Company “J” owns hundreds of registered trademarks, and its core trademarks are registered for almost 45 categories of goods and services. The earliest registered trademarks have been renewed twice. Hundreds of registered trademarks will expire between 2018 and 2020. Among these registered trademarks, only a few are used. Most are only registered as defensive trademarks, and are not used.
On the one hand, company J renews its trademarks step by step; on the other hand, it complains about the input (including agency fees and formality fees paid to the trademark office) in renewal of a large number of defensive trademarks that are not used, and in which no value is seen. In addition, these trademarks may be cancelled at any time if they are not used for three consecutive years. This issue of company J also troubles the enterprises that own a large number of defensive trademarks.
Value of defensive trademarks. Defensive trademarks are registered in order to prevent others from using the signs of the registered trademarks on goods or services of other categories. The value of defensive trademarks lies in passive defence and reservation.
Prevention of trademark squatting is the most important function of defensive trademarks. In the event of trademark squatting, more costs will be spent than application for trademark registration if the company wants to retrieve the squatted trademark. Defensive trademarks also provide reserve trademarks for enterprise development. If an enterprise intends to operate goods or services of other categories and finds that the trademarks have been registered by other enterprises, it has to use a new brand. In this respect, value can be seen in defensive trademarks.
Reducing the risk of cancellation of trademarks not used for three consecutive years. As more and more enterprises become aware of brand protection, they generally will register a number of defensive trademarks, like company J. The characteristics of defensive trademarks determine that few of them are really used. It is provided in the Trademark Law that others may apply for cancellation of a trademark if it is not used for three consecutive years. If the trademark registrant fails to produce the evidence of use of the trademark within the time limit for evidence adducing, the trademark will be cancelled.
Cancellation of defensive trademarks of well known enterprises because they are not used for three consecutive years happens everywhere. Therefore, it is critical to pay attention to the use of defensive trademarks and preserve evidence of their use.
What is use of a trademark? During the actual use of trademarks, many enterprises do not develop a correct understanding of the use of trademarks, and there are few professionals specialised in intellectual property rights to check the use. As a result, they make changes to their trademarks for the purpose of market promotion and bringing out new products. Does this qualify as the use of a registered trademark?
It is provided in article 26 of the Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Administrative Cases Involving Trademark Granting and Affirmation that, “if the actually used trademark is slightly different from the approved registered trademark without any change in its significant features, it can be deemed that the registered trademark is used”. The meaning of slight difference can differ from case to case. Therefore, it is advised to use the exact pattern of the registered trademark to mitigate related risks.
Major trademarks and defensive trademarks. Based on the actual conditions of company J, we divide all of its registered trademarks into major trademarks, namely, the trademarks registered for core categories of goods or services (categories of goods or services closely connected to the actual business activities of company J), and defensive trademarks.
For major trademarks, we assist company J in their renewal. As company J continues using these trademarks, they are influential and popular to some extent, and have accumulated high brand value after consistent use and advertisement. The brand value needs to be carried by these major registered trademarks.
The defensive trademarks have not been used in the latest decade and meet the conditions for cancellation of trademarks not used for three consecutive years. In other words, if others apply for cancellation of unused trademarks, these defensive trademarks will be cancelled, because company J is unable to adduce the evidence of their use. Considering that the major function of defensive trademarks is to protect trademark uniqueness instead of brand heritage, we treat the massive defensive trademarks of company J differently, based on the remainder of their validity periods:
For defensive trademarks where the remainder of the validity period is less than one year, we will apply for renewal within six months before expiration of their validity; and
For defensive trademarks where the remainder of validity period is one year or more, we may apply for registration of a new trademark instead of renewal. In the new application, we may consider fine-tuning the trademarks. As the trademarks of the reapplication are identical or similar to the original ones, the probability of rejection is low. In addition, as one year is given, registration of new trademarks will be approved before the original ones expire. If registration of new trademarks is not approved as expected, the original ones can be renewed then.
New trademark application is advantageous, as others are unable to apply for cancellation within three years after the newly applied trademarks are registered. The formality fee of new trademark application is RMB300 (US$44) per piece while that of renewal is RMB1,000 per piece.
Management of brand/trademark operation is a long-term systematic project. From logo design, selection of specific goods or services, to retrieval and analysis, submission of registration application, rejection, re-examination of rejection, objection, and approval of registration, the birth of a registered trademark is not easy.
The whole-process professional schematic design, process management, and service are required to reasonably and effectively use and promote brands, improve their popularity and reputation, and safeguard brand operation and management.
Shan Xunping is an associate at Dentons