Based on the recent official notices issued by the CNIPA (China National Intellectual Property Administration) about non-use cancellation cases, applicants are now required to submit more stringent evidence to prove that the target trademark has not been used, including:
- Basic information about the trademark registrant, including business scope, operational status, and trademark registration details.
- Evidence of on-site investigation report.
- Evidence from online platforms, industry-specific websites related to the goods or services for which the trademark is registered, and other platforms. The search results should include continuous screenshots of the first five pages from each platform, with no less than three platforms being searched.
The non-use cancellation procedure was initially designed to clear idle trademarks, but this new practice appears to contradict its purpose.
Surge in Non-Use Cancellation Cases
The new practice aims to curb the misuse of the cancellation procedure by increasing the applicant’s burden of proof. However, the surge in cancellation cases has underlying reasons, and simply increasing the burden of proof fails to address these issues.
A large number of marks
At the end of 2024, the number of valid trademark registrations in China reached 47.62 million. With the limited availability of registrable trademark elements, the likelihood of new applications being similar to existing trademarks increases as the number of existing trademarks grows. If many zombie trademarks (an abandoned trademark from a brand or company which a new enterprise with no affiliation to the former brand revives) occupy these limited resources, market entities would struggle to obtain suitable new trademarks. Based on our experience, a new trademark application often must overcome at least two to three prior cited trademarks, and in some cases, even more than ten, to be approved for registration.
Limited ways to overcome the prior cited trademarks
At the end of 2021, the CNIPA strictly reviewed the coexistence agreement/letter of content and excluded the possibility of waiving prior cited marks. Non-use cancellation has become the most feasible option for dealing with these marks, leading to a surge in cancellation cases.
Hard to clear idle trademarks
Even though the number of cancellation cases has surged sharply, most cases still result in full or partial cancellation of the target trademarks and only a small proportion of trademarks are maintained.
This indicates that many idle trademarks act as barriers to market entry. The current trademark system lacks mechanisms to require trademark registrants to actively use their trademarks or the administrative authorities to clear up idle trademarks effectively.
As a result, the regulatory and supervision responsibilities of trademark use are delegated to market entities (i.e., trademark applicants and cancellation applicants) through the cancellation procedure.
It is unfair to force trademark applicants to clear zombie trademarks through the cancellation process while increasing their burden of proof. This would lead to an imbalance of rights and obligations.
Possible Solutions
Strengthening the obligation of trademark registrants to actively use their trademarks and enhancing administrative supervision
The draft revision of the PRC Trademark Law in 2023 introduced a use commitment requirement in Article 5. This requirement requires trademark applicants to promise that the trademark will be used within three years of registration. This requirement reinforces the obligation to use trademarks and reflects the legislator’s determination to promote actual trademark use.
The draft also requires registrants to periodically submit statements of trademark use in Article 61, providing a basis for the burden of proof. Registrants should be responsible for their use, rather than placing the burden on cancellation applicants.
Further, it is suggested that the consequences of non-use be detailed: registrants who fail to fulfill their use commitment should be included in the list of abnormal business operations and restricted from applying for new trademarks. Professional bans should be established for those who maliciously submit false use evidence. Increasing the cost of non-compliance will force registrants to fulfill their use obligations.
Providing multiple solutions in overcoming prior trademarks
As a market-oriented solution, the coexistence agreement, which used to play a significant role in waiving citation objections, should be reconsidered as a solution to the conflict between later applications and prior rights when trademark resources are highly saturated and the non-use cancellation procedure encounters difficulties in distributing the burden of proof.
When the similarity between a newly applied-for trademark and a prior trademark is not very high, a coexistence agreement can prevent both parties from engaging in an all-or-nothing confrontation. Although an unregulated agreement may harm public interests and cause confusion, the CNIPA may reduce such risk by clarifying the specific requirements and examination standards for coexistence agreements rather than being reluctant to consider them a solution.
Strategies
Conducting searches to check the use of the target trademark is highly recommended before filing a non-use cancellation. The searches against Chinese companies as registrants are advised to be conducted at least through the National Enterprise Credit Information Network (the official Chinese enterprise information release channel), Baidu search engine (the most popular Chinese search engine), and major e-commerce platforms like Taobao and JD.com. These searches can help clients understand the use status of the target trademark, collect evidence to meet the CNIPA’s requirements of evidence proof of non-use in cancellation cases, and increase the chances of success in cancellations.
The requirement to provide evidence of an investigation report is unreasonable and may significantly increase the cost of filing a non-use cancellation. Some local trademark agencies have already communicated the issue to the CNIPA through the Trademark Association, and the CNIPA may soon release more explicit guidelines. Under current circumstances, clients may initially file a cancellation based on the aforementioned search results and further supplement the investigation reports should an official notice be issued.
