Author: Judge Yuanmei Wu of the Beijing Intellectual Property Court
High Standards for Evidence in Trademark Non-Use Cancellations
The phrase "Cancellation for Non-Use" refers to a trademark cancellation initiated by the registered owner due to a lack of valid reasons for not using the trademark. This is commonly known as a "trademark cancellation for non-use" case. Recently, trademark applications in China have surged to unprecedented levels, yet many registered trademarks remain unused, primarily serving as protective registrations for certain companies. Additionally, some individuals exploit the trademark registration system by hoarding trademarks for potential profit from their transfer.
The main function of a trademark is to distinguish different market entities offering goods and services. When a trademark is not actively used, it leads to a misallocation of trademark resources. To tackle this issue and streamline the trademark registration process, there has been an increase in requests for cancellation of trademarks that have not been used for three consecutive years. This trend has led to a rise in trademark "cancellation for non-use" cases, alongside a growing practice of hoarding registered trademarks and engaging in malicious registrations.
In response, both the trademark office and courts in China are applying stricter evidence standards in trademark "cancellation for non-use" cases to eliminate hoarded and inactive trademarks, thereby promoting the principle of "using trademarks, not speculating." When responding to cancellation applications, trademark owners must provide evidence of use to maintain the trademark's validity. This evidence must show either actual use of the trademark or legitimate reasons for its non-use. The trademark administrative and judicial authorities will evaluate this evidence, and if deemed valid, the registered trademark will be upheld.
Thus, the key focus in examining trademark cancellation for non-use cases is the assessment of the evidence of trademark use.
Judicial Review of Non-Use Cancelltions
In trademark non-use cases, even if the owner claims justifiable reasons for their lack of use, they often present some evidence of use. Therefore, when determining whether the trademark owner has a "genuine intention to use" the trademark, it is crucial to follow specific review principles.
The central issue in validating the disputed trademark's registration is the evaluation of the evidence of use provided by the trademark owner. To maintain trademark registration, the evidence must show that the trademark has been used genuinely and effectively, rather than merely symbolically or incidentally to preserve its status. The use should demonstrate a certain level of consistency and continuity, leading to a rigorous examination of evidence in "cancellation for non-use" cases.
Typically, the evaluation of evidence will include the following aspects:
First, trademark use within the three-year timeframe is critical. Cases of "cancellation for non-use" usually focus on a three-year period, and demonstrating use within this timeframe is essential. Some cases may reference a significantly earlier period, which can be challenging for small businesses to substantiate. Often, rights holders may lack proof of use during the specified three years and can only provide evidence from three years before or after. Current practices indicate that rights holders rarely submit evidence from outside the designated period, and courts tend to assign limited weight to such evidence.
Next, the evidence must show the disputed trademark exactly as it is registered. Rights holders may have multiple trademarks, some distinct and others closely related to the trademark in question. In practice, trademark identification can evolve over time, and its usage may differ from the original application status. If the rights holder's trademark lacks distinctiveness, the standards for providing evidence become even stricter.
Third, the evidence must clearly demonstrate the use of the designated goods. Trademark usage is specifically tied to designated goods, and in "cancellation for non-use" cases, the evidence must clearly show the use of these goods. However, it is common for the actual goods to differ from those approved. Many trademarks facing cancellation are often registered defensively, contributing to a strong trademark defense strategy by securing trademarks for related or upstream products. Consequently, in "cancellation for non-use" cases, the goods actively used are typically the primary goods associated with the main trademark, while those related to the contested trademark are fewer.
Additionally, invoices are crucial evidence in China. There are various ways to utilize trademarks, including direct and licensed uses, some requiring payment and others not, with transactions varying in whether they come with invoices. Due to challenges within the social credit system, there is a heavy reliance on invoices. The absence of invoices can lead to skepticism regarding the evidence, as it may be perceived as potentially fabricated. Conversely, the presence of invoices generally supports the assumption that the transactions occurred.
After thoroughly examining the submitted evidence, if any issues arise, the court will also consider whether the trademark owner demonstrates a "genuine intention to use" the trademark before making a final decision on the cancellation of the disputed trademark.
Judicial Assessment of Genuine Intention to Use
According to Article 26 of the Supreme People's Court Regulations on Administrative Cases of Trademark Authorization and Confirmation, if a trademark owner shows a genuine intention to use the trademark and has made necessary preparations for its actual use but has not yet utilized it due to objective circumstances, the court may recognize justifiable reasons. To establish "justifiable reasons," two key criteria must be met: a sincere intention to use the trademark and adequate preparations for its intended use.
In this context, "genuine intention to use" serves as the basis for justifying the trademark owner's inability to use the registered trademark. Any subjective intent must be evaluated through objective actions. For instance, when assessing "malicious registration" as described in Article 45 of the Trademark Law, various factors can be considered, such as the similarity between the disputed trademark and existing well-known trademarks, their distinctiveness and reputation, their connection to the goods, and any business interactions or partnerships between the parties involved. Additionally, when determining whether a malicious registrant is aware or should be aware that the trademark is not registered by others, factors may include whether the applicant for the disputed trademark has contacted the prior trademark user regarding licensing or transfer, whether the applicant has engaged in trademark infringement, whether both parties operate within the same industry, and whether the prior trademark is highly distinctive while the disputed trademark closely resembles it.
