Kelly Sánchez May 31 2021 Trademark cancellation for lack of use: not always a reliable strategy OMC Abogados & Consultores | Intellectual Property - Peru Kelly Sánchez Intellectual Property IntroductionAndean Community legislationINDECOPI precedentsCommentIntroductionA trademark owner's main obligation is to use its trademark. This obligation is not necessarily always fulfilled, particularly because the Trademark Law – unlike Anglo-Saxon law – is constitutive and obeys the principle of registration, which means that the trademark need not be in use to achieve registration. This enables economic agents to obtain a registration for a trademark that has never been and will never be used or that will have only a temporary use.For this reason, many jurisdictions have regulations that address trademark cancellation procedures for lack of use, which enable economic agents that genuinely intend to use a trademark to obtain its registration. Cancellation for lack of use is also a means of defence for oppositions and one of the most-used strategies to avoid registrations being denied because of the existence of already-registered trademarks that are identical or similar.Andean Community legislationArticle 165 of the Common Regime on Industrial Property of the Commission of the Andean Community (Decision 486) states as follows:at the request of an interested party, the Competent National Office shall cancel the registration of a trademark that, without justified reason, had not been used by its owner, by a licensee or by another person authorized to do so in at least one of the Member Countries, during the three consecutive years preceding the date on which the cancellation action was initiatedThis regulates total cancellation. Such article also states as follows:when the lack of use of a trademark only affects one or some of the products or services for which the trademark is registered, a reduction or limitation of the list of products or services included in the registration shall be ordered, eliminating those for which the mark had not been used; for this, the identity or similarity of the products or services must be taken into account. This regulates partial cancellation. It suggests that decisions on partial cancellation must take into account not only the suitability of proofs of use presented by the owner, but also the identity or similarity of the goods or services distinguished.Due to the complexity of the interpretation of partial cancellation, the Trademark Office of the National Institute for the Defence of Competition and the Protection of Intellectual Property (INDECOPI) has issued two mandatory precedents in this regard.INDECOPI precedentsPETALO resolutionThe first precedent regarding partial cancellation was Resolution 1183-2005 (TPI-INDECOPI), which partially cancelled the registration of the trademark PETALO. Such trademark originally distinguished "toilet paper, paper towels, napkins and paper handkerchiefs, cleansing paper, toilet paper and similar and other articles" in Class 16 of the Nice Classification. Following Resolution 1183-2005, the trademark was limited to distinguishing only "toilet paper".The office established the following criteria for the analysis of the identity or similarity of the goods and services:If the use of the trademark is proven for a good or service that was specifically detailed in the list, the registration for that specific good or service will be kept.If the use of the trademark is proven for a good or service that was not specifically detailed in the list, but belongs or is similar to the other goods or services included in a genre that was specifically described in the list, the registration for that genre will be kept.CORONA resolutionThis precedent was modified by the second and current precedent, Resolution 2076-2016 (TPI-INDECOPI). This resolution partially cancelled the trademark CORONA, which originally distinguished "exclusively hand tools" in Class 8 and was limited to distinguishing only "bow saws for butchers".In the first instance, as the owner had demonstrated the use of the trademark for "bow saws for butchers", a product that was included in the hand tools genre, the cancellation was declared ungrounded. However, the petitioner appealed, claiming that as the use of the trademark had been demonstrated only for "bow saws for butchers" but not for hand tools in general, the trademark should be partially cancelled, limiting it to distinguish only that specific good.This simple but strong argument led the office to add a new criteria since, in practice, it had been noted that the products or services in each genre were not always similar. For example, nail files and side arms were also included in the genre of 'hand tools' in Class 8.In this regard, the court established that if the use of the trademark is proven for a good or service that was not specifically detailed in the list but is included in a genre that was specifically described in the list and the good or service is not similar to the other goods of services of that genre, the registration will be kept only for that specific good or service.This decision was favourable for the petitioner since it could subsequently register in its favour the trademark CORONA to distinguish "exclusively nail clippers" in Class 8. Such trademark had been denied in the first instance due to the existence of a risk of confusion with the registered trademark CORONA that distinguished "exclusively hand tools" in Class 8.In the examination of registrability, it was initially determined that as well as the trademarks sharing as their only relevant denomination the word 'corona', which generated a phonetic similarity, there was also a link between the products, since nail clippers were included in the genre 'hand tools'. However, once the trademark was partially cancelled and limited to distinguishing only "bow saws for butchers", this link ceased to exist and the applicant could obtain the registration of the trademark CORONA to distinguish "exclusively nail clippers" in the second instance.CommentThis case raises the questions of whether cancellation is the most reliable strategy to obtain the registration of identical or similar trademarks that are already registered on behalf of other owners, and whether such cancellation is misleading to consumers. To answer these questions, it is important to point out that the INDECOPI Trademark Office tends to prioritise the rights of consumers over any other parties' rights, which is why the examination of registrability regarding the linking of products or services is strict, particularly if they are in the same class or genre. Further, because of the specialty principle whereby trademarks protect only those goods or services for which they were registered, the coexistence of identical or similar trademarks is possible as long as no link exists between the goods or services for which they are registered.For example, in Resolution 0007548-2018 (DSD-INDECOPI), issued on 20 May 2018, the application for registration of the trademark RAE to distinguish exclusively "underwear for men, boys, girls and women" in Class 25 was denied due to the existence of the trademark and device RAE, which was registered on behalf of another owner to distinguish "only bras" in Class 25.The registered trademark and device RAE, which initially distinguished "clothing, footwear, headgear", was the subject of a cancellation action which the applicant had filed at almost the same time as its trademark application as a strategy to obtain the trademark's registration. However, the owner managed to prove the use of its trademark for "bras", a product that belongs in the genre of "clothing". Therefore the authority in the second instance applied the aforementioned precedent and decided to partially cancel the registration, limiting it to distinguish "only bras".Unlike the CORONA trademark case, this partial cancellation was unfavourable for the applicant, since the product that remained in force was linked to the products of its requested trademark, hence its application was denied.Although the precedent is debatable, it should not be taken as an incentive for the coexistence of identical and similar trademarks with different owners, which would create a risk of confusion for consumers, but rather as a way of reflecting a more accurate reality of trademark use, favouring fair competition in the market.Finally, as parties may not have the luck of the CORONA trademark applicant, it is always advisable to perform market studies relating to a trademark before starting a cancellation action. Even though such studies entail extra expenses, they help to avoid cancellation strategies failing, as in the case of the RAE trademark.For further information on this topic please contact Kelly Sánchez at OMC Abogados & Consultores by telephone (+51 1 628 1238) or email ([email protected]). The OMC Abogados & Consultores website can be accessed at omcabogados.com.pe.