Since the trademark right is an intellectual property right whose value is enhanced through actual use and the commercial benefits derived therefrom, the rights owner’s actual use of a trademark occurs out of a commercial need for enhancing and reflecting the value of the trademark.For this purpose, Item (4) of Article 44 of the P.R.C. Trademark Law and Article 39 of the Regulations for the Implementation of the Trademark Law provide that where a registered trademark has not been used for three consecutive years, the Trademark Office can revoke the trademark or order the rights owner to correct its non-use. Moreover, anyone can apply to the Trademark Office for revocation of a trademark, which makes actual use of a registered trademark an essential statutory requirement for maintenance of the trademark right. In other words, the rights owner must use the registered trademark in actual commerce so as to prevent the trademark from being revoked based on non-use for three consecutive years, and to maintain the exclusive right to use the registered trademark.Below the author introduces two trademark revocation cases based on non-use for three consecutive years and analyzes the laws and their application to this type of case.

[Brief Introduction to the Cases]

[Case 1]

In May 2003, the internationally registered No.808033 graphical trademark (i.e. the “Lacoste” crocodile) was granted extended protection within the territory of China under Class 16 for goods such as “advertising posters, books, newspapers and pens”.

In October 2007 an individual named Zhongneng Jin filed a petition with the Trademark Office to revoke the foregoing trademark under Class 16 based on non-use for three consecutive years. The case was decided by the Trademark Office, reexamined by the Trademark Review and Adjudication Board and was granted an administrative judgment by a People’s Court before finally being revoked under Class 16.

The issue in dispute was whether the evidence produced by Lacoste proves its use of the trademark under the specific class. This evidence mainly included the following:

  1. Advertising materials printed by the owner of the Lacoste trademark.

The court held that since such evidence was created with considerable randomness, without further supporting evidence it does not independently prove the conditions of use of the “Lacoste” graphical trademark. Moreover, since the trademark presents by its content that it is used for the advertising of clothing and accessories rather than for goods under Class 16, the evidence is insufficient to prove commercial use of the trademark in the designated class.

  1.  A photocopy of the “Legend of Lacoste” printed by the trademark rights owner; photocopies of the envelope and the packaging box marked with the Lacoste graphical trademark used by the trademark rights owner

The court held that since such materials were printed and produced solely by the rights owner, they can neither prove the specific date nor demonstrate the use of the trademark on goods under Class 16. For this reason, they could not be used as evidence.

  1.  Pages in the magazines ““时尚”, “世界时装之苑” and “财富”” that advertise the Lacoste graphical trademark on clothing.

The court held that since the trademark was not used on goods under Class 16, these materials cannot be used as evidence.

  1. Bills of lading and purchase orders provided by the Lacoste trademark rights owner.The court held that since the bills of lading provide neither the condition of the trademark, information about the user nor information about the use of the trademark in China, they cannot be used as evidence.

[Case 2]

Registered trademark [A] is a combination trademark including Chinese characters, English letters and a figure, which elements are visually independent of each other. The trademark was approved and was registered by Company [A] in November 2001 under Class 7 -- valves (machine parts), air compressors, etc.

In November 2006 Company [B] filed a revocation petition with the Trademark Office on the ground that trademark [A] had not been used for three consecutive years. The case was decided by the Trademark Office, reexamined by the Trademark Review and Adjudication Board, and both trial and appeal judgments were entered in administrative litigation proceedings. The disputed trademark was finally revoked with respect to the designated goods.

The focus issue in this case was whether trademark [A] had actually been used under Class 7 during the period in dispute. Company [A]’s evidence mainly included the following items:

  1.  Original license certificate issued by Company [A] to Company [C]

Although the owner of trademark [A] asserted that the purpose of issuing such a license certificate was to legally and reasonably use the trademark, the court held that the certificate proves only that Company [C] was entitled to use the trademark, not that the trademark was actually used in commerce, and thus cannot prove commercial use of the trademark.

  1. Advertising page of a professional auto parts magazine published in Taiwan

The trademark on the foregoing magazine showed only the figure and the English letters of trademark [A], while the Chinese characters were not included. The court held that since the evidence was generated in Taiwan and written in English, it cannot prove the use of trademark [A] in mainland China, and thus cannot be used as evidence to prove actual commercial use of the trademark in mainland China.

  1. Technical services contract between Company [C] and a large website along with the remittance voucher and invoice.

Since this evidence did not show any information about trademark [A], it cannot prove the use of trademark [A]. Meanwhile, since the relevant materials lacked printed dates, they cannot prove that trademark [A] was used within the designated period.

