Vietnamese Companies Lost IP Assets in China – How to Claim them Back?

Attorney Le Quang Vinh – Bross & Partners

Email: vinh@bross.vn

Loss of copyright, loss of intellectual property asset, loss of trademark abroad are phrases that often describe the phenomenon of intellectual property rights of a Vietnamese individual or organization being illegally appropriated by other foreigners by quickly filing a pre-emptive trademark registration to legalize that trademark in his or her own name. Perhaps China is the market where Vietnamese businesses most lost their IP rights, because many big brands such as the geographical indication (GI) Buon Ma Thuot for coffee, Phu Quoc for fish sauce, and G7 Instant Coffee (Trung Nguyen) were all lost in China.

The following article can help you update about the legal development of China to deal with the very serious preemptive trademark registration in China, which is usually referred to as bad faith registration, as well as assist you to predict the successful possibility of taking them back.

Main Legal Grounds against Bad Faith

According to the law and practice in China, in general, the act of filing a trademark application is contrary to the principle of good faith, with the aim of appropriating or dishonestly exploiting the reputation attached to the mark of another person, infringing on another party's prior rights or infringing on public resources are all considered bad faith. Legal grounds for refusal when examining or processing an opposition or annulment of a mark filed in bad faith include:

(a)  Copying, imitating or translating another party's well-known trademark (Article 13 of the Trademark Law).[1]

(b)  Bad faith registration of a trademark that has been used by another party and has certain influence (Article 32 of the Trademark Law)[2]

(c)  Registering a trademark infringes another party's prior rights. (Article 32 of the Trademark Law)[3]

(d)  The representative organization or the person representing the trademark holder arbitrarily files a registration application in his or her own name. (Article 15 of the Trademark Law)[4]

(e)  Registration of a trademark is similar to the geographical indication of the product when the named place is not the origin of the product, thereby misleading the public. (Article 16 of the Law on Trademarks).[5]

(f)   Registered trademarks which violate Articles 4, 10, 11, 12 and paragraph 4 of Article 19, or trademark registrations obtained by deception or other illegal means shall be void. Individuals or organizations can request TRAB to declare that registered trademark invalid. (Article 44 of the Trademark Law)[6]

(g)  Any natural person, legal person or other organization wishing to gain the exclusive right to use the mark for its goods or services in the process of production and business activities needs to file a trademark registration application with the trademark office. An application for a trademark registration in bad faith filed with the intention of not being used is not admissible for protection. (Article 4 of the Trademark Law).[7]

In 2020, China shows a new determination to fight bad faith by amending the 2013 Trademark Law, specifically adding Article 4, which stipulates that trademarks that apply for registration without real intention to use will be rejected protection. The new law also allows third parties to have additional legal grounds to oppose or cancel a bad faith trademark based on evidence that the bad faith mark was filed with no bona fide intent to use.[8]

On October 16, 2019, the Ministry of Market Management (SAMR)[9] promulgated "Regulations regulating trademark registration applications" effective from December 1, 2019, including 19 articles (“Regulations”) with the main purpose of preventing bad faith when registering a trademark. It is noteworthy that the phrase "abnormal application" is used to mean a bad faith or malicious application. According to the Regulations, the following factors must be considered before concluding an “unusually application”:

(1)  Imitation of a well-known trademark to the public and dishonestly taking advantage of the reputation of others.

(2)  Preemptive trademark registration of another's trademark that is being used and has certain influence;

(3)  Registration of a trademark identical or similar to another's prior right even though the applicant knew or ought to have known the existence of another's prior right.

(4)  Filing a trademark application many times with bad faith purposes.

(5)  Filing a large number of applications in a short time.

(6)  The trademark application lacks a real intent to use it, and the applicant has no real need to obtain the exclusive right to use the mark on the product concerned.

(7)  Other acts that violate the principle of goodwill, infringe upon the legitimate rights and interests of others, or disrupt the orderly operation of the market.

(8)  Help others, or for the representative organization is to act as an industrial property representative, apply for trademark registration.

The good news is that the Chinese courts in administrative litigation have rejected or canceled a series of trademarks with signs of registration in the form of trademark speculation, which are known as obtaining registration by illegal means. For example, in 2018, in the case of Wuhan Zhong Jun Campus Services Co., Ltd vs. TRAB regarding the cancelation of “360安钱宝” trademark under registration 13880086, the SPC finds that holders have filed more than 1,000 trademarks, most of which are similar to other people's well-known trademarks and the owners' shareholders openly put up for sale the trademark. The SPC decided to invalidate the above registration for the reason of “the registration obtained by other illegal means”.