While the concept of "genuine intention to use" may appear flexible and open to interpretation, it is crucial that it aligns with specific objective criteria.
Effectively Demonstrating Genuine Intention to Use
In administrative trademark cancellation cases, trademark owners with weaker evidence often claim to have a "genuine intention to use" their trademarks. Conversely, those with stronger evidence may also reference this intention to bolster their claims. However, in the absence of actual use evidence, courts tend to view the trademark owner's "genuine intention to use" skeptically, often concluding that sufficient evidence has not been provided. So, how can a trademark owner effectively demonstrate their "genuine intention to use" the trademark?
Firstly, "genuine intention to use" must be substantiated through external factors. As previously mentioned, since this is a subjective state, proof of "genuine intention to use" should be reflected in objective actions. Due to a lack of evidence for actual use, trademark owners frequently assert a "genuine intention to use." However, external evidence does not equate to evidence of use itself; rather, it relies on "justifiable reasons" for non-use. Therefore, when evaluating whether a contested trademark should be revoked, it is essential to consider the specific circumstances surrounding these "justifiable reasons."
According to Article 20 of the Supreme People's Court Opinions on Administrative Cases of Trademark Authorization and Confirmation, if a trademark owner has been unable to use the registered trademark or has ceased using it due to objective factors such as force majeure, policy restrictions, or bankruptcy liquidation, or if they have a genuine intention to use the trademark and have made necessary preparations for actual use but have not yet done so for other objective reasons, this can be recognized as having justifiable reasons. The specific circumstances mentioned include force majeure, policy restrictions, and bankruptcy liquidation, among others.
Moreover, the concept of "genuine intention to use" can be further understood by examining the specific context in which the trademark is utilized. Commercial activities are complex and adaptable, influenced by factors such as product characteristics, business locations, and consumer behaviors. Trademark usage may vary slightly depending on the commercial context. Article 20 of the aforementioned opinions states that if the actual use of a trademark differs slightly from the registered version but retains its distinctive features, it can still be considered valid use. For trademark owners with only one contested trademark, there is generally more leniency for minor differences, provided the public can recognize it as the registered trademark. However, for those with multiple registered trademarks, this leniency diminishes. If the actual trademark used shows slight differences but is aimed at other registered trademarks, the claim to maintain the contested trademark may not be upheld. An example of valid trademark use is when the owner uses products with the contested trademark exclusively for export.
Additionally, the use of trademarks in online environments is noteworthy. In a cancellation review concerning "Double Eleven," the court found that "Double Eleven," a service brand for a major promotional event organized by a third party, had received significant advertising and promotion for the contested trademark during the relevant period. The third party's ongoing promotion helped the contested trademark gain commercial recognition and industry influence. The third party engaged platform merchants through various promotional activities and established a dedicated "Double Eleven" event space on the platform, labeling participating merchants and products with "Double Eleven" to provide product information, identify sources, and categorize items. Consumers could easily access information about participating merchants and products through the event space and the "Double Eleven" labels. In this commercial context, the use of "Double Eleven" and "Double 11" exemplifies typical trademark usage in the online service environment. Despite some differences between the two terms, the court recognizes the third party's genuine intention to use the trademark and notes that "Double Eleven" and "Double 11" are identical in pronunciation and meaning. The relevant public is accustomed to associating "Double 11" with "Double Eleven." The court concludes that the third party's usage aligns with commercial practices and public perception, thus constituting valid use that does not alter the distinctive characteristics of the contested trademark.
Conclusion
In conclusion, it is essential to assess the "genuine intention to use" a trademark in conjunction with the objectives of the three-year non-use cancellation system. The effectiveness of a trademark as a commercial identifier is closely linked to its active use in connection with goods, rather than being held without purpose for an extended duration. The three-year non-use cancellation system in trademark law aims to encourage registered trademark holders to actively utilize their trademarks and fulfill their role in the marketplace. This usage should be both consistent and authentic; however, evaluating the usage of trademarks facing cancellation, especially those involved in litigation, can be complex. When a trademark's exclusive rights holder presents initial evidence demonstrating use of the contested trademark within the specified timeframe, they should be considered to have satisfied their proof requirement unless contrary evidence is presented. Furthermore, to foster active use among trademark holders, a genuine intention to use the trademark should not hinder its identifying and distinguishing functions.
The three-year non-use cancellation system was designed to promote the active use of trademarks by allowing for cancellation. However, the revised trademark law in 2013 permits trademark owners to retain their registrations even if they have not used them for three years, provided they can offer valid justifications. This amendment reinforces the legislative intent and introduces protections to ensure trademark stability while deterring malicious cancellation attempts. It is believed that as long as trademark owners diligently manage their trademarks and maintain proper documentation, they should not be concerned about facing cancellation after three years.