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The value of a trademark lies in its use. What are the precautions when providing evidence of trademark use?

The value of a trademark lies in its use. What are the precautions when providing evidence of trademark use?

1. Whether a trademark that has been successfully registered can be revoked? The answer is YES.

According to Article 49 of the Trademark Law of the People’s Republic of China, Where a registered trademark is becoming a generic name in a category of approved goods, and the mark has not been used for a period greater than three years without any justifiable reasons, any organization or individual may request that the Trademark Office make a decision to cancel such registered trademark. The Trademark Office shall make a decision within nine months from its acceptance of an application for the cancellation of a registered trademark due to nonuse. If an extension is needed, upon the approval of the department of industry and commerce administration under the State Council, the time limit can be extended for a further three months.

Please note that the above Article states that “any organization or individual” has the right to revoke, and not necessarily to have prior rights, therefore, it can maximize and expand the scope of applicants for revocation and also serve as a “nation-wide” role of supervision. As such, after obtaining a trademark certificate, whether you can enjoy the protection under the law without any concern, the answer is not necessarily yes. The value of a trademark lies in its use. The purpose of the 3-year-nonuse revocation of a trademark is to encourage trademark owners to utilize their trademarks, to exert their trademark functions and to avoid the idleness and waste of trademark resources. Therefore, it does not mean that after registration of a trademark can be carefree, but they must be actively used and placed in the market or circulation.

With the booming economy and the continuous optimization of trademark applications, more and more companies choose to protect their rights by having an agent. In the first half of 2018, the cumulative number of trademark applications in China reached 31.428 million, and the number of valid registered trademarks reached 16.807 million. In order to maintain their rights, companies have to carry out various “defensive trademark registrations”, however, most companies tend to ignore the use of these defensive trademarks or have no conditions to use them, resulting in a large number of trademarks being idle. For example, the renowned Tencent has a Penguin graphic trademark, when it comes to the case against上海仟果企业管理有限公司, given to the three-year idleness of the trademark, Tencent is unable to provide sufficient evidence of its use of the trademark. Ultimately, Tencent faces the risk of revocation of the trademark.

2. In practice, the success rate of three-year idleness trademark revocation is very high. The incomplete statistics show that more than half of revocation applications of trademarks have been succeeded. It is necessary to pay attention to the use of a trademark. Here are some tips for the precautions:

With reference to the specific details of the case and all evidence, normally, evidence within a non-designated period, evidence of the trademark review, self-made evidence (such as photographs) and only use the trademark in a contract but no actual performance, etc. are not the actual use of a trademark. A screenshot on the website which has contained the trademark will not be perceived as the evidence of the actual use of a trademark; Self-made evidence likes the receipts of delivery and invoices which are the internal records will not be admissible as well; Product’s packing, business cards and posters cannot prove as an evidence as they cannot directly reflect the product circulation in the market. Therefore, such evidence will not be admissible upon the revocation application to prove the actual use of a trademark. A simple contract, for example, a license which only contains a simple statement from party A to party B, in order to make it possible to be admitted as evidence, basic information of both parties should be included, namely names, address, telephone number, trading objects, transaction amount, terms applied upon breach of contract and dates etc.

 So, how should we prepare?

(1) First of all, the contract is the best proof and the easiest for the parties to provide. Given that the contract is signed and stamped with both parties, the contract is formal and complete. For stronger proof in evidence, a contract which contains the transaction amount and higher monetary worthiness will be much persuasive.

(2) The invoice should be used in conjunction with the contract and transaction records. Invoices are credible evidence as they are searchable and reliable. However, normally it will not show the name of the trademark, therefore, it is best to provide the transaction records and contract in pair. The invoices, contract, transaction records correspond and the trademark name appears in the contract, which will be admitted as valid evidence. The validity of the above-mentioned evidence should be within 3 years.

(3) Product photos are used in conjunction with processing contracts and advertising contracts.

(4) The photo of the exhibition is used together with the exhibition contract. Many companies provide photos of the exhibition, which reflect the name of the brand and also the products. However, this is not a proof of date, so it should be used in conjunction with the contract of participation. It will be much better if the invoice can be provided.

(5) The evidence of notarization, which is the proof certified by state organs and social groups, is relatively in higher credibility.

Some trademarks, due to special circumstances, do not exist in contracts and invoices. However, there are records which are publicly assessable and prepared, for example, some social platforms such as WeChat, Weibo and Taobao. The creditability of screenshots of the above-mentioned platforms are not high, therefore, it requires notarization. Notarization can certify the authenticity of the above-mentioned evidence, which enhances the creditability of the evidence.

Benny Kong & Tsai © 2023

Benny Kong & Tsai, Solicitors

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