Defensive registration is a strategy commonly used under the Chinese legal and administrative IP protection system, especially regarding trademark protection. After registration of the main trademark under the classes of the key business scope, the proprietors would typically extend the registration over other related classes or classes in which the goods or services would potentially bring about competitive or negative impacts. The extension of a TM registration is typically considered as defensive registration.
Now due to the continuous evolution of the Chinese legal system, in particular respect to the enforcement of the new Trademark Law in 2019, we may have to shift the focus of IP protection strategies from defensive registration to more proactive measures.
When discussing about how to protect the IP of a foreign company newly entering the Chinese market, a country well-known for its massive administrative measures, an aspect to highlight first is always the registration.
Instead of the First to Use Rule, China is a typical country that adopts the First to File Principle. Take trademark protection as an example, the trademark shall be registered by the Trademark Bureau to receive protection as per the law, and when two or more applicants apply for the same or identical TM for the same or similar goods or services, the approval will be granted “for the trademark that was first filed”[1].
China also adopts the Nice classification regarding trademark registration, which means you may choose to register the trademark under 45 classes of goods and services and the relevant subclasses within.
The combination of the two mechanisms has created and continues to create many bad faith registrations in China, as the cost of such registration for a company is typically acceptable.
Therefore, if asked how to avoid malicious trademark infringement, we would always suggest that:
The second suggestion asserts the notion of defensive registration in the IP protection strategy by building up a network of registrations to form a shield of prior rights ahead of any potential infringement. However, with the newly revised Trademark Law of P.R. China, things may become a little different.
China does not have a Defensive Trademark system as Japan & Australia both do, with the mass Trademark piracy and even an internet market for the trading of registered Trademarks, applicants simply register mass defensive trademarks as normal trademarks. To avoid the revocation/cancellation they have to use the trademark to meet the use requirement, otherwise, they are likely to lose the defensive trademark.
Prior to the Trademark Law revision, the legal grounds to stop defensive registrations or squatting was not strong enough, and the filter for malicious squatting during the substantive examination was unable to comprehensively cover all of them. There wouldn’t be much ground to raise an objection in China to stop the registration when the trademark user was not a registered owner, which was the situation many foreign companies have faced. Additionally, if the counterfeit trademark passed the registration, there wouldn’t be much grounds to argue a nullification either, the original user would have to wait 3 years to file for cancellation for non-use or had to purchase the counterfeit trademark.
However, under the Trademark Law, newly revised in 2019, Article 4 adds,
“The application for trademark registration that is malicious and not filed for the purpose of use shall be refused.”
The condition “malicious and not for the purpose of use” has also become a legal basis for Objection, which can cause hindrance to the malicious and defensive registration[2], and Nullification, which will be an important remedy, and provide a strong filter before and after the registration. Meanwhile, the judicial interpretation of the Supreme Court has not been released, and the CNIPA has not issued the standard guide for review and adjudication, therefore, regarding how to define “malicious and for the purpose of use”, the legal updates need to be closely followed.
It is very possible that under the grounds of non-use and malicious, the defensive registration will not get approval so easily in the future, and the bar for the defensive registration will be set higher.
It is currently not clear whether the intention within the defensive strategy may constitute “knowingly, with bad faith” in business competition. For example, some companies may choose to register trademarks similar or identical to or potential trademarks of the competitors to prevent them from developing in or entering the Chinese market. Many Chinese local brands have been put to death in the name of Intellectual Property protection due to such strategies carried out in competition with multinational businesses.
Meanwhile, while the defensive trademarks are arguably malicious, the “not for use” condition, to some extent, is part of the defensive registrations’ nature. They are not intended for the purpose of use since most of the time they will not be used at all, hence they are called defensive. Currently, from the intention of the legislation to stop bad faith squatting, free the non-use trademarks and provide the proprietor stronger protection methods, “malicious” is estimated to, by experience, cover the meaning of “knowingly and with bad faith”, and “for the purpose of use” may be interpreted from regulations regarding the non-use cancellation that for the purpose of use, the trademark has to be intended to be used “openly, authentically, legally and in business”. Even though some owners of the defensive trademarks will have minimal use of the trademark, still, it barely meets the requirement.
The reasoning is an increasing intention from the Chinese Government to open its domestic market and to try to introduce more new foreign players. In order to do that, China is clearing out the IP environment. We can see this from the New Foreign Investment Law and the implementation regulations[3], the New Economic and Trade Agreement between China and USA[4], which is primarily about IPR protection, as well as the ongoing draft of the Amendment of Patent Law. We can clearly see the commitment of the Chinese Government to strengthen the protection for intellectual property rights.
From all of the above, we estimate a shift of strategic focus from the defensive registration to more proactive measures.
The proactive measures, in the context of trademark protection, refers to a monitoring-based detecting system, with the legal and administrative measures to be taken to stop infringement, such as opposition (objection), invalidation (nullification), and revocation (cancellation for non-use).
Revocation-The revocation has always been a remedy for owners or interested parties when faced with trademark infringement. However, due to the restriction of the 3 years time period after registration, it may be a little less effective compared with Objection and Nullification.
Objection – If any individual or entity wants to oppose the trademark application within the 3-month public notice, the newly revised trademark law offers a broader legal basis to raise objections to stop the counterfeit trademark from registration. The block of the objection will hinder the registration for approximately a further 9 months.
Nullification– If the counterfeit passed through the review and is registered, the original owner or interested parties may file for nullification and try to have it cancelled. The nullification will also impose further costs on behalf of the infringer.
Other measures-To cease the infringement, measures such as reporting to administrations and civil litigation shall also be considered on the basis of the above measures. Chinese administrative authorities are granted a wide and significant power to investigate and can take quick protective measures, such as seizures. If the infringement is confirmed by the authorities, administrative punishment such as fines may be imposed, and criminal punishment will be imposed if the requisite criminal liability is found. While civil litigation, although time-consuming, would grant you financial compensation, which is legally enforceable.
To be proactive requires faster and earlier reactions, more effective and more professional handling to the detected situations. In order to take active measures aggressively, monitoring is the core basis on which to build upon. We offer the following suggestions by means of improvements in your company’s activities:
From the above, we conclude:
[1] Trademark Law of P.R.China (Revised in 2019) Article 31
[2] Trademark Law of P.R.China (Revised in 2019) Article 33, 44, 68.
[3] Foreign Investment Law (Jan 1, 2020) – Art. 22,23
Foreign Investment Law Implementing Regulation (Dec 26, 2019)-Art. 23 24
[4] Economic and Trade Agreement between the Government of P.R.China and the Government of the United States of America (January 15, 2020),
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