Source: China IP News

In recent years, China has seen sustainable growth in the number of applications for trademark registration. However, a small number of applicants' acts in hoarding a bulk of trademarks not for the purpose of use jeapordize the legitimate business needs of market players in applying for trademark registration. Recently, the State Administration for Market Regulation of China promulgated the Rules on Regulating the Applications for Trademark Registration (Draft Inviting Comments) , providing concrete measures for curbing such malicious applications.

On April 23, 2019, the 10th meeting of the Standing Committee of the 13th National People's Congress adopted the decision on amending the Trademark Law, focusing on the revision of several articles on regulating malicious applications, hoarding of registrations and enhancing the punishment for violations of trademark exclusive rights. Article 4 of the revised Trademark Law provides that the malicious applications for trademark registration shall be rejected if they are not driven by actual needs in obtaining the exclusive rights of trademark and not for the purpose of use.

In order to supplement the revision of the Trademark Law, China's top market watchdog drew up this Draft Inviting Comments and refined the operational aspects of the revised contents of the Trademark Law. The Draft, which consists of seventeen articles, reaffirms the principle of good faith and the orientation of applying for trademark registration on the premise of the willingness established by the Trademark Law and provides for the types of actions and legal consequences of the malicious applications for trademark registration not intended for use and identifies the factors for evaluating what is not intended for use by trademark registration authority and lists specific sanctions. 

"The Draft proposes that the IP administration authority shall actively guide applicants to apply for trademark registrations in accordance with the law and trademark agencies to engage in representation services according to law, and regulate the use of registered trademarks in business production and operation; industry organizations for trademark agency shall improve self-regulation and self-discipline of the industry, publish and take disciplinary actions against members who violate the industry's self-regulation, and promptly announce disciplinary actions to the public," said Tang Xueli, director of the IP Department of Beijing Yingke Law Firm, "The Draft also encourages the public to capitalize on those available mechanisms such as revocation of trademarks not in use for three years and invalidation of registered trademarks, keep a close eye on the true intention of use of trademarks, instilling the notion of registering only with a real desire for use ."

"With an aim to optimize the business environment and uphold market order, the Draft facilitates IP authorities' involvement, pushes the forefront against such not-for-use applications forward, stresses reliance on both governmental guidance and inherent market power, and joins force of both supervison and guidance, seeks the solution under the current legal framework for being difficult to enforce under ambiguous legal basis, and eventually establishes a long-term scheme in combating hoarding of trademarks and malicious applications," Tang added.