China trade marks: The rising importance of trade mark use in China

February 27 2018

People have generally thought of China as a first to file country in the area of trade mark protection. Filing and registration of trade marks are emphasised in the jurisdiction. However, new trade mark law that came into force on May 1 2014 shed more light on trade mark use. Trade mark use, if not fundamental in China, is becoming more and more important and may be even more significant in the future.

Use is not a precondition for registration

In China, use of a mark is not a precondition for registration. However, Article 4 of Chinese trade mark law states that "any natural person, legal person, or other organisation that needs to acquire the right to exclusively use a trade mark on the goods or services thereof in the course of business operations shall apply to the Trademark Office for trade mark registration." Though use is not a precondition for registration of a trade mark in China, this provision implies that the applicant should have the need and intention to use a trade mark or service mark.

What constitutes use of a trade mark?

According to Article 48 of trade mark law, "trade mark use refers to the use of a mark on commodities, packages or containers of merchandise and commodity trading instruments, or the use of marks in advertisements, exhibitions and other commercial activities for the purpose of identifying the source of the goods." For service marks, the law does not provide a separate definition, but according to Article 4, "the provisions of this law regarding trade marks are applicable to service marks as well." So, in a similar way to the definition in other jurisdictions, a trade mark or service mark should be used in commerce and the marks should perform the function of identifying the origin of the goods/services.

Trade mark use in China

1. A prior used mark may exclude registration of another party's application for the same or similar mark on the same or similar goods/services.

According to Article 32 of the country's trade mark law, if a party uses a mark for a period of time and has acquired a reputation using it, the prior used mark may be able to prevent another party's application for the same or a similar mark on the same or similar goods.

2. A prior used mark may exclude another party's application for the same or similar marks for the same or similar goods/services filed the same day but without use or used later.

If two or more parties file the same or similar marks on the same day for the same or similar goods/services, the party who uses the mark first will get the mark.

3. Use of a registered mark is able to maintain the registration in non-use cancellation cases.

As a mechanism to eliminate unused trademarks, according to the law, if a registered mark stops being used for over three years, any party may file non-use cancellation against the mark. Effective use evidence will be able to maintain the registration.

4. Prior use of a mark may be used as defence in a trade mark infringement action.

If a trade mark infringement action is brought by a trade mark registrant, use of the mark by another party prior to the application date of the registered mark can be a defence, and the user of the trade mark may continue using the mark in the same scope with an additional identifier added, if necessary.

5. Use of a registered mark is a basis for claiming damages in trade mark infringement actions.

In trade mark infringement actions, if the defendant asserts that the registrant is not using the mark, the court may require the registrant to submit use evidence for the last three years. If the registrant cannot submit evidence to prove its use of the mark, it is not entitled to damages as the court takes the view that no losses have been caused.

Issues, recent developments and the future

As a major part of the trade mark protection system in China, the Trademark Office and its higher level administration the State Administration for Industry & Commerce (SAIC) have realised an important problem needs to be solved urgently. This is that potentially only a small portion of existing marks are in actual commercial use. One of the problems is that these existing marks will block new applications where the trade mark is intended for use. Currently, about one third of new applications are refused for registration, and many of the refusals are due to prior marks. Another serious problem is that many marks are held by trade mark dealers. They register the marks for sale or even for blackmailing the real brand owner.

An article entitled SAIC Opinion on Deepening the Reform of Trademark Registration and Enhancing the Efficiency of Trademark Registration just released by the SAIC on November 17 2017 mentions that to solve this problem, the Trademark Office is studying the possibility of requiring use evidence at a certain point after registration of a mark, or at the time of renewal for the next step amendment of the law, with the hope of increasing the cost of maintaining a trade mark registration that is not in use or making it impossible.