Recent data released by the Chinese Trademark Office reveals a noteworthy drop in trademark filings in China for the first time in years, with over 2 million fewer applications than in 2021. The COVID-19 pandemic has caused budget constraints for businesses, which have led to the decline in filings. Although this decrease might seem worrying, it’s actually a positive sign for the trademark industry in China, as previous years saw an abnormal increase in filings because of defensive filings made against bad faith squatters. Therefore, the recent decline indicates a more normalized trend in the trademark industry in China.
However, American companies face a significant issue in China in the post-Covid world: Article 4(1). This article puts a cap on the number of trademark filings these companies can pursue in China. Failure to comply with this article may result in the company being perceived as a bad faith filer and potentially becoming blacklisted by the government. This poses a significant challenge for companies, forcing them to choose between pursuing defensive filings to protect their brands or risking frowning from the government.
Although the recent decrease in trademark filings is a promising sign that China is taking meaningful steps to address the previously high numbers of filings, Article 4(1) is casting a shadow. It would be helpful if the authorities can clarify the exact number of filings that could lead to blacklisting. Overall, while the trend in trademark filings is improving, companies need clearer guidelines to navigate the murky water where brands and businesses are at risk.
