Guidelines to Proceed Trademark Non-Use Cancellations in China PRC

NUC disputes are heard by TMO at first and then TRAB which are both under China National Intellectual Property Administration, and eventually by courts who conduct judicial review.

Comparing with many other jurisdictions, some major differences can be found, which is the key to have a best understanding over the Chinese trademark practice in this area.

• Who can act as the Petitioner?

Anyone is capable, even if he/she has no interest or dispute toward the registered mark. Accordingly, there is no difference between a domestic entity or a foreign entity, either. This brings some advantages if the Petitioner is not the client’s name, which confuses the Registrant or at least protect the client from standing behind the strawman. That is, for instance, usually we recommend the client approve to use our law firm’s name to act as the Petitioner, which is called anonymous mode.

• Low Threshold: commercial investigation is not required

Whilst a formal report based on commercial investigation about trademark use is required in some jurisdictions, raising a NUC in China only requires an informal online search report produced by the Petitioner’s agent. Such report usually shows search engine results by putting key words like registrant name, mark name or relevant signs, and includes a brief conclusion that no convincing proof of use is found. That is, this low evidentiary threshold is good for petitioners because it’s also reasonably cheap, as well as causing no downside.

• When to Refute Evidences of Alleged Proof Use?

The Petitioner has no chance to refute the Registrant’s evidences during the initial stage, because in order to save time and keep docket as clear as possible, TMO will not forward such evidences to the Petitioner for rebuttal. Thus, if the decision is unfavorable, the Petitioner shall appeal to TRAB who will organize evidence exchange and respect the Petitioner’s observations.

• Deadwood: high possibility of successful cancellations?

Filing a trademark application in China does not require “already-in-use”, causing trademark piracy was horrible and rightful owners’ defensive filing number is crazy. Thanks to the new trademark law enacted as of November 2019, situation is becoming better and better, but the issue is still serious. That is, a significant result is a deadwood of “registered but never used” marks, which leads to about 70% cancellations are successful at the initial stage!

• TMO’s Broad Acceptance vs TRAB’s Strict Criteria

Years and years over, or at least as of 2014, due to a reluctance or an informal policy to cancel registrations, TMO has been lenient in determining whether or not the evidences could establish proper use. For instance, it is not necessary to show use for all goods/services, and showing use for one or two items is sufficient to maintain the whole registration in its entirety. Furthermore, even if the evidences are not strong enough, most examiners would still exercise mercy. As a result of such broad acceptance, some registrations under non-use attack shall not have been maintained.

 Therefore, given the TMO decision of initial stage is not favorable, do NOT give up, because we still have a fair chance to overrule the said decision through review before TRAB. Based on our firm’s own experience, as well as some public statistic reports, more than 50% of such decisions are overruled, because we find significant defects and weak points from the alleged evidences.

•  Cost or Attorney Fee Refunding?

Unfortunately, the losing party is not responsible to pay the winning party’s cost or attorney fee, which is quite different from common law jurisdictions. That is, each party shall pay at its own.

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In most cases, the reason why client decides to have a blocking earlier trademark registration cancelled is because they wish to achieve a granting trademark registration for their own. Considering uncertainty of NUCs, client may hesitate to file their own new applications, or prefer to await until the blocking registration is cancelled. Despite that deferring filing of own application may be wise in other jurisdiction, doing so in China will however cause tragedy. 

Basically, due to the strict first-to-file principle, pre-filing NUC is highly recommended based on two reasons:

1. TRAB will not suspend its review of refusal if the NUC is raised after refusal is issued. However, suspension would be mostly granted if the NUC predates client’s rejected application.
2. China allows and grants duplicate applications even if the same registrant already owns a matured registration, which motivates the registrant to simply do not respond while makes a re-filing application. This would lead to a painful outcome: although the matured registration is cancelled, the registrant still acquires a second fresh registration which predates the client’s own new application.

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Petitioner may choose to cancel a part of the granted goods/services which are exactly conflicting against the client’s interested business, while may leave the remaining part unchallenged. This strategy works best, because: (i) examiners become more willing nowadays to rule in favor of petitioners under such circumstance; (ii) registrant may decide to not respond if the challenged goods/services are no longer within its operation; (iii) usually proceedings could be faster than cancelling a entire registration. Thus, if time is essential, client shall consider this strategy.

Nevertheless, if the target registration is in the name of a pirate or malicious competitor, canceling the entire registration shall be better, or raising two petitions: one partial and another entirety.

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•  Inexpensive and Predictable Costs

Comparing with other jurisdictions, proceeding with a NUC case in China is relatively cheaper, as well as cost predictable because of uncomplicated procedures (see our flow-charts).

• Mandatory Formality Documents

Provided that the client agrees to adopt the above-mentioned anonymous mode, we do not need any documents (e.g., power of attorney, company certificate), and take client’s instructions to act.

However, if the client prefers to show its own name, we shall ask you to provide:

1. A scanned copy of signed power of attorney.
2. For corporate clients, an electronic copy of the company certificate of good-standing, certificate of incorporation, or any other officially certified paper proving company existence.
3. For individual clients, a colorful scanned copy of the passport front page.