The trademark "MIRRO", of the French company SEB was the object of an application for cancellation based on alleged non-use for three consecutive years. SEB successfully resist such application even though the trademark was used in the context of an OEM manufacturing.

Legal and Regulatory Background

Article 44 of the 2001 version “Trademark Law” stipulates that:

Where any person who uses a registered trademark has committed any of the following, the Trademark Office shall order him to rectify the situation within a specified period or even cancel the registered trademark:

(4) where the registered trademark has ceased to be used for three consecutive years.

Case Summary

On October 11, 2012, a company named Seven·Seven Co., Ltd. filed with the China Trademark Office (CTMO) a cancellation application against the trademark No. 684783 “MIRRO” (the “Reviewed Mark”) registered by SEB S.A. on the designated goods of “cooking apparatus and instruments, roasting apparatus, cutlery (except knives, forks and spoons), oven utensils, beverage utensils and utensils used to serve dishes, all the above not made of precious metal” in Class 21, based on alleged non-use for three consecutive years. The period covered was October 11, 2009 to October 10, 2012

SEB submitted the evidence of use of the Reviewed Mark via OEM activities in China during the said period.

On December 10, 2013, the CTMO ruled that the adduced evidence was inefficient and canceled the Reviewed Mark.

On January 10, 2014, SEB appealed to the Trademark Review and Adjudication Board (TRAB) for review based on the grounds that the use of a trademark in OEM activities does comply with the definition of "use" as provided in the Trademark Law, and should be recognized as valid use to defend against a cancellation application for non-use. To prove that point, SEB submitted complete sets of documents produced during OEM procedure from placing orders to receiving goods, and actively participated in the evidence disclosure procedure.

On January 19, 2015, the TRAB overturned the CTMO decision and sustained the registration of the Reviewed Mark.

The TRAB specifies that the use of a trademark refers to the commercial use of such trademark, including affixing the trademark to commodities, commodity packages or containers, as well as using it in commodity trading documents, advertising, exhibitions and other commercial activities.

The TRAB further elaborates that the legislative intention of the 2001 version of the Trademark Law[1] to cancel a registered trademark not used 

for three consecutive years is to encourage the registrant to put the trademark into genuine and active use so as to make the registered trademarks fulfill its function. Even if the OEM products do not enter market circulation in mainland China, if the use of the trademark in the OEM process is denied as trademark use in the sense of the Trademark Law, it will definitely limit the development of the OEM industry and will go against the policy of expanding foreign trade.

Based on the above reasoning, the TRAB decided to maintain the registration of the Reviewed Mark.

WAN HUI DA represented SEB in the trademark cancellation and subsequent review procedure.

Comments:

In China, whether or not the use of trademark in OEM activities shall be regarded as "use" in the sense of the Trademark Law, is the object of intense controversies.

According to some views, since the OEM products are exclusively for export and do not enter the Chinese market, the trademark can not fulfill its function as identifier of the source of the goods, and thus such use should not be regarded as use in the sense of the Trademark Law. Others consider that the trademark use in OEM activities corresponds to the circumstance described in Article 3 of the Old “Implementing Regulation of Trademark Law” (2002 version)[1]: “The use of trademarks refers to affixing trademarks to commodities, commodity packages or containers as well as using trademarks in commodity exchange documents, advertisements, exhibitions and other commercial activities”, and consider further that the operators involved in the production and transportation of the OEM products in China are the relevant public of such goods and that the OEM products have entered the market in China.

In this case, the TRAB explicitly endorses the latter opinion, which conforms to the Court judgments on the cancellation cases against the trademark “SCALEXTRIC” of Hornby Hobbies Limited and the trademark “KA SI TE in Chinese” of DAOZHI LI YU.

In this case, besides submitting complete set of documents produced during the OEM procedure and affidavits provided by SUPOR (affiliated company of SEB) to prove the real use of the Reviewed Mark, SEB also based its argument on the legislative intention of the Trademark Law on non-use cancellation, on the actual loss of business interests of the trademark registrant, and finally on the prejudice that the OEM enterprises may suffer if the Reviewed Mark is cancelled. This argumentation was supported by the TRAB.

This case confirms that trademark use in OEM activities is not excluded from “trademark use” in the sense of Trademark Law. As long as the use evidence forms a complete evidence chain, OEM activities can maintain a registered trademark.