In production and business activities, operators often use trademarks in practice but fail to register them in a timely manner due to various reasons. When the "popular" trademarks used by operators are preemptively registered or they are even prevented from continuing to use their own trademarks, how should they safeguard their rights and interests? Does years of brand management go to waste just because the trademark was not registered in a timely manner? To prevent preemptive registrants from "taking advantage of loopholes," we can use Article 32 of the Trademark Law to protect our rights and interests. |
The Origin of Article 32 of the Trademark Law
The acquisition of trademark rights in China necessitates the fulfillment of trademark registration procedures, and it adheres to the principle of "first-to-file", meaning that only through registration can one obtain the exclusive right to use a trademark. Theoretically, while obtaining trademark rights through registration facilitates legal oversight of trademarks and maintains a sound economic order, the true value of a trademark lies in its use, and the genesis of trademark rights also stems from use. Trademarks that have been used by operators for an extended period in commercial activities gradually acquire the function of distinguishing the sources of goods and services and preventing confusion, thereby giving rise to trademark rights.
Unregistered trademarks and registered trademarks are relative concepts. In daily production and operation, operators often fail to promptly apply for trademark registration after actually using a trademark due to various reasons. However, some unregistered trademarks have been used and have a certain influence, possessing the substantive requirements of a trademark. China's allowance for obtaining trademark rights through prior application without prior use provides "convenience" for bad faith squatting on trademarks that have been used by others first and have a certain influence. At the same time, squatters can prevent the prior user from continuing to use the trademark and freely transfer it, which not only impairs the legitimate rights and interests of the unregistered trademark owner but also confuses consumers and disrupts fair market competition order.
To better safeguard the interests of all parties and balance the principles of fairness and efficiency, China's Trademark Law, after being amended in 2001, added Article 32, which addresses the shortcomings of the original principle of absolute registration protection and provides protection for unregistered trademarks that have been used first and have a certain influence.
Legal Basis and Applicable Conditions
Article 32 of the Trademark Law––when applying to register a trademark, ... one shall not preemptively register trademarks, by improper means, that have been used by others and have a certain influence.
As mentioned above, Article 32 of the Trademark Law is based on the principle of good faith, which protects trademarks that have already been used and has a certain degree of influence, prohibits the act of preemptive registration by improper means, and makes up for the shortcomings of the strict implementation of the "first-to-file" registration principle. Unregistered trademarks include trademarks for which no trademark registration application has been filed before the application date of the trademark in dispute or for which the exclusive right has been lost due to failure to renew the registration upon expiration.
There are four conditions for Article 32 of the Trademark Law to be applicable, as shown below:
(1) The trademark of another party has been previously used and has a certain influence prior to the application date of the disputed trademark. The previously used trademark constitutes a "trademark that has been used and has a certain influence", where "has been used" is commonly referred to as "prior use" in practice, requiring the prior user to provide evidence that their use of the trademark precedes the application date of the disputed trademark, and that the trademark has been continuously used up until the application date of the disputed trademark; "a certain influence" refers to the situation where an unregistered trademark, through commercial promotion and production and operation activities, has played a role in identifying the source of goods or services and is recognized by a certain range of relevant public in China. Only when both conditions are met can an unregistered trademark constitute one that is protected by law.
(2) The disputed trademark is identical or similar to the prior trademark. That is, the marks themselves give consumers the same or relatively similar impressions in overall appearance, making it extremely difficult to distinguish them, and their use on identical or similar goods or services is likely to confuse consumers.
(3) The goods or services designated for use by the disputed trademark are, in principle, identical or similar to those used by the trademark of another party. Since China's trademark law does not provide cross-class protection for unregistered trademarks, the application of Article 32 first requires determining whether the categories of goods or services used by the trademarks of the disputing parties are identical or similar.
(4) The applicant for the disputed trademark has employed "improper means". This requires the prior user to prove that the trademark applicant had "bad faith" at the time of registration, i.e., registering out of the purpose of unfair competition while knowingly or ought to have known that a certain trademark has already been used by another party and has generated a certain influence.
Typical Case
The main ground of the opponent: the respondent preemptively registered the trademark in bad faith, which damaged its prior rights and interests, and violated the provisions of Article 32 of the Trademark Law.
After examination, the Trademark Office held that the opposed trademark was designated for use on goods in Class 30 "condiments for coffee; cocoa; tea; molasses for food; ice cream powder" etc. The opponent claimed that the respondent had preemptively registered its trademark in bad faith. Evidence provided by the opponent, such as product photos, contract manufacturing agreements, product sales invoices, relevant reports from "China Beverage News," exhibition photos, screenshots of Taobao storefronts, and other materials, can prove that the opposed trademark has a certain degree of popularity and influence in the local area through prior publicity and use by the opponent, and that the respondent and opponent are both located in Hubei Province and should have known about the opponent's trademark. The opposed trademark is identical in word composition to the trademark previously used by the opponent, and the respondent has failed to provide a reasonable explanation for this or evidence demonstrating that the opposed trademark was originally and uniquely designed by the respondent. In summary, the Office believes that the respondent, without the opponent's permission, has prematurely applied for the registration of a trademark that is identical in word composition to the opponent's previously used and influential trademark on related goods in Class 30. This action violates the relevant provisions of Article 32 of the Trademark Law.
Case Analysis
This case involves the application of Article 32 of the Trademark Law to regulate the bad faith squatting of others' unregistered trademarks. With the development of the internet and e-commerce economy, trademark squatting has become a common occurrence, typically occurring shortly after another brand gains a certain level of influence. Additionally, due to the weak awareness of intellectual property protection among rights holders and the difficulty in providing evidence, regulating such squatting behaviors poses certain challenges.
After carefully organizing and comprehensively considering the evidence provided by our client, we found that the evidence of use presented by the client had a certain impact in the local area. Based on our experience in handling similar cases, the requirements for providing evidence of "a certain impact" are not as strict as those for well-known trademarks. By confirming that the conditions of "prior use," "a certain impact," and "by improper means" in Article 32 of the Trademark Law were met, we determined that the opposed trademark was the result of bad faith squatting. Our client adopted our suggestion and ultimately safeguarded the interests of its unregistered trademark through opposition proceedings.
Summary
Article 32 of the Trademark Law aims to prohibit the bad faith squatting of unregistered trademarks that have been previously used by others and have a certain influence, to prevent confusion among the relevant public and maintain good trademark order. This provision protects unregistered trademarks that have been used and have a certain influence, and prohibits the registration of such trademarks through improper means, thereby compensating for the deficiencies of the strict registration principle. When applying this provision, the three essential elements of "having been used," "having a certain influence," and "through improper means" are indispensable. Among them, "having been used" requires "prior use," and "having a certain influence" is not overly complicated or demanding. If an operator discovers that its unregistered trademark has been registered in bad faith, it can invoke Article 32 of the Trademark Law to safeguard its own interests and prevent competitors in the same industry from registering the previously used unregistered trademark through improper means for the purpose of copying, imitating, or stealing business reputation.
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