Recently, a Chinese IP agency, Beijing Sihailong Intellectual Property Agency Limited, was sanctioned by the China National Intellectual Property Administration (CNIPA) for continuous breach of its due diligence obligations under the Trade Mark Law. The agency was suspended from handling trade mark matters at the CNIPA for twelve (12) months and was included in the list of those who have severely violated the law and breached credibility in market regulation for three (3) years. This means that for a period of time in the future, not only will the agency itself be unable to engage in business activities related to trade mark agency, but its senior management may also be restricted in their personal business activities or commercial transactions. Case reference, Guo Zi Chu Zi 2023 No.13.
The agency had previously been fined by the local Administration for Market Regulation (AMR) in 2021 for applying for a number of Bentley-related trade marks for a Hong Kong-based copycat company, BEN MOTORS LIMITED, which used the same Chinese name as the British luxury car manufacturer Bentley Motors Limited. Case reference, Jing Xi Shi Jian Fa Zi (2021) 398. For our coverage of this case, please see the article “China IP Agency Fined US$11,000 for Filing Copycat Bentley Trade Mark Applications”.
In October 2022, the agency was again sanctioned by the local AMR for previously representing a Chinese company in obtaining two "adidas" marks through the trade mark assignment procedure - the true owner of which was the German company adidas AG, which had neither authorised the assignment nor had any knowledge of it. The agency also acted for a Hong Kong cottage company, adidas AG LIMITED, by changing the registrant's address for 298 marks owned by the German company to that of the Hong Kong copycat. Furthermore, it recorded the aforementioned unauthorised Chinese company as the licensee of more than 30 "adidas" trade marks. Case reference, Jing Xi Shi Jian Fa Zi (2022) 1983.
In February 2023, the CNIPA held a hearing on the above series of acts of the agency. In May 2023, the CNIPA issued an administrative penalty decision on the suspension of the agency's trade mark business, etc., as mentioned above. In its decision, the CNIPA stated that:
- The agency handled the adidas and Bentley trade mark cases on the instructions of the same Chinese individual, which was clearly against common sense, but the agency still filed a large number of relevant applications for registration, assignments, changes, license recordals and reissue of certificates, and therefore clearly failed in its basic due diligence duty and was subjectively at fault.
- "宾利 (Bentley in Chinese)", "BENTLEY" and "B-in-wings logo" are well-known trade marks of Bentley Motors Limited, a famous British automobile company, which has significant popularity and influence; the agency's act of applying for the registration of these marks for the Hong Kong copycat company amounted to accepting the entrustment knowing that the entrusted matters infringed the prior rights of others, which constituted "aggravated circumstances".
- The series of acts of the agency not only harmed the legitimate rights and interests of Bentley Motors Limited and adidas AG, but also interfered with the trade mark examination practice of the CNIPA and disrupted the market order of the trade mark profession, constituting "serious circumstances".
The 2019 amendment to China's Trade Marks Law added the requirement that trade mark agents shall not accept engagements for applications that violate the principle of good faith and imposed an obligation of due diligence on agents. Since 2022, market regulation authorities across China have imposed more than 200 administrative penalties for acts such as representing malicious trade mark applications. Since 2023, the CNIPA has continued to strengthen its supervision and administration of trade mark agents, including requiring agencies to re-enter into a practice license valid for three years. These initiatives help to safeguard the rights of trade mark owners and to prevent infringement, and will hopefully go some way towards tackling the problem of bad faith filings which can be a significant financial burden for brand owners. In addition, we do expect that they will, to a certain extent, help to provide a fairer market environment for trade mark practitioners.