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A positive step forward in the war against brand hijacking in China?
January 5, 2014
China has passed a new trade mark law that becomes effective on 1 May 2014. The new law includes:
A requirement that trade marks shall be registered and used “by the principal of honesty and credibility”;
Some important changes to the trade mark application process; and
As discussed here, a couple of notable provisions designed to improve trade mark enforcement in China.
Trade mark “hijacking” in China refers to the situation in which a third party registers a company’s established trade mark in China, often before the company enters the Chinese market, then attempts to sell the trade mark registration to the company when the company begins conducting business in China. As the existing law in China only forbids a trade mark owner’s agent or representative from registering the mark in his or her own name, trade mark hijacking has become a serious problem in China.
Chinese trade mark rights are based on the principal of first-to-register; whoever first registers a trade mark with the Chinese Trade Mark Office generally has the rights to that trade mark. Under this first-to-register principle, it has been relatively easy for trade mark hijackers to register established trade marks of others in China, then sell their rights to these trade marks to the legitimate owners.
New law designed to discourage trade mark hijacking by business partners
The new Chinese trade mark law provides a mechanism to discourage trade mark hijacking. The new law has essentially widened the class of restricted persons to cover an applicant who knows or should have known of the other party’s prior use of the trade mark, whether through some contractual or business relationship with the other party. An application to register a trade mark which is identical or similar to another party’s mark for identical or similar goods or services will be rejected if it is then opposed by the party who has prior use of the mark.
Broader definition of trade mark infringement
The new law contains a list of actions that constitute trade mark infringement. Amongst those listed, it will constitute trade mark infringement if one purposefully facilitates or assists someone’s trade mark infringement activities. So, for example, if someone helps transport counterfeit Nike shoes from one city to another, in the knowledge that the shoes are knockoffs, he or she – in addition to the manufacturers and sellers of the shoes – may be subject to penalties for trade mark infringement.
For brand owners looking to expand into the Chinese market, the new laws against trade mark squatters and counterfeiters are a step in the right direction but still do not tackle the situation where your name is hijacked by someone with whom your business has absolutely no connection.
New story courtesy of British Footwear Association