In recent years, the number of non-use cancellation cases against registered trademarks on the ground of three consecutive years of non-use has risen sharply, and the cancellation rate remains high. It is increasingly difficult to achieve once-and-for-all security through registration alone. The question of “how to maintain a registered trademark” undoubtedly requires more consideration and investment. The commercial use of registered trademarks often faces various practical circumstances and dilemmas, such as only minimal use of the trademark, discrepancies between the goods actually used or the trademark specimen and those registered, use of the trademark only within the enterprise, and may also involve issues such as infringement litigation, liability for damages, and bad-faith cancellation claims. This chapter aims to provide an in-depth analysis of the regulations, common issues and response strategies relating to non-use cancellation of registered trademarks, and to offer recommendations for enterprises on maintaining their trademarks.
Focusing on the key topics of trademark use in relation to non-use cancellation and corporate response strategies, we have selected the following three popular Q&A items from Chapter 7: Standardized Use and Lawful Retention of Registered Trademarks of the Practical Q&A Handbook on Cutting-edge Issues in Intellectual Property, which was jointly compiled by Wolters Kluwer Legal & Regulatory, China, and our strategic partner Rouse.
Selected Practical Q&A
Q1
[Inconsistency Between Use and Registration – Goods] Where a registered trademark is subject to a non-use cancellation request for three consecutive years of non-use, and the goods on which the registrant actually uses the trademark for sale are inconsistent with the goods approved for use by the China National Intellectual Property Administration (CNIPA), can the registration be maintained?
Article 22 of the Trademark Law provides: “An applicant for trademark registration shall, in accordance with the prescribed classification table of goods, indicate the class and the designation of the goods on which the trademark is to be used, and file an application for registration.”
Article 23 of the Trademark Law provides: “Where a registered trademark needs to obtain the exclusive right to use the trademark on goods beyond the approved scope of use, a separate application for registration shall be filed.”
In addition, pursuant to the Trademark Law, the Guidelines of the Beijing High People’s Court for the Trial of Administrative Cases Involving Trademark Authorization and Confirmation, and the 2021 Trademark Examination and Adjudication Guidelines, the registrant shall use the trademark within the scope of registration.
The goods on which the registrant actually promotes and sells the trademark shall be consistent with the goods approved for use at the time of registration. If the trademark is used only on part of the approved goods, the registration may be maintained in respect of those approved goods and other approved goods similar thereto. Whether goods are similar shall be determined based on their function and purpose, production sector, sales channels and consumer groups, and is generally determined with reference to the Classification of Similar Goods and Services. Where the determination of similarity of goods changes due to updates to the Classification, the version of the Classification that is favorable to the registrant and conducive to maintaining the registration shall be applied.
Where the goods actually used do not fall under the standardized designations of goods in the Classification and therefore appear inconsistent with the approved goods on the surface, but the goods actually used and the approved goods differ only in name and are essentially the same goods, or where the goods actually used fall under a subordinate concept of the approved goods, such use may be recognized as use on the approved goods. Examples include “lubricant” and “lubricating oil”, and “Chinese patent medicine” and specific names of Chinese patent medicines.
Where the goods actually used are not the same as the approved goods, and do not fall within a superior-subordinate relationship, then even if the goods actually used are similar to the approved goods, such use does not constitute use of the trademark on the approved goods.
The criteria for determining the services approved for use under a service mark are basically the same as those for goods under a trademark.
In particular, with respect to “sales promotion for others” in Similar Group 3503 of the Classification, it should first be noted that where a goods provider sells goods directly to consumers by itself (or through its distributors), the mark used is a trademark for goods, rather than a service mark for “sales promotion for others”. Secondly, according to the Guidelines of the Beijing High People’s Court for the Trial of Administrative Cases Involving Trademark Authorization and Confirmation and the Guidelines on the Application for Registration and Use of Class 35 Service Marks issued by the China National Intellectual Property Administration:
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“Sales promotion for others” refers to services such as providing advice, planning, publicity and consultancy for the sale of goods (or services) for others. The service recipients shall be distributors (including providers) of the goods (or services), and do not include situations where goods (or services) are sold directly to consumers through retail or wholesale, with commercial profit obtained from price differences.