  1. Two print advertisements provided by Company [C]

Although the logo of trademark [A] appeared in two print materials, it included the figure and the English letters but not the Chinese characters. The court held that the logo was inconsistent with the logo of registered trademark [A], and that only two appearances in advertisements cannot prove Company [C]’s reasonable use of trademark [A] in good faith within the designated period, let alone prove actual commercial use.

[Relevant Provisions]

  1. Parties that can revoke or petition to revoke registered trademarks based on non-use for three consecutive years

Under Chinese law, the parties that can revoke or petition to revoke registered trademarks based on non-use for three consecutive years are: i) the Trademark Office, which can revoke registration under its own authority; and ii) any party that petitions the Trademark Office for revocation of registration.Item 4 of Article 44 of the P.R.C. Trademark Law provides that the Trademark Office can revoke a registered trademark if it has not been used for three consecutive years. In other words, if the registered trademark has not been used for three consecutive years, the Trademark Office can revoke the registration on its own authority.

Article 39 of the Regulations for the Implementation of the P.R.C. Trademark Law provides that anyone may petition the Trademark Office to revoke a registered trademark under any of the circumstances stipulated in Item 4 of Article 44 of the Trademark Law if it explains the relevant facts. The Trademark Office shall notify the trademark registrant and order it to submit evidence of use of the trademark before the revocation petition was filed, or justification of non-use, within 2 months of receiving the notice. If the trademark owner fails to submit such evidence or if the evidence is invalid and the trademark owner fails to justify non-use, the Trademark Office shall revoke the registered trademark.

  1. Definition and Standard for “Use” of a Trademark

Article 3 of the Regulations for the Implementation of the P.R.C Trademark Law provides as follows:

“The use of trademarks stipulated in the Trademark Law and the present Regulations refers to affixing trademarks to goods, goods packaging or containers as well as transaction documents, or using trademarks in advertisements, exhibitions and other commercial activities.

”According to the Trademark Review and Adjudication Standards jointly promulgated by the Trademark Office and the Trademark Review and Adjudication Board, evidence proving the use of a disputed trademark should display (1) the trademark; (2) its use on designated goods and/or services; (3) the user; (4) the date of use; and (5) the territory of use. This evidence should be able to prove that the disputed trademark has been publicly, actually and legitimately used in commercial activity.

Article 44.1 of the P.R.C Trademark Law provides for item (1) “display the trademark” that where a trademark registrant alters a registered trademark without approval, the Trademark Office shall order it to restore the original trademark by a specified deadline or face revocation. Therefore, to avoid the risk of revocation, use of the trademark should be as consistent as possible with the registered trademark, especially in that the use of a combination trademark should avoid using only a part of the registered mark. Furthermore, according to the Trademark Review and Adjudication Standards, the publication of registration details about the trademark or the declaration of the owner of a registered trademark that he/she has the exclusive right of use the trademark shall not be considered use of a trademark under the P.R.C. Trademark Law.

The Trademark Review and Adjudication Standards also provides for item (2) “display use on designated goods and/or services” as follows:

  1. The use of the trademark on designated goods is specifically presented in the following manner:
  1. Attaching the trademark to a product, package, container or tag of the product by means of direct adherence, inscription, branding or knitting, or applying the trademark to the product’s affiliated signs, product manuals, introduction brochures and price lists;
  2. Applying the trademark to transaction documents relating to the sale of the product including product sales agreements, invoices, instruments, receipts, inspection certificates for import and export commodities, and customs declaration forms;
  3.  Using the trademark in media such as radio or television, publishing the trademark in publications in public circulation or advertising the trademark or the product using the trademark by means of billboards, mailers or other means of advertising;
  4. Using the trademark in exhibitions or expos, including handing out printed materials and other materials containing the trademark at an exhibition or expo; and
  5. Other methods of using the trademark that comply with the law.
  1.  The specific presentation methods for a trademark on designated services include the following:
  1.  Applying the trademark in service locations including descriptive brochures, signs at service locations, shop decorations, staff uniforms, posters, menus, price lists, lottery tickets, office stationery, letters and other articles related to the designated services;
  2.  Applying the trademark to documents and materials indirectly related to the services such as invoices, remittance documents, service agreements and repair and maintenance certifications;
  3. Using the trademark in media such as radio/television, publishing the trademark in publications in public circulation, or advertising the trademark or the service that uses the trademark by means of billboards, mailers or other means of advertising;
  4. Using the trademark in exhibitions or expos, including handing out printed materials or other materials containing the trademark at an exhibition or expo; and
  5. Other means of using the trademark that comply with the law.
  1. Definition of “Due Cause”

The Trademark Review and Adjudication Standards provide a detailed definition of the term “due cause” in Article 39 of the Regulations for the Implementation of the P.R.C. Trademark Law. In accordance with this provision, the following circumstances are due cause for non-use of a trademark:

  1. Force majeure;
  2. Governmental restrictions;
  3. None-use due to bankruptcy and liquidation; or
  4. Other due causes not attributable to the trademark registrant.

