Foreign companies should pay attention to non-use trademark cancellation

Registering a trademark in China alone is not enough.  Foreign companies operating in the country, who own registered trademarks, must have a strategy in place to avoid losing their brand, especially if the trademark has not been used for three consecutive years without justified reason. 

Chinese authorities have been perfecting the trademark registration system at the levels of legislation, governance, policy, and rules in general. As a result, trademark guidance has experienced a rapid change in the system and practice on the ground. 

To address trademark issues, the China National Intellectual Property Administration (CNIPA) released the Draft Amendment to the Trademark Law in January 2023.  

With the goal of strengthening the regulations relating to bad faith trademark registration, some of the suggested amendments include stronger measures to ensure that trademark applications are made with intention to use, that those

trademarks that are registered are used, and that duplicate trademark applications are prohibited.  

Anyone can request to cancel a registered trademark if it has not been used for three consecutive years without justified reason. This policy seeks to ensure that owners actively use their trademarks. 

For this reason, foreign companies should have a strong strategy in place to guarantee the correct use of their registered trademarks for actual, effective, and legal commercial use, otherwise they will face the risk of non-use trademark cancellation cancellation.  

In theory, a registered trademark should be used exactly as it is registered. However, owners may modify their trademarks to a certain extent. Whether such modifications will affect the validity of the registered trademark is a common concern among rights holders. 

According to the Supreme Court, if the used trademark is slightly different from the registered one, but its distinctive features have not been changed, it can be deemed as the use of a registered trademark. Minor changes to a registered trademark on the original basis are allowed. 

Common grounds for trademark revocation 

According to the Trademark Law of China, a registered trademark can be revoked or canceled by the Trademark Office based on the following grounds: 

• A trademark registrant must renew the trademark in time. A registered trademark shall be valid for 10 years, commencing from the date of registration. Where the registrant intends to continue using the trademark, it shall complete the renewal within the 12-month period before the expiration date. A six-month extension (grace period) may be allowed. If the renewal is not completed, the registered trademark will be cancelled. 

• Failure to use the trademark properly. Any arbitrary change to the registration matter, such as the color (if the color was specified when registering), font, or combination of each element, etc., will be deemed as non-standard use of the trademark. The trademark registrant would be ordered to make the correction within the stipulated period, or the trademark will be revoked by the Trademark Office. 

• Failure to use the registered trademark practically and continuously. The law stipulates that a trademark shall be actually and continuously used on the goods/services that it has been registered for, in the territory/region it is registered in. If it has not been used for three years consecutively, without a proper reason, any organization or individual may apply to the Trademark Office for the revocation of the said registered trademark. 

• A registered trademark becomes a generic name of the commodities for which it is approved. Under Chinese law, where the relevant public generally believes that a certain name can refer to a class of goods, it shall be recognized as a generic name.  

Among the four grounds, the third one — failing to use the registered trademark actually and continuously — is the most common reason that has led to trademark revocation in China in recent years. 

Multiple trademarks owned by the same person 

A company may own multiple registered trademarks. If one of them is requested to be cancelled due to non-use for three consecutive years, and the trademark as use evidence provided by the registrant is not clearly and uniquely correspondent with the trademark being requested to be cancelled but is the same or similar to other registered trademarks in the name of the registrant, in this situation it can be disputed. 

According to the interpretations of the Supreme Court, if the actually used trademark is slightly different from the registered trademark, but its distinctive features have not been changed, it can be deemed as the use of a registered trademark. This can be used as the basic principle for the determination of trademark use. 

However, a lower court stated in a different interpretation that if it can be determined that the actual use of trademark is directed towards other registered trademarks owned by the registrant, even though there are only slight differences between the actually used trademark and the disputed trademark, the claim to maintain the registration of the disputed trademark may not be supported. 

The current judicial rulings consider the situation of other similar trademarks owned by the trademark registrant, to determine whether the evidence provided can be deemed as the trademark registrant’s use of the disputed trademark within the specified term. If the use

evidence is clearly directed towards other registered trademarks, in principle, the registration of the trademark in dispute will be cancelled. 

Determination of use for "multiple trademarks owned by the same person" 

Based on recent cases, the court adopts relatively strict determination standards on this issue. 

A company must prove that the trademark in dispute has been legally, genuinely, and effectively used for commercial purposes on the designated goods within the specified term. 

When the evidence provided by the right’s holder is not clearly directed to the disputed trademark nor to other trademarks under their name, a comprehensive consideration will be given to other factors, such as the specific circumstances of other registered trademarks they own, whether there is a genuine intention to use, business practices, consumer perception. 

Trademark use and evidence retention 

In trademark cancellation cases, the determination of trademark use ultimately depends on whether the user has a genuine intention to use the trademark and whether the actual use behavior objectively establishes a connection between the trademark and the goods or services it identifies for the relevant public. 

Trademark owners should actively and properly use their registered trademarks on the designated goods or services, as well as continuously sell goods or provide services to establish the recognition of the relevant public of the registered trademark as the source of the goods or services.  

Foreign companies should regularly collect and preserve evidence of trademark use in commerce. When owning multiple trademarks, companies should differentiate their trademarks from each other, and use them in the same way as registered respectively in production and/or business activities and preserve evidence of the use for each trademark. 

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Woodburn Accountants & Advisors is one of China’s most trusted business setup advisory firms.

Woodburn Accountants & Advisors is specialized in inbound investment to China and Hong Kong. We focus on eliminating the complexities of corporate services and compliance administration. We help clients with services ranging from trademark registration and company incorporation to the full outsourcing solution for accounting, tax, and human resource services. Our advisory services can be tailor-made based on the companies’ objectives, goals and needs which vary depending on the stage they are at on their journey.

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