Different from many other countries, evidence of use is not required when trademark application is filed, and the registrant is not obliged to submit any evidence of use either after registration in China. Hence, some registered trademarks are not put into use at all. To make up for the shortcomings of the trademark system, the procedure of non-use cancellation is set. According to Article 49 of the China Trademark Law, if a registered trademark is not used for three consecutive years without justifiable reasons, anyone may apply for cancellation of the registered trademark. So the application for non-use cancellation is an easy means to check whether the registered trademark has been used.
In recent years, the number of non-use cancellation cases is greatly increasing. There are several reasons. The most important reason is that the trademark resource is very limited now. According to the statistics published in the first quarter of 2022 by the China National Intellectual Property Administration (the CNIPA), the number of valid registrations has been up to 37,250,480. So it is very difficult to get a new trademark registration without encountering any obstacle. Non-use cancelation is a preferable option to remove the obstacle. Besides, the CNIPA is changing its attitude regarding the letter of consent in recent months, and reluctant to accept the letter of consent. This change leaves less options for the applicant to remove the obstacles. What’s more, many registered trademarks are not put into use. So the non-use cancellation is a good way to clear the unused registrations.
For the trademark registrants, it is crucial to understand the latest review practice regarding the evidence of use in the non-use cancellation cases to safeguard trademark registration, in order to avoid being “mistakenly” canceled.
The complete cancellation process may go through examination by four institutions, namely the Examination Division of the CNIPA, the Review Division of the CNIPA, Beijing IP court, Beijing High court. Recently, it appears that the four institutions are becoming stricter about the evidence of use. There is obvious change of criteria especially at the Examination Division.
In the past, the Examination Division and the Review Division have different examination criteria and procedure in the following aspects:
1. The Review Division require the evidence shall form a chain to prove the trademark has been truly, commercially used, while the Examination Division may not. The Examination Division will not cancel the registration easily as long as they think the registrant has the possibility of using the trademark even if the evidence has some flaws.
2. The Review Division just maintain the registration on the used goods and similar goods, while the Examination Division maintain all the registered goods even if the evidence only shows the use of some goods.
3. The Review Division will forward the evidence to the applicant and the applicant has a chance to question the evidence. The Examination Division will make a decision directly without giving the applicant any chance to check and question the evidence. According to our experience, this chance is very important to the applicant, which may influence the final result.
Based on the above, it is common that the Examination Division and Review Division make different decisions. So it is important to go to review if the trademark to be cancelled is a serious obstacle.
However, according to recent decisions, we found the CNIPA is changing its practice in the non-use cancellation procedures.
Instead of simply stating the submitted evidences are sufficient to prove the effective use of the trademark registration, the Examination Division gives a list of submitted evidence now. Besides, same with the Review Division, it just maintains the registration of the used goods and similar goods. Hence, it is important to pay more attention to collection of evidence. It is also suggested to submit evidence of use on at least one item from each subclass at this stage.
The Review Division is also becoming stricter than before. In some cases, the registrant submitted commercial contracts and invoices, but the Review Division rejected to accept them just because the invoices do not bear the registered trademark or the registered goods shown on the invoices are not consistent with the description of the registered one. To safeguard the trademark registration, it is important for the registrant to keep good record of proper evidence. We would like to give some suggestions for two different types of business.
In the first type of business, the goods are imported to and then sold in the Chinese Mainland.
In such international business, the registrant shall keep commercial documents such as commercial contracts, purchase orders, invoices, bills of lading, customs declarations etc. Commercial contracts, purchase orders and invoices may be deemed as self-made evidence, so it is recommended to keep the original emails attaching the commercial documents. If the CNIPA deems they are self-made, the registrant can notarize the emails with the attachments to enhance the probative force of the evidence. Regarding bills of lading and customs declarations, they are considered as objective evidence, which has strong evidencing power. Please do place the registered trademark and goods on those documents.
What’s more, we suggest the registrant requesting the distributor or Chinese partner to put the trademark and exact description of goods on commercial documents, especially VAT invoices. The registrant may ask for ten sets each year for possible use, in case the distributor or partner cannot provide them for urgent use.
In the second type of business, the goods are only manufactured in the Chinese Mainland and then exported abroad. They will not be sold in Chinese mainland. This business is usually referred to as “OEM”.
Some registrants may worry that such use may not constitute effective use. According to Beijing High People’s Court Guidelines for the Trial of Trademark Right Granting and Verification Cases, if the goods using the trademark in dispute are directly exported without being circulated in China, and the registrant of the trademark in dispute claims to maintain the registration of such trademark, this claim may be supported. This principle is also confirmed in the Guidelines of Trademark Examination published by the CNIPA. Thus there is nothing to worry about. The registrants just need to keep good record of the evidence.
Since OEM products are not sold in Chinese mainland, there will be no VAT invoice which is considered important and powerful evidence. What’s more, most of the commercial documents are just copies, which have weak evidencing power compared with originals and VAT invoices. Hence, it is strongly recommended to keep good record of the original communications regarding the business. The commercial documents shall better be sent out through the official emails of the firms. As we mentioned in the above, bills of lading and customs declarations are objective evidence. They are powerful evidence if the product names and trademark are both shown on the documents. If the products are not listed on the documents, the product codes corresponding to the product brochures shall be placed on. In a word, without on-spot investigation, the evidence shall be sufficient to tell the examiner the registered trademark is indeed used on the registered goods in the past three years.
In such business, the registrant usually issues an authorization letter or manufacturing agreement to the manufacturer. It is highly recommended to include the authorized trademark numbers and authorization scope to avoid future disputes.
Though it may be troublesome, we strongly recommend linking one set of commercial documents with a code or reference number. In this way, they can confirm each other even if some have flaws.
In summary, the evidence shall be sufficient to prove the registrant or the licensee has used the mark identical with the registered trademark on the products identical with or covered by the registered goods in the stipulated period.
With the good record of evidence, non-use cancellation is no more a problem!