In China, trademark infringement and squatting are a real challenge for many businesses. To prevent this situation, a common strategy used by brand owners is defensive trademark registration. By registering their core trademarks in different classes, companies can expand the protection scope and avoid the bad-faith filings of trademark squatters.
The main purpose of this strategy is to create a "defensive" perimeter around the mark actually used by the proprietor. Defensive trademark registration is undoubtedly one of the most economical and effective ways to protect a brand in China.
A defensive trademark can be applied for by the owner of a well-known trademark for goods or services that are not intended to be used by the applicant. Defensive trademarks are an effective protection against 'copycats' who might attempt to benefit from the goodwill of a well-known trademark for unrelated goods or services.
Other less common defensive trademark applications are filed as a "variation" of the main mark used by the owner, in the same class.
However, in China, under the Trademark Law, a registration protection is still subject to relevant laws and regulations. If a registered trademark is not used for three consecutive years without justifiable reasons, any individual may request the cancellation of the trademark.
In such a non-use cancellation proceeding, the registrant can defend its registration by submitting evidence demonstrating effective commercial use of the mark in China within the 3 years prior to the application date of the non-use cancellation action.
At first instance, evidence of use in respect of a single one item of the specified goods/services used to be sufficient for the China National Intellectual Property Administration (CNIPA) to maintain the registration for all the challenged goods/services.
Recent CNIPA decisions suggest that a stricter approach is now being applied. While it seems the CNIPA still maintains a registration for all goods/services in the subclass(es) where use on one or more items is proved, the practice now seems to be to cancel the registration partly in respect of the subclasses in which no use on any item has been proved.
Defense trademarks are registered by right holders to protect their core trademarks in different classes, aiming to expand the protection scope and avoiding the bad-faith filings of trademark squatters. They are not meant to be used and are exposed to the non-use cancellation system.
Supporters of defensive trademark registration agree that this strategy is meant to protect a popular brand from bad faith mark registration and prevent consumers from being confused and misled. Therefore, many agree that this practice should be recognized to a certain extent.
According to Article 13 of the Trademark Law, a registered well-known mark may prohibit others from registering, copying, imitating, or translating the identical or similar trademark of the registered trademark on different goods.
This provision not only extends the protection scope of the right of well-known trademarks, but also indicates the need to protect trademarks with high reputation in their unused, unregistered, and different classes.
A defensive trademark is also a proactive measure for right holders who may have difficulties establishing use (because there is no 'market' in the country for the well-known brand) and for those right holders who intend to evolve into other sectors of activity using the same trademark at a later stage, but who under a 'normal' registration would be vulnerable to cancellation for nonuse.
Many countries are dealing with the problem by classifying defensive trademarks as a special type of trademark, which can only be applied by well-known trademark owners and should not be subject to the compulsory use requirements.
In China, when a defensive trademark encounters an application for non-use cancellation, the right holder is helpless against the defensive trademark that has not been put into use.
Therefore, many right holders must re-register the defensive marks to maintain the registration of defensive trademark, which in turn increases the number of trademark applications and overloads the administrative system.
According to the Trademark Law, a trademark owner may provide a valid reason for not using the trademark to maintain the exclusive right to use the registered mark. The justification for non-use of trademarks is very strict, and “defending it” is not currently an acceptable explanation.
Experts believe that the higher the popularity and stronger the recognition function of the core trademark, the more its defensive trademark should be protected. 'Defensive trademark' could be considered as a reasonable justification for not using a registered trademark if it has reached a high degree of popularity or is well-known.
Last January, CNIPA introduced for discussion two clauses in the Draft Amendments of the Trademark Law that add requirements for proof of trademark use or commitment to use by the applicant at the trademark application stage and establish a system of compulsory explaining the use of a trademark every five years after registration.
These new use requirements, especially at the filing stage, complicate the defensive trademark registration. The Draft Amendments would clearly make it impossible for a business to implement this cost-effective trademark protection strategy.
In China, trademark squatting activities are still not effectively under control. When a business with a certain level of popularity introduces a new brand name while only applying for the trademark in goods and services related to its major field of business, chances are high that the same trademark for other unrelated goods or services might have been squatted on.
On that note, preserving the rights for defensive trademark registration only to well-known trademark owners would seem rather burdensome and unfair for the not-so-well-known but still popular brand names.
Filing defensive trademarks is a cost-effective method to protect a trademark from misuse by third parties. Since the trademark squatting activities are still not effectively controlled, it is important for IP owners to develop a workable strategy in China.
Assuming the importance warrants investment of the necessary resources, a rights owner could design a re-registration program every 3 years or so to keep its defensive registration portfolio immune to non-use challenge.
To learn more about our services in China, contact our Head of Business Advisory - Ms. Kristina Koehler-Coluccia at kristina@woodburnglobal.com.
DISCLAIMER: All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.