[Analysis and Application]

  1.  The use of the trademark must be actual.

Without more, a trademark license contract is insufficient to prove actual use of a trademark. In the foregoing Case 2, Exhibit 1 was the original license certificate, based on which Company [A] licensed trademark [A] to Company [C]. Nevertheless, the court held that this certificate only proved that Company [C] was entitled to use the trademark, not that the trademark had actually entered commercial circulation, and thus the certificate did not support commercial use of the trademark [A]. Accordingly, a license cannot independently establish actual use of the trademark under the Trademark Law.

Furthermore, limited appearances in printed materials are also insufficient to prove actual use of a trademark. In Case 2, Exhibit 4 consisted of two printed advertisements provided by Company [C]. While the court held that the logo therein was inconsistent with that of trademark [A], it also pointed out that “two appearances in advertisements cannot prove Company [C]’s reasonable use of trademark [A] in good faith within the designated period, let alone prove actual commercial use.”

  1. Evidence used to prove actual use of a trademark must satisfy the following six elements at the same time:

According to the Trademark Review and Adjudication Standards, evidence proving actual use of a trademark must conform to all six essential elements. As described above, these elements are (1) the trademark; (2) its use on designated goods and/or services; (3) the user; (4) the date of use; (5) the territory of use; and proof that the disputed trademark has been publicly, actually and legitimately used in commercial activity.

”The foregoing standards are applied strictly in practice. Using the foregoing two cases as examples:

Exhibit 2 in Case 1 ”a photocopy of the Legend of Lacoste printed by the trademark rights owner” and “photocopies of the envelope and the packaging box marked with the Lacoste graphical trademark used by the trademark rights owner” did not conform to elements (2) and (4) of the six elements, i.e. they showed neither the date of use nor use on designated products, and consequently were not accepted.

Exhibit 3 in Case 1 “pages in magazines “时尚”, “世界时装之苑” and “财富” that advertised the Lacoste graphical trademark on clothing did not show use on designated goods in Class 16. They did not conform to element (2) and could not be used as evidence.

Exhibit 4 in Case 1, “bills of lading and purchase orders provided by the Lacoste trademark owner” did not show any information about the trademark or the user or any information about the use of the trademark in China. They therefore did not conform to elements (1), (2) and (5) and could not be used as evidence.

Exhibit 2 of Case 2, “advertising page of a professional auto parts magazine published in Taiwan” could not prove the use conditions of trademark [A] in mainland China. It therefore did not conform to element (5) and could not be used as evidence.

Exhibit 3 of Case 2, “technical service contract between Company [C] and a large website, along with the remittance voucher and invoice” did not conform to element (1) since the contract did not show any information about trademark [A]; moreover, since the relevant materials lack printed dates, this evidence did not conform to element (4) and therefore could not be used as evidence.

Although Exhibit 4 of Case 2, “two print advertisements provided by Company [C]”, contained trademark A, it included the figure and the English letters but lacked the Chinese characters, and consequently did not conform to element (1); moreover, two appearances in advertisements could not prove Company [C]’s reasonable use of trademark [A] in good faith within the designated period, let alone prove actual commercial use.

[Conclusions]

Admission of evidence proving the use of the trademarks in the two foregoing examples shows that the courts strictly apply the Trademark Review and Adjudication Standards. Evidence proving commercial use of a trademark has to satisfy all six elements of the Standards simultaneously. If it doesn’t, the evidence will not be admitted and therefore can’t be used to prove commercial use of the trademark. Moreover, the objectivity and acceptability of independent publications of the right owners are considered less probative than publications issued by third parties. It is especially worth noting that evidence proving commercial use has to show a correspondence between the trademark and the goods. For example, although the designated goods in the Lacoste case are books, simple submission of books and papers printed with the trademark are not sufficient to prove use under the specific class; instead, the trademark must be used as an advertising symbol for the books. In other words, the books themselves must be the product advertised by the trademark rather than simply functioning as carriers of the trademark.

The courts’ strict adherence to the Trademark Review and Adjudication Standards may lead to a situation where some right owners, in order to protect their relatively well-known trademarks, register defensive trademarks under classes that are not related to their major business fields, only to see them ultimately revoked (one typical example is the Lacoste trademark under Class 16). Nevertheless, such revocation is consistent with the spirit of the trademark law, since the value of a trademark is accumulated through use, without which value cannot be created or preserved.

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