The judges at the Beijing Intellectual Property Court demonstrate remarkable diligence in their work. In addition to managing a significant caseload, they remain committed to advancing both theoretical and practical knowledge in the field. Their professional articles serve as invaluable resources for practitioners in intellectual property. Taking the time to read these articles and grasp the judges’ perspectives and judicial practices is highly beneficial. Below is an EN version.
The full Chinese article <从商标“撤三”案件看商标的规范使用> is available at https://mp.weixin.qq.com/s/_wC_2wEJgerHwtYI9lsQbw. Author is Judge Di Zhang of Beijing Intellectual Property Court.
Overview of three year cancellation regulation
As stated in the second paragraph of Article 49 of the Trademark Law, if a registered trademark has not been used for three consecutive years without a valid reason, any person or organization can request the Trademark Office to cancel it. This is known as the “three-year cancellation” of trademarks. Unlike the United States, our country operates under a “trademark registration acquisition” system, meaning that acquiring trademark rights does not require an evaluation of the trademark’s usage or intended purpose. Instead, exclusive rights to a registered trademark for specific categories of goods or services are granted to the first applicant based on the principle of prior application.
Trademarks can include a variety of symbols such as words, images, letters, numbers, three-dimensional shapes, color combinations, and sounds. Although the potential for trademark resources is theoretically unlimited, the practical combinations of recognizable symbols are limited. As the market economy changes rapidly, the exclusive nature of trademark rights can quickly create business value through their use, leading to their scarcity and significance. In this environment, registered trademarks have become both accessible and valuable assets. Without adequate regulation, many trademarks may go unused, which can impede their ability to identify products and take up valuable space for other businesses looking to register trademarks. Furthermore, if owners of unused trademarks file infringement claims against active users, it can lead to losses for those users, violating good faith principles and disrupting normal business activities. The “three-year cancellation” system is designed to remove these inactive trademarks, preventing them from blocking the registration of new ones and regulating the misuse of rights, thus promoting trademark usage and boosting market activity.
The “three-year cancellation” system requires that the term “use” of a trademark within a three-year period be understood according to the definitions provided in the Trademark Law. Article 48 of the Trademark Law, updated in 2013, outlines the acceptable forms of trademark use and emphasizes that such use must take place in commercial activities to indicate the origin of goods. A standard of “real, public, and legal” use has developed in practice. However, trademark owners may not consistently use their trademarks in a uniform way for various reasons, making it difficult to assess whether a contested trademark has been used legally during the following “three-year cancellation” process.
Case 1: Use After Modifying the Registered Trademark Main Part
In the “Weishi” case, the main question was whether trademark No. 902500 “Weishi” was legally used from August 26, 2016, to August 25, 2019. The trademark holder, Beijing Gaojie Shengshi Technology Co., Ltd. (referred to as Gaojie Company), submitted evidence including purchase and sales contracts and invoices for that time frame to the National Intellectual Property Administration. The Administration found that while some documents displayed the “Weishi” trademark, the existence of two different font styles made it impossible to verify that the trademark used in the documents was the one in dispute. Additionally, promotional materials featured the “Weishi Image” trademark instead of the contested trademark, resulting in insufficient evidence to prove that the disputed trademark was used during the specified period. Dissatisfied with this outcome, Gaojie Company filed a lawsuit with the Beijing Intellectual Property Court.
Upon review, it was revealed that Gaojie Company had registered another “Weishi” trademark (No. 18015753) in Class 9, which was applied for on September 30, 2015, and registered on May 7, 2017. The court concluded that although Gaojie Company had registered the No. 18015753 “Weishi” trademark, it had not been approved when the purchase and sales contracts were executed. Despite the inconsistent use of the “Weishi” trademark and the presence of the “Weishi Image” trademark in some promotional materials, the court acknowledged the actual goods used and ruled that the evidence provided by the plaintiff demonstrated legal use of the disputed trademark during the specified period, ultimately overturning the previous decision.
Generally, altering a registered trademark main part requires a new registration application. However, to protect the legitimate rights of trademark owners and avoid unnecessary cancellations, courts may accept minor modifications made for promotional purposes, as long as the essential characteristics remain unchanged. If such changes cause confusion with other registered trademarks or exceed the limits of “not altering significant characteristics,” the evidence of use may not be deemed valid. This judicial reasoning has been supported by precedents from the Beijing High People’s Court in cases like “ASC” and “WEIWEI.” It is crucial to assess the validity of other registered trademarks during the specified period.
Other registered trademarks should be carefully analyzed concerning the actual use of goods or services by the rights holder. Many companies currently register multiple similar trademarks (joint trademarks) for the same or similar goods or services to protect their “main trademarks.” Often, these joint trademarks are not actively used in commerce but serve a defensive purpose. Some scholars argue that joint trademarks should be considered in use based on the main trademark’s usage and should not be revoked. I believe that joint trademarks operate similarly to the registration of a “main trademark” for unrelated goods or services, both acting as strategies to safeguard the “main trademark.” This market strategy is also reflected in the Trademark Law. However, the provisions of the Trademark Law aim to prevent public confusion and maintain market order. If joint and defensive trademarks are not utilized, they should not be exempt from cancellation. China lacks a defensive trademark system, and allowing joint trademarks to remain registered based on the use of the “main trademark” would worsen the issue of excessive trademark registrations, placing an undue burden on trademark examination and management. Furthermore, joint and defensive trademarks are unlikely to effectively protect the “main trademark.” In jurisdictions like Japan and Hong Kong, defensive trademarks are typically limited to well-known trademarks, which do not receive protection under this system if they have not achieved such status. Thus, joint and defensive trademarks merely shift the focus of trademark protection from post-protection to pre-protection. Given that China does not actively recognize well-known trademarks, implementing joint and defensive trademarks is inherently problematic. Article 13 of China’s Trademark Law provides stronger cross-class protection for well-known registered trademarks than for general registered trademarks, adequately addressing their protection needs. In contrast, joint and defensive trademarks, due to their limited identification forms and registration categories, cannot sufficiently protect well-known trademarks. This is also evident in the actions taken by the UK, India, New Zealand, and Taiwan, which have abolished their earlier defensive trademark systems.
