CNIPA Invalidates Trademark, Sets Precedent for U.S. Brands in China

What's Happening?

A U.S. brand faced trademark squatting in China when a third party registered its mark domestically in 2020. An initial invalidation action filed in 2021 was unsuccessful. However, a second attempt in 2023 led to the China National Intellectual Property Administration (CNIPA) declaring the trademark invalid. The CNIPA's decision was based on Article 32 of the PRC Trademark Law, which prohibits the use of improper means to pre-empt the registration of a prior-used mark with certain influence. The case highlighted the possibility of refiling an invalidation action if it relies on new evidence or a distinct legal basis. The brand, despite having no physical presence or direct sales in China, successfully demonstrated its reputation through indirect evidence such as online media coverage and cross-border e-commerce activities.

Why It's Important?

This decision by the CNIPA is significant for U.S. brands and other international companies facing trademark squatting in China. It broadens the interpretation of what constitutes market influence, allowing brands to establish reputation without direct sales in the country. The acceptance of indirect evidence of reputation marks an important precedent, providing a pathway for foreign brands to protect their trademarks in China. This case underscores the evolving nature of trademark enforcement in the digital commerce era and reinforces protections against malicious filings.

What's Next?

The CNIPA's decision may encourage more international brands to pursue trademark invalidation actions in China, even if initial attempts fail. Companies may increasingly rely on indirect evidence to establish market influence, potentially leading to more robust protections against trademark squatting. Legal practitioners and brand owners will likely monitor this development closely, as it could influence future trademark strategies and enforcement actions in China.

Beyond the Headlines

The case highlights the challenges and opportunities presented by digital commerce in trademark enforcement. As cross-border e-commerce continues to grow, the ability to demonstrate market influence through indirect means becomes increasingly important. This development may prompt further legal and regulatory adjustments in China and other jurisdictions, as they adapt to the realities of a globalized digital marketplace.