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Legal Update

Domain Name and Trade Mark Scams in China

25 March 2011
Mayer Brown JSM Legal Update

Domain Name Scams

For a few years, many brand owners have received emails from domain name registrars or IT consultant companies based in China claiming that someone is trying to register English domain names (usually .CN, .HK, .TW), Chinese domain names, Internet Keywords and/or Wireless Keywords that are identical or similar to the famous trade marks or domain names belonging to the brand owners, and urging the brand owners to immediately apply for registration to pre-empt the alleged bad faith applications. Usually, an urgent response within 2-3 days is required.

In most cases, the alleged applicant is a fictitious entity and the email is simply coaxed to solicit business. The email sender may or may not be a registrar accredited by the China Internet Network Information Center (CNNIC).

Upon receipt of such email, brand owners not familiar with the practice may make irrational or impulsive decisions to register the domain names and/or keywords in issue lest their names or marks will be taken by the others. There are however far too many possible domain name extensions and variations (e.g. adding a hyphen or the character "s"). It is simply not practical to register all the domain names and keywords that may be similar to one's name or trade mark. Further, a positive response to the scam may prompt more scams or unsolicited marketing emails.

In deciding whether to register for defensive purpose to avoid dilution and internet traffic diversion, a brand owner should evaluate the value of the name, the level of commercial risk, the chance of recovering the relevant domain names and/or keywords in the future (e.g. by filing an administrative complaint) and the costs for doing so.

Trade Mark Scams

Lately, some brand owners began to receive unsolicited emails or facsimiles in Chinese (usually marked "urgent") from some trademark agents in Mainland China claiming that someone has just applied (usually just one or two days before the message) for registration in all 45 classes of trade marks that are identical to the trade marks of the recipient but in respect of non-identical goods or services; and suggesting the brand owners to act by filing applications for the same mark in all classes. The trademark agents claim that if the brand owners respond timely, there is a pre-application opposition procedure which can handle the brand owners' trademark applications on a priority basis (implying that the brand owners' trademark applications will pre-empt the third party's bad faith applications).

However, there is no such "pre-application opposition procedure" under the PRC Trademarks Law. Basically, China follows the first-to-file principle for obtaining trade mark rights. Once an application is filed, it will join the queue for examination. These days, the examination is much expedited and will be completed within a year. If the PRC Trademark office is satisfied that the mark is distinctive, complies with the law and there is no prior registration, it will preliminarily approve the application for publication in the PRC Trademark Gazette. The mark will proceed to registration if no one opposes within three months from the date of gazette.

All PRC trademark applications are processed in the manner outlined above. The law even has provisions to govern which applications may take priority if they happen to cover the same mark, same or similar goods or services and are filed on the same day. A trademark agent definitely does not have the capacity to determine whether a particular trademark application can be handled or processed with priority. Further, a trademark agent is not required under law to conduct any pre-application check if any instructions they receive may conflict with other brand owners. Moreover, it would be a breach of client privilege in the western system to disclose one's own client's application to another party.

Hence, brand owners should treat such messages with caution and perhaps mark one's diary to check the progress of the alleged application online before deciding if any action should be taken.

For inquiries related to this Legal Update, please contact:

Kenny Wong ( )

Alan Chiu ( )

Learn more about our PRC offices and Intellectual Property practice.

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