How to defend against non-use cancellation attacks

Last week we outlined the critical legislation for rights holders to understand should they face a non-use cancellation attack (see “Understanding the legislation that governs non-use cancellation attacks”). Here we take a deep dive into effective, comprehensive strategies that can be employed should trademark holders have to defend themselves against such an action.

Best practice in the initial stages of evidence

To convince the examiners to allow the challenged mark to remain in use, it is crucial to correctly understand the essence of the goods or services in the application for cancellation, especially for the sub-class that they fall under. Then, collect use evidence with a targeted and comprehensive perspective. Further, try to collect the most effective and helpful evidence to form a complete evidence chain. This could include:

• evidence that reflects the trademark samples applied for, such as pictures of the goods/services themselves, the packaging, promotional materials, commercial advertisements and exhibition scenery;
• evidence of the whole production and operation process for the goods or services, including any relevant licence access documents necessary for business, any contracts for the sale of goods or the provision of services, and actual use evidence such as receipt, payment and delivery documents, invoices, service process or outcome documents; and
• a general introduction to the production and operation of the trademark registrant and the licencee (while these introduction contents are not necessary to form a single trademark use evidence chain, they are conducive to showing that the rights holder has carried out normal operations) including the brand history, business fields, production and revenue data and other information, which will help to minimise questions about symbolic use.

However, it should be pointed out that these suggestions are based on the presumption that there is evidence of trademark use presented within the specified time limit of preparation. If conditions permit, it is best to conduct a full defence according to these standards from the outset. This is not only helpful for achieving a favourable decision from the authorities, but also if the other party initiates the review of non-use cancellation or other follow-up procedures, it will not be necessary to repeat the supplementary collection of evidence. If solid defence material is obtained to maintain the trademark registration, the other party will be less likely to file administrative litigation again and this will help the rights holder to curb the litigation burden.

Back-up strategies in cases of no solid use evidence

In cases where there is no solid use evidence for the trademark, or there are no valid reasons for not using the trademark, is it good practice to use back-up strategies as early as possible.

One option is to offer coexistence agreements in exchange for the other party’s application withdrawal. Most non-use cancellation actions are filed to remove any obstacles to a specific target trademark - given this and assuming that there is some difference between the marks, a coexistence agreement can be used to try to resolve any issues in an amicable way. 

To fully realise this, the applicant of the target trademark must be willing to accept the solution. Second, the coexistence consent document must be officially adopted, so that the target trademark can be registered. It also needs to be tightly linked, so it is best to withdraw the non-use cancellation application before any final decision is made.

New applications under this strategy should be filed in a timely manner. If it seems impossible to reach a coexistence agreement, it is best to consider filing a new trademark application as soon as possible. Provided that the challenged mark is still active, this should be helpful when it comes to streamlining the registration of the new trademark application.

Another strategy is to strengthen the standardised use of trademarks throughout the whole process of production and management and to pay more attention to establishing the evidence pool.

Further, when engaging in business activities directly related to the scope of goods or services designed by the registered trademark, the mark should be fully used as far as possible throughout. Specific attention should be given to the combination of the trademark sample and timestamps such as the header of the business contract, commercial invoices, product packaging, service documents, promotional materials, official network account tweets and newspaper advertisements.

Other considerations

As Chinese Trademark Law does not stipulate the systems of defensive and storage trademarks, many enterprises are choosing to file numerous defensive applications in order to prevent squatters from rush-registering. To minimise the risk of non-use cancellations, applicants should ensure that their goods and services correspond to the core business field and that they prioritse completing the core trademark registration layout on the specific goods or services.

In line with their own development and the degree of correlation with the core and future business expansion (among other factors), applicants can gradually and appropriately file defensive trademark applications. However, it is not recommended to blindly pursue full registration out of actual needs, nor is it recommended to hold a large number of similar trademarks just to reduce the cost of rights protection.

Key takeaways

Registration is the starting point in obtaining exclusive rights protection. The realisation of the true value of a trademark depends on long-term, honest and effective commercial use. Whether it is necessary to apply for registration, which goods or services are designated and how is best to standardise and make full use of them, these issues are still worth considering at the inception of a trademark plan.