s strategy was to focus on the registrant’s bad faith in achieving a favorable invalidation outcome. Facebook further conducted deeper investigations of the registrant aiming to collect and present as much evidence to demonstrate its bad faith as possible.

Like the opposition proceeding, the registrant did not respond in the invalidation. Upon reviewing our arguments and evidence, the CNIPA found that:

Since 2015, the registrant has applied for more than 280 trademarks such as “UBER in Chinese,” “UBERBEATS,” “APPLEMOBILE,” “APPLELIFE,” “BMWAPPLE,” etc., for computers, automobiles, coffee, currency exchange, online banking, real estate management, electronic information transmission, education and other goods and services in Classes 9, 12, 30, 35, 36, 38, 41, etc. Some trademarks have been refused from registration or been invalidated for being similar to others’ prior marks.

The registrant did not respond to the invalidation arguments, did not submit evidence of the use of the disputed trademark, and did not give a reasonable explanation of its intention for its massive number of trademark applications or of its source for the trademark designs.

As an investment management company solely owned by a natural person, the registrant’s behavior of filing a massive number of applications could hardly be considered legitimate as it showed obvious subjective intention of duplicating or imitating others’ prior marks, which has exceeded the normal needs for business operation, and lacks genuine intention to use.

Considering the above facts comprehensively and in the absence of evidence to the contrary, the CNIPA concluded that the registrant’s massive applications has disrupted the normal order of trademark administration and was detrimental to a fair and competitive market order. The disputed mark’s registration was invalidated based on Article 44.1.

  1. Comments

Both exemplary cases are related to Facebook, and admittedly, the distinctiveness of the mark FACEBOOK and the fame of Facebook have their contributions to the final favorable outcome.  However, Facebook’s persistence in pursuing the cases to next levels and their persistence in exhausting all possible evidence to show the other party’s bad faith are also of vital importance.

Regarding the first case against the individual who filed “facebook,” it was not particularly surprising, though disappointing, that both opposition and invalidation decisions were not favorable. After all, the adversary had only one mark in total and the class 6 goods carried minimal relatedness with Facebook’s core business. So, at the court proceeding, Facebook’s arguments focused on presenting evidence of the registrant’s qualification for filing trademark applications.

In China, any natural person who applies for trademarks should be a responsible person running an individual business or a lease holding rural household, or someone with the permission to engage in business operation. So, when filing new applications in the name of an individual, a copy of the applicant’s ID card and a copy of business license of their solely owned business or of the lease holding contract should be submitted.

Some malicious applicants submit forged credentials to obtain trademark registration by fraud. In the first case, after the court appeals case was officially docketed, Facebook formally requested an official copy of the disputed mark’s application materials on file with the Trademark Office. Upon receiving the documents, it was obvious that the individual filed the trademark application with forged documents and the disputed mark was subsequently invalidated based on Article 44.1.

When dealing with bad faith filings, every detail in the life of a trademark application counts and should be closely examined – the second case proves this strategy.

In the invalidation decision against “FBMENTIONS,” the CNIPA referred to the number of the registrant’s filings and some of its marks similar to famous brands, which constituted the basis for finding the bad faith of the investment management company. But when presenting the case to the CNIPA, other than above arguments, Facebook discovered and sorted out the following facts so as to make a convincing argument of bad faith.

Background of the registrant: the duration of its existence, the actual payment of its registered capital, its business scope and the specific situation of the industry, the operation status and whether there are abnormal situations like administrative orders and fines, suspension of business, etc.

In this case, the registrant is an investment management company while the disputed mark is in class 38 for telecommunication services. The two industries both bear strong industry attributes and have strict qualification requirements, but they are not naturally related, which may indicate the low likelihood of genuine intention to use the mark because companies would not often apply for trademarks for goods or services that are too unrelated to its core business, unless they are expanding to other industries.

Circumstances of the registrant’s marks: the cumulative number of trademark applications, the designated classes of goods and services, the time span of the registrant’s submission of trademark applications, the applications similarity to others’ marks with distinctiveness and fame, the repeated trademark applications, the marks on sale at public transaction platforms, etc.

In this case, the registrant applied for more than 200 trademarks designated on goods and services that care commonly used by the general public like automobiles in class 12, financial services in class 36, telecommunication services in class 38, education services in class 41, medical services in class 44. More importantly, many of the registrant’s marks were imitating the marks owned by worldwide giants such as Facebook, Apple, BMW, Canon, Uber, etc. These applications provide inferences that the registrant has bad faith.

Related entities of the registrant: companies shared the same legal representative or senior executives, entities involved in trademark assignment with the registrant, entities associated with the registrant as revealed and proved in other cases, etc.

In some cases, the number of the adversary’s filings is not large; but when one expands the firing range and takes a deeper look at its affiliates, one would find that the related entities in combination are large enough to turn the case around.

In this case, Facebook found an affiliate with unusual connection. As shown by the trademark filing records, the registrant filed serial marks starting with “FB,” like “FBATWORK,” “FBSHOPPIN,” “FBWALLET,” etc.; and searching in the trademark database, Facebook noticed that there was an individual who also filed similar series marks starting with “FB.” Facebook conducted further searches using both names and found a special relationship between these two entities – the individual is recorded as the inventor of the registrant’s patent. And that individual happened to be a squatter whose bad faith has been repeatedly affirmed by the CNIPA and the court. Although the number of and the copies among the marks filed on the registrant’s own seem sufficient for the bad faith argument, the more evidence of bad faith, the higher success rate.

Other related actions: selling marks to actual proprietor or at public platform to third parties, registering domain names or e-stores and bundling with trademarks for transfer, coercing others for commercial cooperation, and demanding high transfer fees, license fees, tort compensation, litigation settlement fees, etc.

In order to find evidence from the above-mentioned aspects, one should make an in-depth investigation of the adversary from the following databases:

  • Commercial and business registration
  • Trademark
  • Patent
  • Copyright
  • Domain names
  • Court judgments and CNIPA decisions