- KIPO, effects of “program to support joint response to disputes regarding intellectual property rights”: 53 trademarks preoccupied by a trademark broker were invalidated in China

The KIPO announced that as a result of their “program to support joint response to disputes regarding intellectual property rights” that was put forward in 2018 in order to support companies hurt by overseas trademark brokers, 53 companies established for the joint response won an invalidation action.

 

The 53 companies are small and medium-sized Korean companies of a total of 4 types of businesses including dolls, clothing, cosmetics, etc. that suffered damage from major trademark brokers (5 brokers) in China, and all of 53 trademark right disputes ended with rulings in favor of the companies.

Korean companies have relatively low recognition in China, and thus trademarks bought by brokers in advance have not been easy to invalidate.  However, the rulings in favor of the companies likely took advantage of the Chinese trademark authority’s policy for eradicating trademark brokers.  In particular, the manner of forming a consultative group including companies hurt by the same broker to jointly cope with the damage made it easy to prove the malicious intention of the broker, and collaborative use of materials and know-how helped reduce costs and improve the ability to respond to IP-related disputes.

 

The joint response to the trademark broker resulted in a victory against the trademark broker who was attaching the trademarks in the same field of business to goods and selling the actual goods.  When the trademark broker used the trademarks through online shopping malls, it was unclear whether the broker corresponded to “a trademark broker” as set forth in the Chinese Trademark Act and the Trademark Examination Guidelines.  However, even though the trademark broker was using the trademarks, it was nothing more than a superficial usage, and the broker’s unauthorized preoccupancy of a large number of third parties’ trademarks demonstrates an unfair use that undermines order of fair use of trademarks and is in violation of the principle of good faith, which led to rulings in favor of the companies on all counts.

 

The main subject matter of the decision is provided below.

 

“A trademark should be registered in compliance with the principle of good faith and public business morality, and should not be used to pursue unfair profits in a manner of disturbing trademark registration order, harming public interest, etc.  The defendant filed a number of trademark applications other than the subject trademark, and the above-stated trademarks … (omitted) … were obviously deliberate reproductions and copies of third parties’ trademarks, and are in violation of the principle of good faith.  The malicious act of registration by the defendant disturbed the Chinese ordinary trademark registration and management order, and harmed to the fair and transparent competition order in the market.  Consequently, the act of filing and registering a trademark application for the subject trademark qualifies as a case in which “registration is obtained by other improper means” as set forth in Article 44(1) of the <Trademark Act>.

 

Mok Seong-Ho, Director General of the Industrial Property Protection & Cooperation Bureau at the KIPO, said that “Overseas brokers continue to cause financial damage to Korean companies who are the true right holders such as by sending cease and desist letters, and demanding large amounts of settlement money or royalties.”  He continued, “We will further extend support to prepare for prolonged damage resulting from disputes by providing short- and long-term measures to eradicate trademark brokers’ activities.”