In trademark infringement cases, we regularly encounter the bad-faith preemptive registration of trademarks and actual use on relevant goods by infringers. The nature of such an infringement is extremely odious. Usually the infringer planned in advance its passing off of the rights holder’s brand and goods, its ultimate objective being to confuse consumers as to the origin of the goods and achieve its goal of free riding on the reputation of another’s brand to obtain unlawful gains.
Such infringers usually have been active in passing off activities for an extended period of time, and once they have been stamped on, will continually revise their method of infringement, making the infringement stealthier and increasing the difficulty of pursuing liability. Under such a circumstance, it is necessary to carry out a comprehensive analysis of the infringing acts and adopt an appropriate strategy, as only in this manner is it possible to break through the obstacles to rights protection that it has erected and maximize the effectiveness of rights protection.
Based on the authors’ experience, a typical model of the above-mentioned infringement is as follows. The infringer preemptively registers the trademark for another class of goods or services that is intimately linked to the rights holder’s goods or services. In other words, it chips at the edges of the selected designated goods or services, and after securing registration, actually uses the pirated trademark for identical or similar goods/services.
Under such a circumstance, the difficulty in rights protection lies in determining whether the infringing goods are the class of goods for which the pirated trademark is designated, or the class of goods for which the rights holder’s trademark is designated. In a case that the authors once handled, the rights holder had been fighting back against infringement through administrative procedures for many years before engaging us. However, due to the existence of the above-mentioned difficulty in determining the infringement, its successes in striking back with such administrative procedures were minor at best.
After taking on the case, the authors revised the action strategy, submitting a petition for invalidation of the pirated trademark while simultaneously instituting a civil procedure claiming that the infringer’s trademark was not being used on the goods for which the pirated trademark was designated. Ultimately, through the direct mutual co-ordination and support of the different actions, we achieved a favourable rights protection result.
Where the infringer has been successful in preemptively registering the trademark, it is difficult to take rights protection actions against its compliant use of the pirated trademark. The second paragraph of article I
of the Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Civil Disputes Involving Conflicts Between Prior Rights and Registered Trademarks or Enterprise Names specifies that, “If a plaintiff institutes a legal action on the grounds that the registered trademark of another used on the goods for which it was designated is identical or similar to his prior registered trademark, the People’s Court shall, in accordance with item (3) of article III of the Civil Procedure Law, inform the plaintiff to apply to the relevant competent authority for resolution.”
From this provision we can see that if the infringer has preemptively registered the trademark and is using it on the designated goods, it is not possible to institute an infringement action in respect of the use of the trademark until the administrative procedure addressing the trademark has completed. It is necessary to first resolve the conflict involving the registered trademark itself.
In the authors’ protection strategy, the basic action that should be considered is an action directed at the pirated trademark, invalidating or cancelling its registration through an administrative procedure. Toppling the pirated trademark is like uprooting the infringement; it can clear away the obstacles to rights protection actions. Furthermore, it is necessary to co-ordinate other actions based on the circumstances of the case so as to achieve even more favourable results. More specifically, consideration may be given to the following strategies.
Invalidation or cancellation of the pirated registered trademark. This is the most important basic action to be taken against a pirated trademark. A petition for invalidating the pirated trademark registered in bad faith and actually used may be submitted to invalidate such trademark ab initio. Only if the pirated trademark has not actually been used may consideration be given to applying for its cancellation based on its not having been used for three years in succession.
Monitoring the pirate’s trademark applications. Many professional trademark pirates squat on a large number of others’ trademarks in bad faith. By monitoring a pirate’s trademark applications, it is possible to promptly understand whether other trademark applications of the pirate also infringe the rights holder’s lawful rights and take timely and appropriate legal action. Although China’s administrative and judicial authorities are currently taking more concerted action to crack down on trademark squatting, there is little doubt that it is only by active monitoring that rights holders can better protect their own lawful rights.
Further investigation of the pirate. If a pirated trademark is already actually being used, notwithstanding the fact that civil infringement liability cannot be claimed against use of the pirated trademark until the registration of the same has been invalidated or cancelled, such a pirate has usually committed other acts of infringement, e.g., passing off packaging and trade dress, falsely claiming that it is an authorized distributor of the rights holder, the images it uses for publicity and promotional purposes infringing the rights holder’s copyrights, infringement of other trademarks that it has yet to preemptively register, etc., and infringement of the rights holder’s patents may also be involved. If an investigation reveals other infringing acts, rights protection measures may be taken against such infringing acts.
Assessing the use of the pirated trademark. Even though a pirated trademark is being “used”, it is nevertheless necessary to determine whether the trademark actually being used is consistent with the design, the registration of which has been approved, and whether the goods/services for which the trademark is being used are consistent with the goods/services for which registration of the trademark has been designated. If they are inconsistent, it remains possible to claim trademark infringement liability in respect of the use of the pirated trademark.
The above-mentioned ideas are a distillation of the authors’ experience in their work. As such complex infringing acts usually administer a major shock to the rights holder’s market, it is worth expending a fair amount of energy to strike back hard.
Frank Liu is a partner and Adam Zhu is an associate at Tiantai Law Firm
Tiantai Law Firm
29/F, T1 Building, Raffles City
No.1133 Changning Road, Changning District
Shanghai 200051, China
Tel: +86 21 5237 7006
Fax: +86 21 5237 7009