by Seven Liu
Many companies assume that the greatest trademark risks come from competitors.
In reality, some of the most difficult trademark disputes arise from people who already know the business well.
A distributor who sells a company's products, a local agent responsible for market development, a supplier involved in manufacturing, a consultant participating in negotiations, or even a former employee may become familiar with a brand long before the trademark owner encounters any legal problem. Because these individuals and companies often have direct access to the brand, they may also be among the first to recognize its commercial value.
In some cases, that knowledge leads to a familiar problem. The party that learned about the trademark through a business relationship files an application in its own name.
For both Chinese and international businesses, understanding this rule is important because many trademark disputes are not the result of strangers copying a brand. Instead, they arise when someone who was once trusted attempts to claim ownership of it.
The Problem Article 15 Was Designed to Solve
Trademark systems generally operate on a first-to-file basis. In China, registration is often obtained by the party that files first rather than the party that first created or used a mark.
While this system provides certainty and efficiency, it can also create opportunities for abuse.
Imagine a foreign company entering China through a local distributor. During the course of cooperation, the distributor becomes familiar with the company's brand, products, marketing materials, and future business plans. Before the foreign company files its own Chinese trademark application, the distributor files the trademark first.
A similar problem can arise when a former executive, employee, consultant, supplier, franchise partner, or licensee decides to register a mark that they encountered during the business relationship.
More Than Agents and Distributors
Many people believe that Article 15 applies only to formal agency relationships.
The provision is broader than that.
The law certainly covers traditional agency and representative relationships. However, it also extends to a wide range of business connections where one party becomes aware of another party's trademark through commercial dealings.
Chinese trademark authorities and courts increasingly focus on the practical reality of the relationship rather than the title attached to it.
The central question is often whether the applicant knew about the trademark because of its connection with the trademark owner.
If that connection exists, Article 15 may become relevant even where there is no formal agency agreement.
Why Evidence Matters So Much
One of the most important aspects of Article 15 cases is proving the relationship between the parties.
Many businesses discover too late that they never properly documented their cooperation.
A company may have worked with a distributor for years without a comprehensive written agreement. A brand owner may have conducted extensive negotiations with a potential partner but failed to preserve communications. A foreign company may have relied on informal business practices without creating a clear record of discussions concerning trademark ownership.
When a dispute later arises, proving the existence and nature of the relationship can become difficult.
Chinese authorities and courts often examine contracts, correspondence, purchase records, invoices, emails, meeting records, promotional materials, and other evidence showing how the parties interacted.
The stronger the evidence demonstrating that the applicant had access to the trademark through the relationship, the stronger the argument that the filing was made in bad faith.
Trademark Ownership Should Never Be Assumed
One common misconception is that everyone involved in a business relationship automatically understands who owns a trademark.
In practice, this assumption can create serious problems.
When ownership provisions are absent, disputes become more likely.
Clear contractual language identifying the trademark owner, defining permitted uses of the mark, and prohibiting unauthorized trademark filings can significantly reduce future risks.
Such provisions not only clarify the parties' intentions but can also serve as valuable evidence if a dispute eventually arises.
Prior Use Can Strengthen Protection
For some Article 15 disputes, particularly those involving parties outside a traditional agency or representative relationship, evidence of prior trademark use can become extremely important.
This is an issue that international companies sometimes overlook.
A business may have invested heavily in developing a brand but failed to preserve evidence demonstrating when and how the mark was used.
Importantly, Chinese law does not always require the prior use to reach the level of fame or widespread market recognition required under other legal provisions. What matters is demonstrating that the mark was already being used and that the applicant became aware of it through the parties' relationship.
Similar Goods Are Not Always the End of the Analysis
Many trademark disputes focus on whether the parties' goods or services are identical or similar.
While this remains an important consideration, Chinese authorities do not always approach the issue mechanically.
Modern brands often operate across multiple product categories and commercial channels. A company may develop a successful online game that later expands into merchandise, toys, entertainment services, and consumer products. A fashion brand may diversify into cosmetics, accessories, and hospitality services.
As a result, trademark disputes increasingly require a broader assessment of the commercial relationship between the parties, the nature of the brand, and the likelihood that consumers would assume a connection between the products or services involved.
The analysis often extends beyond simple classification rules and examines the overall commercial context.
Prevention Is Far Less Expensive Than Litigation
The most effective strategy is not winning an Article 15 dispute. It is preventing one from arising.
Businesses entering China should consider trademark protection at the beginning of a commercial relationship rather than after problems emerge.
- Trademark applications should be filed as early as possible.
- Cooperation agreements should clearly address trademark ownership and usage rights.
- Communications relating to branding should be documented and preserved.
Evidence of trademark use should be collected continuously rather than assembled only after a dispute begins.
These measures require relatively little effort compared with the time and expense involved in recovering a trademark from a former business partner.
A Reminder About Trust and Intellectual Property
Article 15 reflects a simple principle.
Commercial relationships create opportunities for cooperation, but they also create opportunities for misuse of information.
When a trademark dispute arises between former business partners, the question is often not who knew about the mark.
The real question is who can prove it.