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24 April 20223 minute read

The time has come for trademark hijackers to pay the price

Trademark hijacking in China is notorious and has been a mission impossible for brand owners for many years, despite the continuous efforts from both the China National Intellectual Property Administration (the “CNIPA”) and the Chinese courts. One of the key reasons for such “unstoppable” hijacking activities is that hijackers can often afford to take big gambles at very low costs. In most cases, even if a brand owner manages to successfully remove a hijacking trademark, the hijacker does not really lose anything except for the insignificant trademark filing fees. On the other hand, if the brand owner fails to remove the hijacking mark, they often end up having have to pay the hijacker big money in order to recover what really should have belonged to them in the first place.

Over the past few years, some brand owners have tried to fight the hijackers though civil proceedings, but most of the cases were based on either infringing use or malicious complaints by the hijackers, such as the Bayer case (2017 Zhe 0110 Minchu No. 18627) and the BRITA case (2017 Hu 0112 Minchu No. 26614). There has not been a clear finding as to whether trademark hijacking per se is subject to civil liabilities, until the recent Emerson case (2021 Min Min Zhong No. 1129).

New landmark case

In the Emerson case (2021 Min Min Zhong No. 1129), the Xiamen Intermediate People's Court (1st instance court) and Fujian High Court (the appellate court) both ruled that trademark hijacking per se constitutes to unfair competition and is subject to civil liabilities. In this case, the hijacker repeatedly filed as many as 48 trademarks in 14 different classes, mostly through the same trademark agency. Its hijacking acts did not stop even after it was found to be a malicious hijacker in several administrative decisions. Emerson then sued the hijacker, its legal representative and the trademark agency for joint infringement based on Article 2 of the PRC Anti-Unfair Competition Law (bona fide). In the judgments, both the 1st instance court and the appeal court found that the hijacking acts have caused Emerson to pursue oppositions and invalidations to protect its interests, which have in turn, disrupted Emerson’s business operations and damaged Emerson’s interests. If the courts did not order the defendants to stop such hijacking acts, Emerson would have to continue pursuing oppositions and invalidations, which would incur significant costs to Emerson and also constitute a waste of public resources. As a result, the courts decided to order the defendants to stop applying for trademarks that are identical or similar to Emerson’s relevant trademarks and to issue a public apology. More significantly, the courts awarded RMB1.6 million (around USD250,000) damages to Emerson (with 40% assumed by the trademark agency).

Our comments

This is a landmark case as the Chinese courts have, for the first time, made it clear that trademark hijacking per se could constitute to unfair competition, even if the hijacker did not actually use the hijacked trademarks or exercise its rights in bad faith. With this finding, it seems that brand owners can finally move from the whac-a-mole approach to a more proactive and targeted strategy in tackling persistent bad faith trademark hijackers. Equally significant is the fact that dishonest trademark agencies who assist the trademark hijackers could also be found liable and responsible for the hijacking acts. It seems that there is finally a light at the end of the tunnel.

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