Principles on how to handle preemptive trademark registration pursuant to the ground of agent or representative misappropriation

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(Source: AFD China Intellectual Property)

It is stipulated as follows in Article 15 of the current Trademark Law:

(Paragraph 1) Where an agent or representative of the owner of a trademark applies for registering the trademark in his own name without prior authorization and the owner of the trademark has raised an opposition against the same, registration of such trademark shall be refused and the use of the mark shall be prohibited.

(Paragraph 2) Where a trademark for which a registration is applied is identical or similar to an early used trademark of another party that is not registered, in respect of the same or similar goods, and where the applicant knows the existence of the trademark owned by the other party due to contractual, business, or other relationships except the relationship referred to in the preceding paragraph with the other party, the trademark shall not be registered, if the other party raises an opposition.

The second paragraph is newly added into the Trademark Law.

We learned from recent seminars with the judges of Beijing Intellectual Property Court that the court may adopt the following principles when handling matters related to preemptive registration:

In judicial practice, the Court has interpreted the “agent or representative”, as provided for in the first paragraph of Article 15, broadly to include not only the trademark agent or representative authorized by the applicant or the registrant of a trademark to act on the matters concerning trademark registration within the scope of the authorization, but also the agent or representative in the sense of marketing and distribution, such as general distributor (exclusive distributor) and general sales agent (exclusive sales agent). Meantime, this broad interpretation also includes the following circumstances: a party preemptively registered an early used trademark of another party and then establishes an agency or representation relationship with that party; the agent or representative of the owner of a trademark colludes and conspires with a third party to preemptively register the trademark (such circumstance may be deduced from the special personal relationship between the applicant of the trademark registration and the agent or representative).

To avoid limitlessly broadening interpretation of the word “agent or representative”, and also to encompass a wider range of circumstances in which the preemptive registration is forbidden, an additional paragraph (the paragraph 2) was added into the new Trademark Law. Thus, other kinds of preemptive registration which are not included in the above paragraph 1 of Article 15, shall be subject to the provisions of paragraph 2.

The contractual and business relationships referred to in Paragraph 2 of Article 15 include:
(1)    trading
(2)    commissioned processing
(3)    franchising (trademark licensing)
(4)    investment
(5)    sponsorship, co-organization
(6)    business investigation and negotiation (no agency or representation relationship is established after negotiation)

Other relationships referred to in Paragraph 2 of Article 15 include:
(1)    kinship
(2)    subordination (the staff other than the “representative” as provided for in the first paragraph of Article 15)
(3)    there was an pre-existent economic dispute between the applicant of the trademark and the prior user of the said trademark
(4)    the applicant of the trademark filed more than one mark owned by the prior user
(5)    the applicant of the trademark is geographically near to where the prior user is located

After the implementation of the new Trademark Law, where the first paragraph of the article 15 could not apply, the addition of the second paragraph may allow for more circumstances on preemptive registration. Furthermore, the introduction of this second paragraph to the article 15 also epitomizes more efforts than ever the Chinese government has invested in maintaining a viable intellectual property market as well as in protecting the transaction security.

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