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What Should Taiwanese Brand Owners Do When their Brands have been Registered by Agents in Mainland China?
In view of tremendous business opportunities, the Chinese market becomes a battlefield for many Taiwanese brand owners. In the early stage, Taiwanese brand owners might just introduce their goods or services into the Chinese market through agents. Perhaps because of trust in their agents, Taiwanese brand owners did not realize that the agents might apply for trademark registrations in the agents' own names in mainland China privately. How should Taiwanese brand owners manage the situation immediately when they discover later that their agents have preemptively registered the owners' trademarks in Mainland China without authorization? This article will briefly explain relevant legal procedures and legal points through the practical experience of cases undertaken.
I. Legal procedures in Mainland China
The trademark examination process in Mainland China: After a trademark application has been examined by the Trademark Office of China National Intellectual Property Administration (hereinafter the "Trademark Office"), the trademark will be "preliminarily approved and published." If no opposition has been filed after the expiration of the 3-month time limit from the publication date of the approval, the application will mature to registration, an official certificate of trademark registration shall be issued and the trademark shall be published.
According to Article 15(1) of the Trademark Law of the People's Republic of China (hereinafter the "PRC Trademark Law"), where any agent or representative, without authorization, seeks to register, in his/its own name, the trademark of a person for whom it or he acts as the agent or representative, and that person raises opposition, the trademark shall be rejected for registration and prohibited from use. Article 15(2) of the same Law provides that where a trademark sought to be registered for identical or similar goods is the same as or similar to a prior user's unregistered trademark, the applicant is aware of existence of the prior user's trademark because of a contractual agreement, business relationship or other relationship with the prior user not specified in Article 15(1), and the prior user has filed opposition thereagainst, such trademark may not be registered.
If Taiwanese brand owners discover that their trademarks have been preemptively applied for registration by agents in Mainland China, the following measures may be taken pursuant to Article 15 of the PRC Trademark Law:
(1) Filing oppositions
According to Article 33 of the PRC Trademark Law,anyholder of prior rights or interested party may, within three (3) months from the date of publication of approval, apply to the Trademark Officefor opposing a trademark applicationwhich has been preliminarily approved and published if he/it considers it violates the provision of Article 15. According to Article 35(1) of the same Law, the Trademark Office shall make a decision on whether or not the trademark registration shall be registered within twelve months from the expiration of the publication of trademark approval (it can be extended for further six months for special circumstances). According to Article 35(2) of the same law, if the Trademark Office still makes a final decision to approve the trademark registration, the dissatisfied opponent may apply for invalidation of the registered trademark pursuant to Article 45(1) of the same Law.
(2) Applying for invalidation of registered trademarks
In addition that an opponent who dissatisfies with an opposition decision may apply for invalidation of the trademark registration concerned, supposed a Taiwanese brand owner discovers trademark squatting after the squatted trademark has been registered, any holder of prior rights or interested party may, within five (5) years from the date of trademark registration, request that the China National Intellectual Property Administration (hereinafter the "CNIPA") to declare the invalidation of the trademark pursuant to Article 45(1) of the same Law; however, if an invalidation action is filed against a trademark application made in bad faith, the genuine right holder of the well-known trademark concerned shall not be bound by the five-year limitation. According to Article 45(2) of the same Law, the CNIPA will make a final ruling either to maintain or to invalidate the trademark registration within twelve months from the date of receipt of the application (it can be extended for further six months for special circumstances).
Where any party to a case is dissatisfied with the ruling on an invalidation case, he/it may, within thirty days from the receipt of the ruling, institute administrative proceedings with the People's Court or the Beijing Intellectual Property Court pursuant to Article 45(2) of the same Law and the ruling. The court shall notify the counterparty of the trademark ruling to take part in the legal proceedings as a third party. Besides, the court adopts a "two-level two-instance court system" to examine administrative proceedings in respect of invalidation cases (for instance, Beijing Intellectual Property Court and Beijing Municipal High People's Court).
II. Legal points for trademark squatting by agents
Article 15(1) of the PRC Trademark Law provides thatwhere any agent or representative, without authorization, seeks to register, in his/its own name, the trademark of a person for whom it or he acts as the agent or representative and that person raises opposition, the trademark shall be rejected for registration and prohibited from use. The legislative spirit thereof ensures that "an application for registration of a trademark complies with the good-faith principle", and aims to knock down malicious trademark squatting through specific business relationships and to maintain the order of normal market competition.
(1) Agents or representatives
On 22 June 2020, the Beijing Intellectual Property Court's administrative judgments under No. (2019)-Jing-73-Xingchu-15272 and No. (2019)-Jing-73-Xingchu-15273 came out and is a typical case of the subject issue of a Taiwanese brand owner's brands being registered by its agent in Mainland China.
The said judgmentsheld that the term "agent or representative" stipulated in Article 15(1) of the PRC Trademark Law includes the agent or representative defined in general sales agency relationship, such as trademark agent, representative, general/sole distributor (exclusive sales), general/sole agent (exclusive agency), and distribution agent. According to the said judgments, before the date of filing the squatted trademark by the agent (hereinafter the "trademark in dispute"), the brand owner has already applied for registration of the trademark in Taiwan where the brand originates, and the brand owner has provided license contracts and purchase contracts for such brand and packaging design therefor, as well as e-mails exchanged between both parties to negotiate the exclusive agency of the branded goods occurred several years before the filing date of the trademark in dispute. The evidence has established that both parties constitute an agency relationship specified in Article 15(1) of the PRC Trademark Law. In view of the agency relationship, the applicant of the trademark in dispute is apparently aware of the owner's Taiwanese trademark and also of the owner's use of the said trademark for relevant goods.
(2) Unauthorized
The said judgments held that the party for whom the agent or the representative acted did not expressly consent to the agent's or representative's application for registration of the trademark in dispute, which is considered "without authorization" specified in the Law.
III. Conclusion
If Taiwanese brand owners desire to introduce their goods or services into the Chinese market through agents, it is recommended that they proceed with trademark plan & portfolio in both the Taiwan market and the Mainland Chinese market in advance. To avoid future disputes or to use all relevant documents as legal defense for any potential disputes in the future, it is recommended to keep all contracts between both parties, as well as all correspondences or e-mails with agents. Should any agent maliciously commits trademark squatting in the future, the above materials may serve as proof of the agency relationship.