Victory for Farfetch in Trade Mark Squatting Battle

In China, it is notoriously difficult to deal with trade mark squatting whereby someone registers another business’ trade marks in bad faith. Once the squatter owns the trade mark registration, they can then sue the rightful owner should they use the mark for their goods/services in China or – alternatively – extort payment for a licence or the sale of the mark. Furthermore, often squatters will try to register the mark for unrelated goods/services simply so that – when they use the mark for their goods/services – they can take advantage of the repute of the earlier mark.

It is possible to object to these kind of applications (‘oppose’ in legalese) when filed, if you become aware of them in good time. Alternatively, it is possible to apply to invalidate the resulting trade mark (i.e. argue that it should not have been registered).  However, the grounds on which you can do so are quite limited. Indeed, in China, it is very difficult to succeed in this kind of situation as the only option is often to prove that the mark was very famous (‘well-known’ in legalese) in China at the time of the squatter’s application, which is a high threshold. Proving this is likely to be nearly impossible for start-ups which are only just entering the Chinese market. Moreover, even when you are a well-established brand, this can still present a major issue.

In this case, the applicant had filed an application for a black and white version of the  logo in respect of clothing, footwear etc. Farfetch had protection in China for many of its services but not for any goods. Farfetch opposed the application on various grounds but was unsuccessful. Farfetch then decided to file an invalidity application against the resulting trade mark registration. (It is not possible to appeal opposition decisions in China.) In this second set of proceedings – represented (as in the opposition proceedings) by Briffa and Chinese counsel – Farfetch was able to successfully to argue that: (a) use of the trade mark would take unlawful advantage of copyright in its  &  logos (both of which were registered in China); and (b) as the applicant did not have a valid Chinese business licence (as required for Chinese trade mark applicants and which our associates were able to discover through research at the relevant companies registries), they had committed fraud when they filed the application. As a result, the registration was declared invalid.

Here, Farfetch was able to rely on its copyright and the bad faith of the applicant. However, this will not always be possible. Moreover, China is not the only territory where this is an issue (we have noticed a large amount of these bad faith filings in S Korea and Turkey over the last few years) and the grounds on which businesses can rely will vary by jurisdiction. Therefore – to try and prevent such issues – we recommend that all clients consider:

• registering the copyright in their logo (in those countries where this is possible);
• whether applications in Hong Kong, Macau and Taiwan are required in addition to an application in China (as these are all separate trade mark jurisdictions);
• whether ‘defensive’/’blocking’ trade mark applications are appropriate (i.e. covering goods/services which are not sold by the business but which might be the subject of a bad faith application);
• applications for a/the version of their mark in local script (e.g. a transliteration), given that many local consumers may not recognise the mark in Latin alphabet and may use a version of the mark in local script; and
• using our watching service to ensure that they are notified of problematic applications and can take swift action to address them.

If you need to discuss ensuring that your business’ trade marks are appropriately protected in China or elsewhere, give one of our trade mark experts a call on 0207 288 6003 for a free initial consultation or drop us a line: INFO.