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In light of the evidence on file, where operators such as shopping malls and supermarkets can prove that they have entered into commercial cooperation with distributors (including providers) of goods (or services) by providing premises and other means, and have provided evidence such as promotional posters, promotional campaign plans, promotional advertisements in newspapers and periodicals, and consultancy services, which is sufficient to establish that they have provided advice, planning, publicity and consultancy services for the sale of goods (or services) by distributors (including providers), such conduct shall be deemed use of the mark, in the sense of the Trademark Law, on “sales promotion for others” services.
Q2
[Inconsistency Between Use and Registration – Trademark] Where a registered trademark is subject to a non-use cancellation request for three consecutive years of non-use, and the trademark specimen actually used by the registrant is inconsistent with the trademark sign approved for use by the CNIPA, can the registration be maintained?
Article 24 of the Trademark Law provides: “Where a registered trademark needs to alter its sign, a new application for registration shall be filed.”
Article 49, Paragraph 1 of the Trademark Law provides: “Where, in the course of using a registered trademark, the trademark registrant changes the registered trademark, the name, address or other registered particulars of the registrant on its own initiative, the local administrative department for industry and commerce shall order it to make corrections within a specified time limit; if it fails to make corrections upon expiry of the time limit, the Trademark Office shall cancel its registered trademark.”
On this basis, the trademark specimen actually used by the registrant shall be identical or substantially identical to the form approved for registration.
At the same time, according to the relevant provisions of the Beijing High People’s Court on Several Legal Issues to Be Noted in Current Intellectual Property Trials, the non-use cancellation system for three consecutive years of non-use of a registered trademark is intended to encourage and urge trademark registrants to use their trademarks and to return idle trademark resources to the public domain, rather than to punish registrants. Therefore, in determining evidence of use, the principle of preponderance of evidence shall be adhered to, and the requirements shall not be unduly stringent.
The administrative and judicial practice of case examination is consistent with this legislative purpose. Article 26 of the Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Administrative Cases Involving Trademark Authorization and Confirmation explicitly provides that “where the trademark actually used is slightly different from the registered trademark, but its distinctive features have not been altered, such use may be deemed use of the registered trademark.” In addition, under the provisions of the 2021 Trademark Examination and Adjudication Guidelines on cancellation of registered trademarks for three consecutive years of non-use, the following circumstances shall not be deemed use of a trademark in the sense of the Trademark Law: … (3) use that alters the main part and distinctive features of the registered trademark.
In other words, under the non-use cancellation system for three consecutive years of non-use, the requirements on the form of trademark use are relatively relaxed. Where there are minor adjustments that do not alter the main part and distinctive features of the trademark, such use shall be deemed lawful use of the registered trademark. Once the distinctive identifying part of the registered trademark has been altered, and the difference from the approved form of registration is significant, such use does not constitute use of the original registered trademark.
In its judgment in case (2018) Jing Xing Zhong No. 3983 concerning the cancellation of the “NATURONE” trademark, the Beijing High People’s Court held that the trademark sign actually used by the registrant was “无限能NATURONE” (“Unlimited Energy NATURONE”), in which the Chinese characters “无限能” (“Unlimited Energy”) constituted the distinctive identifying part. Consumers would find it difficult to associate “无限能NATURONE” with the disputed trademark “NATURONE” as indicating the same source of goods. The registrant’s use altered the distinctive features of the disputed trademark, and therefore the registration of the disputed trademark was cancelled.
In summary, enterprises should file applications for registration based on the trademark sign they plan to use, and the trademark actually used should be consistent with the registered form. If the trademark specimen needs to be significantly altered at a later stage, a new application for registration should be filed in a timely manner.
Q3
[Overall Strategies for Responding to Non-use Cancellation] How can enterprises reduce the risk of non-use cancellation in their daily operations? How can they effectively respond to non-use cancellation actions initiated by others?
Since any entity or individual may, pursuant to Article 49, Paragraph 2 of the Trademark Law and Article 66 of the Implementing Regulations of the Trademark Law, apply to the Trademark Office for cancellation of a registered trademark on the ground of three consecutive years of non-use, the registrant cannot prevent others from filing cancellation applications, but may reduce the risk of cancellation through lawful use and active maintenance.
