Trademark squatting and trademark hoarding have long been a troublesome problem for many foreign companies in China. Now, a breakthrough has been made in Chinese IP jurisprudence: Trademark rights holders can sue for unfair competition against trademark applications filed in bad faith and obtain injunctive relief and damages.
One precedent is the case of Emerson Electric Co. v. Xiamen Anjier Water Angel Drinking Water Equipment and Wang Yiping. Wang filed mass non-use trademarks similar to Emerson’s In-Sink-Erator trademark from 2010 to 2019 through two companies he controlled. The Xiamen Intermediate Court judged this to be unfair competition and the work of the appointed trademark agency to be aiding and abetting infringement. The two companies had to stop the infringement and compensate Emerson Electric with 1.6 million RMB, of which the trademark agency is jointly liable for 640,000 RMB.
Prior to this case, it was unclear whether the filing of trademarks in bad faith alone, without any actual use, constituted unfair competition and whether it could be successfully challenged in civil proceedings. With this ruling, a Chinese court confirmed for the first time that in the case of trademark applications filed in bad faith, a lawsuit can be filed for unfair competition and damages can be claimed for the legal fees incurred for trademark oppositions, trademark cancellations and administrative litigation. The agency that makes the bad faith applications on behalf of the applicant is jointly responsible for the infringement.
Source: IPR Action