5-Year limitation no barrier to invalidation of China trade mark registrations obtained in bad faith

There has been a welcome development in the battle against trade mark squatters in China.  In a recent case, the Beijing Higher People’s Court has cast doubt on the ability of owners of improperly registered marks to rely on the 5-year limitation on invalidation.
 
China operates on the “first-to-file” principle.  Applicants do not need to provide evidence of use or an intention to use at the time of filing. The system is relatively easy for squatters to subvert and to plagiarise, imitate and pre-emptively register marks that belong to other parties.  The squatting problem is fairly endemic.
 
Previously, a registered mark could be invalidated on relative grounds within a period of 5 years from its registration date (there are rare exceptions in the context of “well-known” marks). Invalidation on absolute grounds is not subject to the 5-year limitation.
 
In a recent administrative case, Bobdog (China) Children's Products Co., Ltd. vs TRAB, that concerned the invalidation of registration no. 3423370 "BABOBOG & device" of Quanzhou Bobdog Children's Products Co., Ltd., the Beijing Higher People’s Court  indicated that the 5 years limitation did not apply if the registration at issue was acquired by improper means.
 
Facts of the case
 
Fujian Jinjiang Wan Tai Sheng Footwear & Clothing Co., Ltd. registered the mark at issue in 2004. In 2015, it was assigned to Quanzhou Bobdog Children's Products Co., Ltd. (Quanzhou Bobdog). Bobdog (China) Children's Products Co., Ltd. (Bobdog China) and its related company owned prior registrations for a series of Bobdog marks in English and Chinese in China. It applied to invalidate the registration owned by Quanzhou Bobdog.  At first instance, the Trademark Review and Adjudication Board (TRAB) dismissed the invalidation claim based on relative grounds because the 5-year limitation had expired.  The TRAB also found against invalidation on absolute grounds.
 
Bobdog China appealed the case to the Beijing IP Court. The IP Court noted that Wai Tai Seng (the original applicant) had applied to register more than 200 marks. Apart from the mark at issue, it had applied to register a number of marks identical or similar to other parties’ earlier marks. Meanwhile, Quanzhou Bobdog had applied for marks similar to Bobdog China’s marks and other parties’ famous marks and failed to provide a reasonable explanation for filing these applications or for its acquisition of the mark at issue in this case. Further, Wan Sheng Tai had sold some of its marks through a trademark transaction platform.  The Court concluded that the mark at issue was filed without any intention to use and such behaviour constituted “acquiring the registration through other improper means”.  The IP Court decided to cancel the registration.
 
Quanzhou Bobdog appealed the decision to the Beijing Higher People’s Court  alleging that it had an intention to use the mark at issue, and indeed had used it, and that the invalidation was time barred because of expiry of the 5-year limitation.
 
The Higher Court held that the 5-year limitation did not apply if the mark at issue was acquired by improper means. It also found that the subsequent use of the mark by Quanzhou Bobdog did not confer on Wan Sheng Tai an intention to use or justify the original improper registration of the mark.
 
While the case was decided upon it particular facts, the decision suggests that if it is shown that a mark was originally improperly registered, then the Courts might find that the registrant cannot hide behind the 5 year limitation on invalidation.  It remains to be see how widely this principle will be applied in future, but it is another step in the direction of supporting invalidation of bad faith filings beyond the 5 year limitation.