Case Two: Use Beyond the Approved Goods or Services of Registered Trademarks
In the matter concerning the registered trademark No. 5953917, “CCTC and Figure,” which is authorized for use in Class 36 services—including capital investment, financial services, financial consulting, trade clearing (financial), real estate agency, real estate management, brokerage, and guarantee—the plaintiff, Zhongjin Bidding Co., Ltd., provided evidence of use during the specified period. This evidence included an “Entrustment Agency Agreement,” “Bid Notification,” “Notice of Payment for Bidding Agency Service Fees,” and invoices for bidding agency service fees, all featuring the contested trademark. However, the defendant and a third party argued that the services referenced in the plaintiff’s evidence did not correspond with the approved services of the trademark and should not be considered valid use.
The court acknowledged that while the “Similar Goods and Services Distinction Table” does not specifically list bidding agency services, these services do involve assisting the bidding party with related matters, which are distinct from the “bidding quotation” service that provides agency services to bidders. In the absence of more closely related services in the Distinction Table, categorizing bidding agency services under the relatively closest “brokerage” service aligns with public understanding and upholds the rights of the trademark owner. As a result, the evidence presented indicated that the disputed trademark was indeed used in the “brokerage” service during the designated period in accordance with trademark law.
However, due to the significant differences in service purposes, targets, methods, and content between bidding agency services and the other services listed—such as capital investment, financial services, financial consulting, and trade clearing (financial)—the evidence was deemed insufficient to demonstrate that the plaintiff engaged in genuine, effective, and lawful commercial use of the disputed trademark in those areas. Therefore, the registration of the disputed trademark concerning the corresponding services should be revoked.
Further analysis
Article 13 of the Trademark Law Implementation Regulations requires that applications for trademark registration follow the established classification of goods and services. According to Article 23 of the Trademark Law, if a registered trademark aims to claim exclusive rights for goods beyond the approved categories, a new registration application must be submitted. However, the classification table cannot cover every possible good or service available in society. As a result, it may be challenging to find a standardized name that accurately reflects the goods or services in use. Trademark owners, either for convenience or due to a lack of understanding of the registration process, may apply their registered trademarks to goods or services that fall outside the approved categories when they expand their businesses.
In the first scenario, this should be seen as a necessity. Trademark applicants have acted responsibly by selecting the closest goods or services when categorizing their applications. Their actual use should be recognized as use of the approved goods or services. However, if there is a clearly appropriate name for the goods or services that was not selected, then the actual use would be considered as use on similar goods or services outside the approved categories, which cannot justify keeping the disputed trademark registration. In this instance, while the “bidding agency services” utilized by the plaintiff do not have a corresponding standardized name in the classification table, they can be likened to “brokerage” services based on their purpose, object, method, and content. Nevertheless, since “brokerage” services are not similar to other approved services, using the disputed trademark in “brokerage” services cannot be extended to other approved services.
In the second scenario, the use of standardized names outside the approved categories can typically only be recognized as the use of an unregistered trademark. Even if the actual goods and services used are similar to those listed in the classification table, this remains true. Allowing arbitrary extensions of “registered trademark use” based on similar goods or services would contravene the relevant provisions of the Trademark Law and its Implementation Regulations, disrupting the order of trademark registration.
Conclusion
For trademark holders, losing a trademark means a significant loss of rights, which can have serious implications. The purpose of the “three-year cancellation” system is not to punish trademark owners. In practice, courts use the classification table for goods and services as a guideline rather than a strict rule; they take into account the nature of the goods or services, consumer perceptions, industry norms, and other relevant factors. In the “Shark Graphic” case, both the approved “glasses” and the actual “eyeglass frames” have standardized names and are considered similar goods. Although the trademark owner did not exercise due diligence when applying for the trademark, the court acknowledged the close relationship between eyeglass frames and glasses, allowing the trademark for “eyeglass frames” to also cover “glasses.”
Many scholars believe that the “three-year cancellation” system is not meant to regulate the standardized use of registered trademarks. However, I disagree. As noted earlier, China has a “trademark registration acquisition” system that meets the demands of our rapidly evolving market economy by clearly defining rights and managing registered trademarks effectively. Nonetheless, this system has its drawbacks, leading to many trademark registrations that are not actively used in the market, resulting in trademark hoarding, sales, or malicious litigation that disrupt normal business operations. The rise of collective and defensive trademarks seeks to address these issues, but the increase in such registrations can worsen the problem. Given the limited resources for administrative management, the “three-year cancellation” system should play a crucial role in regulating the proper use of registered trademarks, ensuring that trademarks are revoked when necessary to maintain an efficient trademark management system and promote a fair competitive market environment.