First, plan trademark registration and use in advance. Before filing an application for registration, the specific form of use of the trademark and the specific goods/services on which it will be used shall be clearly determined, and the same trademark specimen and goods/services shall be adopted in the registration application. After registration, corresponding evidence of use shall be retained.
Second, establish an internal evidence collection mechanism. Under China’s non-use cancellation system, the evidentiary requirements focus on sales and advertising documents, and emphasize the integrity of the chain of evidence. It is advisable to coordinate the legal, marketing, sales, accounting and logistics departments within the enterprise to retain evidence relating to advertising, exhibitions, sales, trade and logistics involving the trademark, and to ensure consistency and correlation among materials from different departments.
Upon receipt of the Notice on Submission of Evidence of Use in Non-use Cancellation for Three Consecutive Years issued by the Trademark Office:
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If the registrant decides to defend the trademark, it shall, within the statutory time limit (two months from the date of receipt of the notice), submit a response to the Trademark Office, explaining the legitimate reasons for non-use of the disputed trademark during the relevant period (usually objective circumstances such as force majeure, policy restrictions, bankruptcy liquidation, etc., together with supporting documents), or submit relevant evidence of actual use of the trademark.
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Where the disputed trademark is relatively important but the evidence of use is insufficient, the registrant shall still collect relevant evidence of use for submission in its response to the Trademark Office, and is also advised to conduct a background investigation on the cancellation applicant and, where appropriate, seek a settlement.
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Where, after internal inquiry upon receipt of the Notice, it is found that the trademark has indeed ceased to be used commercially, the registrant shall further conduct a legal case check to confirm that the trademark has not been used to initiate trademark disputes or infringement actions against others. Thereafter, the registrant may choose not to submit a response to the Trademark Office, in which case the registration of the trademark will be cancelled.
Other Highlighted Q&A Covered in This Chapter:
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[Token Use] Where a registered trademark is subject to a non-use cancellation request for three consecutive years of non-use, and the trademark has been used only to a limited extent in advertisements or exhibitions during the specified three-year period, can the registration be maintained?
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[Non-public Use – Preparatory Stage] Where a registered trademark is subject to a non-use cancellation request for three consecutive years of non-use, and the registrant has continuously carried out preparatory activities for use of the trademark during the specified three-year period and commenced use after the three-year period, can the registration be maintained?
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[Non-public Use – Transactions with Affiliated Entities] Where a registered trademark is subject to a non-use cancellation request for three consecutive years of non-use, and the registrant has used the trademark in transactions with its affiliated companies and retained supporting documents, can the registration be maintained?
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[Licensing or Assignment During the Disputed Period] Where a registered trademark is subject to a non-use cancellation request for three consecutive years of non-use, and the registrant licenses the trademark to others or assigns it to others during the non-use cancellation proceedings, can the registration be maintained?
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[Impact of Trademark Cancellation on the Right to Sue] Where a registered trademark is cancelled on the ground of “three consecutive years of non-use”, can the registrant still bring an action against others for infringement?
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[Impact of Trademark Cancellation on Infringement Damages] Where a registered trademark is cancelled on the ground of “three consecutive years of non-use”, can the registrant still pursue damages for infringement committed during the period when the trademark was valid?
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[Bad-faith Non-use Cancellation and Damages] Where the registrant of a registered trademark suffers loss due to another party’s abuse of administrative trademark procedures by maliciously initiating non-use cancellation proceedings, can the registrant claim damages?
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About the Report:
The Practical Q&A Handbook on Cutting-edge Issues in Intellectual Property is jointly authored by Wolters Kluwer Legal & Regulatory, China, Lusheng Law Firm and its strategic partner Rouse, and was officially released online in November 2024. The handbook is compiled by more than 30 senior intellectual property experts, and selects 108 intellectual property questions divided into 11 chapters, comprising a total of 100,000 words of in-depth analysis. It focuses on the most cutting-edge issues of concern in the industry, comprehensively covering key areas such as patents, trademarks, copyright, trade secrets, unfair competition on the internet, intellectual property capital contribution, and punitive damages for intellectual property infringement. In a “Q&A” format, it distills the hot topics of interest to IP practitioners and provides readers with the latest legal interpretations, case analyses and practical guidance.
Since its release, the report has attracted widespread attention and high praise from the industry. In order to better share its highlights, we will continue to select and publish a series of articles featuring key Q&A items from each chapter.
