Foreign fashion designer prevails against trademark squatter despite failing to prove prior use

Although trademark squatting is recognised as a problem that affects trademark offices and brand owners around the world, several factors have exacerbated the problem in the People’s Republic of China. First, the sheer size of the Chinese market serves to vastly increase the value of a Chinese trademark. Second, the adherence of the Trademark Law of the People’s Republic of China to the first-to-file principle puts speedy trademark squatters in a powerful position - even over an entity with a better claim to the mark. Lastly, the lack of 'use’ requirement to secure a trademark registration means that only a successful opposition will prevent a trademark that has passed the examination stage from proceeding to registration. In these circumstances, it is not uncommon to find serial trademark squatters who have filed hundreds of trademark applications in bad faith.

When the Trademark Law was amended in May of 2014, a good-faith requirement was introduced, which means that a trademark applicant or registrant must act in good faith when securing or exercising a trademark right. According to Article 7 of the amended Trademark Law, “the principle of good faith shall be upheld in applications for trademark registration and in the use of trademarks”.

Taking into account that there is no use requirement for securing registered trademark rights under the Trademark Law, trademark practitioners considered whether a trademark squatter’s lack of intention to use a trademark could be considered as a violation of the 'good-faith principle' and whether a breach of that principle could prevent bad-faith trademark applications from proceeding to registration (see "Transforming China from a manufacturing power to a brand power").

The recent decision in Bastian v Nanning Shen Dian Commerce Co Ltd, handed down by the Trademark Review and Adjudication Board (TRAB) on March 2 2015, demonstrates that a trademark applicant’s or registrant’s lack of intention to use a trademark should be considered as a factor militating against the registration of a trademark.

In Bastian, Nanning Shen Dian attempted to register 迈克巴士田 MICHAEL BASTIAN as a trademark in Class 25 with respect of clothing. Michael Bastian, an award-winning fashion designer based in New York who specialises in menswear, opposed the registration of the mark on three grounds:

1. the registration of the mark would infringe his prior personality right;
2. the mark MICHAEL BASTIAN had been used previously as a trademark in association with clothing and had already achieved a certain influence through use; the application for 迈克巴士田 MICHAEL BASTIAN thus constituted an improper means of registering another’s influential trademark; and
3. Shen Dian had applied to register numerous trademarks that are similar or identical to other well-known trademarks.

The TRAB found that Bastian had not demonstrated that his English and Chinese names were sufficiently well known in China prior to the application date for Shen Dian’s trademark. For this reason, Bastian’s claim based on his prior personality right failed.

The TRAB was also unpersuaded by the evidence submitted by the opponent that MICHAEL BASTIAN had been used as a mark in China prior to the date of Shen Dian’s application. The evidence was thought to be particularly weak for three reasons:

1. Evidence of internet searches for 'Michael Bastian' was generally treated as unreliable;
2. Trademark registrations from foreign countries could not demonstrate that the MICHAEL BASTIAN mark had been previously used in China; and
3. The results of a library search showed evidence of use of MICHAEL BASTIAN as a mark only after the filing date of Shen Dian’s trademark application.

As a whole, the evidence provided by Bastian could not prove that he was already using MICHAEL BASTIAN as a trademark for clothing and other goods in Mainland China and that, through such use, the mark had achieved a certain amount of influence prior to Shen Dian’s application date. Accordingly, the trademark application for 迈克巴士田 MICHAEL BASTIAN could not constitute an improper means of registering another’s influential trademark.

Although the opponent’s factual evidence relating to the use of MICHAEL BASTIAN in China was found to carry little or no evidentiary weight, the TRAB decided against the registration of the mark 迈克巴士田 MICHAEL BASTIAN on the basis of Shen Dian’s bad faith. The TRAB accepted evidence that Shen Dian had applied for the registration of hundreds of marks that were similar or identical to well-known trademarks owned by third parties in several classes, including 路易斯威利 LOUIS VIELLY, 多美依 DIMIE and 将狮单盾 ZJSIDADN. Taking these facts into consideration, the TRAB concluded that Shen Dian’s application for 迈克巴士田 MICHAEL BASTIAN constituted a violation of the principle of good faith.

In the TRAB’s words:

“[t]he aforementioned word trademarks are all non-vernacular words, and it is difficult to believe that the respondent has registered these words, that are similar or identical to well-known trademarks owned by others, purely by coincidence. Based on the evidence submitted by the applicant (Michael Bastian) and this board’s review, it is difficult for this board to believe that the respondent’s (Shen Dian) simultaneous registrations of several trademarks that are similar to trademarks owned by others were made in good faith.” 

It is interesting to note that, shortly after the amended Trademark Law came into force on May 1 2014, the Supreme People’s Court of China released the Draft Provisions of the Supreme People's Court on Several Issues concerning the Hearing of Administrative Cases on Granting and Affirming Trademark-Related Rights for public comments on October 14 2014. Although the document only serves as a working draft, the draft provisions were well received by practitioners and brand owners due to its focus on bad-faith trademark applications and registrations. In particular, Article 3 of the draft provisions deals with the issue of large-scale trademark squatting:

“Where a trademark registrant applies to register a large number of trademarks that are identical or similar to others' relatively well-known trademarks or to relatively well-known location names, with an apparent lack of intention to use such trademarks, or applies for a large number of trademarks without justification, the competent people's court shall uphold the decision by the Trademark Review and Adjudication Board that such trademark applications shall not be approved or that the trademarks so registered by the registrant shall be declared invalid pursuant to Article 4 or Article 44 of the Trademark Law.”

While the Bastian Case may appear to be a simple application of the principle underlying Article 3 of the draft provisions, it also teaches us that the 'good-faith principle', as found in Article 7 of the amended Trademark Law, operates in conjunction with Article 44 of the law and, more importantly, demonstrates that all acts that are related to any contravention of the principle of good faith will be subject to scrutiny.

Although the MICHAEL BASTIAN mark may not have been used in Mainland China or known to the relevant public prior to the filing date of the 迈克巴士田 MICHAEL BASTIAN mark, the focus of the TRAB’s enquiry turned towards the actions of Shen Dian. The TRAB's conclusion that Shen Dian’s applications for hundreds of trademarks had been filed in bad faith was sufficient to prevent the registration of Shen Dian’s 迈克巴士田 MICHAEL BASTIAN mark.

Sophie Zhao and George Chan, Simmons & Simmons LLP, Beijing