Notable Practices Regarding Trademark Examination and Evidence Assessment by the CNIPA  

Similar to foreign enterprises doing business in China, especially from EU and the US, Vietnamese enterprises can face many of the following risks and challenges regarding IP in China:

(a)  The number of trademarks/marks squatted/stolen/pre-registered with CNIPA without authorization of the trademark holder is very large, usually accounting for 30% of the total administrative cases filed at CNIPA;

(b)  The sub-class system for similar products as a basis for assessing the possibility of confusion in China is very complicated, so it is easy to see that trademarks of Vietnamese enterprises can easily be protected by CNIPA for reasons that such sub-class is not of the same class as the registered trademarked sub-class[10];

(c)  CNIPA generally does not refuse to protect a trademark containing a Vietnamese place name even if the mark is a provincial place name because Article 10(8) of China's Trademark Law stipulates that only foreign place names are known by the Chinese public is not eligible to register.

(d)  CNIPA also often does not examine carefully (because the examiner is pressured to ensure the examination duration is only 4 months) whether the trademark applied for registration contains or carries a geographical indication of a foreign country, so it is easy to lead erroneously still granting protection for a registered trademark containing a protected Vietnamese geographical indication because Article 16 of the Trademark Law still requires evidence that the goods bearing that geographical name do not originate in the region, leading to confusion in the public about the origin to be rejected;

(e)  The standard and evidence to prove that an unregistered or registered trademark of a Vietnamese enterprise is considered well-known in China is very high, so it is generally difficult to prevent competitors from using and/or registering the trademark of Vietnamese enterprises for products that are not similar to products bearing trademarks that require recognition as well-known of Vietnamese enterprises in China.

What should Vietnam and Vietnamese enterprises do?

With the above situation full of risks and challenges, we suggest that Vietnam should pay attention and implement the following solutions as soon as possible:

(1)       Research, collect and analyze China's laws and practices related to the mechanism, order and procedures for establishing, opposing, canceling and settling IPR infringement by administrative measures, civil and criminal measures; organize seminars, conferences or symposiums as well as write books, guides and topical articles with a focus on researching, introducing, consulting and learning from legal and practical experience in IP litigation by China's IP court and special court; propagating and disseminating the law and practice of adjudicating IP rights disputes in China to the Vietnamese business community;

(2)       Proposing the Government, Ministry of Foreign Affairs and agencies in charge of IP rights of Vietnam to work and propose CNIPA and Chinese courts to support and help Vietnam strengthen IP law enforcement capacity by a judicial system with an emphasis on enhancing the role of the courts; proposing to invite Chinese IP experts from CNIPA and the IP Court to present at seminars, trainings and conferences to share China's experience with the aim of helping Vietnam develop and improve the IP system;

(3)       Inventory and review all IP assets that exist in the form of geographical indications, collective marks, certification marks that are being exported or have the potential to be exported to the Chinese market to make a priority list trademarks that need to be registered for protection; propagating, guiding and providing financial support for Vietnamese enterprises with trademarks in China to quickly register for protection of IP rights, especially trademarks and industrial designs with CNIPA. Trademark registration in China requires special attention to all three principles: (a) immediately registering trademarks; (b) filing an application for registration of both the Chinese version of the mark; and (c) filing multiple applications for significant trademarks;

(4)       Look up and track down to identify IP assets, especially IP assets belonging to the State existing in the form of geographical indications, collective marks, certification marks that are currently being filed/registered for illegal possession by a foreign entity in China; research, study and preliminary assess of the possibility of objection, suspension due to 3 consecutive years of not using the mark or invalidation of those appropriated IP rights, including inviting law firms Vietnam's international experience joins and coordinates with capable Chinese IP law firms to protect the legitimate rights and interests of Vietnamese enterprises;

(5)       Encourage, promote and provide financial support for Vietnamese enterprises to understand the difference of China's IP system and urgently apply for IP registration in the form of technical innovations, especially utility solutions and industrial design of the product because China does not examine the substantive of utility solutions and industrial designs, so Vietnamese enterprises can quite easily obtain protection certificates in a short time, from 4-8 months from the date of application.[11]

Bross & Partners, an intellectual property company ranked First (Tier 1) by Legal 500 Asia Pacific, has experience in resolving complicated IP disputes including trademarks, copyrights, patents, plant varieties in Vietnam and abroad.

Please contact: Vinh@bross.vn; mobile: 0903 287 057; Zalo: +84903287057; Skype: honor.bross; Wechat: Vinhbross2603.