Effective responses in 3-year non-use TM cancellations

By William Shen, Dentons

Recently, the author has been successively engaged by clients to respond on their behalf to cancellations of registered trademarks that have ceased to be used for three consecutive years (three-year non-use trademark cancellations) and to submit evidence of use of these trademarks.

Some of the trademarks were not confirmed to remain valid until they were subject to a three-year non-use trademark cancellation procedure, a cancellation review, trademark administrative procedures (first and second instances), and even a retrial procedure, in which the clients had to invest considerable human, material and financial resources. In addition, the submission of evidence of use, which had been held to be invalid, nearly led to the cancellation of registered trademarks that would result in the loss of ownership of the trademarks.

William Shen

So, it can be seen that whether evidence of use of a trademark is held to be true and valid is not a simple issue, as different entities may well have different interpretations on the same evidence. So, how can a trademark registrant plan ahead for a rainy day in daily management?

Article 49.2 of the Trademark Law and article 66 of the Regulation on the Implementation of the Trademark Law specify the system and procedures of three-year non-use trademark cancellation. In accordance with article 48 of the Trademark Law, “use of a trademark” means the use of a trademark for a commodity, commodity packaging, or containers and commodity transaction instruments, or advertising, exhibition and other commercial activities, with a view to identifying the source of the commodity.

In accordance with the Regulation on the Implementation of the Trademark Law, evidence of use of a trademark includes evidence of use by a trademark registrant of its registered trademark, and evidence that the trademark registrant authorizes other persons to use its registered trademark. The Notice on Provision of Evidence of Trademarks by the Trademark Office specifies the specific forms of use of a trademark involving use for transaction instruments in relation to a commodity or service, mainly including sales contract, service agreement and invoice, inspection report, and corresponding import and export declarations. Instruments and certificates provided by the party concerned to the Trademark Office shall be originals (that will not be returned) in principle. If it is difficult to provide originals, notarized true copies may be provided.

Main issues in providing evidence of use

In practice, issues in providing evidence of use in response to three-year non-use trademark cancellation include, but are not limited to: (1) sales invoices not showing the trademark; (2) inability to provide originals (such as value-added tax invoice); (3) the fact that notarial fees are charged by piece, and if there are a great number of instruments and certificates, notarial fees are not affordable to the trademark registrant; (4) the trademark only being displayed on the website or samples of the trademark registrant; and (5) difficulties in providing evidence of use of the trademark for a specific period.

With regard to the above-mentioned issues, the author believes that first, trademark registrants must correct the wrong brand management philosophy of “focus on the registration and indifference to the use”. Although China has ranked first in the world for many years in terms of the number of annual trademark registration applications and the number of valid registered trademarks, it is still far from being called a trademark power, as many trademark registrants are satisfied with obtaining a trademark registration certificate, and have their trademarks registered but do not have an overall strategic plan for trademark operation. The issue does exist that trademarks have been unused, which leads to the risk that the registered trademarks may be cancelled due to being unused.

Second, daily business operation processes shall be standardized. For example, a trademark registrant shall expressly require its business personnel to indicate the trademarks involved in the businesses in sales contracts, value-added tax invoices and other important written instruments. It is particularly suggested that relevant trademark registration numbers should be indicated in the remark column of the value-added tax invoice to avoid ambiguity. Meanwhile, the value-added tax verification platform for the national tax system can be sufficiently used to selectively snapshot invoice verification information for the record. Such verification information may be used together with the copy of an invoice, if it is inconvenient to provide the original of the invoice and necessary to save notarial fees.

Third, it should be noted that although use of a trademark for advertising, exhibition and other commercial activities is a legal means of using the trademark, such use is merely auxiliary, which, preferably together with other evidence of use (such as evidence of sale), may better achieve the purpose of proving the fact.

Meanwhile, focus should be on the relevance of evidence of use submitted. For example, if a sample is submitted as evidence, the printed invoice, payment voucher and sample indicating the printing date shall be submitted at the same time. If printed matter, other material and photos showing a trademark that are used in an exhibition are provided as evidence, documents for participation in the exhibition (contracts), expense invoices, payment vouchers and otherwise shall also be provided. In such a case, brand managers should consciously display trademarks in a targeted manner, and comprehensively collect all details of using the trademarks for advertising.

In addition, article 67 of the Regulation on the Implementation of the Trademark Law specifies that “force majeure, government policy constraints, insolvency liquidation and other justified reasons not attributable to trademark registrants” are justified reasons for not using a registered trademark for three consecutive years. In brand management, such provision may be sufficiently used to properly handle the response to three-year non-use trademark cancellation.

Finally, if it is impossible to provide evidence of use, and there are no reasons for not using a registered trademark for three consecutive years, the trademark registrant may consider proactively re-applying for registration upon the expiry of the three-year period following the trademark registration, and thus continue to obtain the registration protection under the Trademark Law.

In a nutshell, response to three-year non-use trademark cancellation is not an inextricable difficulty. As long as daily brand management measures are properly taken and there is sufficient evidence, the validity of a registered trademark can be maintained.

William Shen is an associate at Dentons


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