Does “political restriction” justify inactive marks?
ASection 49 of the Trademarks Act provides that “Where a registered mark serving as a generic name for the designated goods remains unused for three consecutive years, any organization or person may apply to the Trademark Office for its cancellation”.
The purpose of cancellation is to encourage and urge trademark owners to actively use their trademarks and prevent idleness or hoarding of trademarks, in order to stimulate trademark resources and ensure sound and orderly functioning of the trademark system.
In practice, requesting cancellation of any unused trademark registered for three years has become an unavoidable option to eliminate existing obstacles in trademark applications. Many inactive brands have been deregistered. However, there are also many scenarios where trademark owners failed to use their registered trademark during the designated period through no fault of their own.
Section 67 of the Trademark Law Enforcement Regulations provided the following four justifiable reasons as described in Section 49 of the Trademark Law: (1) force majeure; (2) government policy restrictions; (3) liquidation of bankruptcy; and (4) other justifiable reasons not attributable to the trademark applicant.
Article 20 of the Opinions of the Supreme People’s Court on Several Issues Concerning the Trial of Administrative Cases Involving the Authorization and Confirmation of a Trademark, issued in 2010, provides that if the owner of a trademark does not use or ceases to use the registered mark due to the reasons mentioned above, or “if a trademark holder intends to use the mark and has made the necessary preparations to use the mark, but does not do so for other external reasons, idleness is deemed to be justifiable”.
Under the above circumstances, the trademark applicant can provide relevant evidence to the China Trademark Office to defend the idleness of the trademark based on justifiable reasons. In this article, the author uses the following cases to analyze “political restriction” as justification for brand inactivity during the designated period.
The respondent (trademark owner), Marumiya Food Industry, argued that on March 11, 2011, the Great Japan Earthquake caused a severe nuclear leak from the Fukushima Daiichi Nuclear Power Plant, which had a significant impact on the safety of Japanese aquatic products, agricultural products, dairy products and other foodstuffs. The mark had not been used due to political restrictions.
The applicant argued during cross-examination that the announcement on the prohibition of imports of certain Japanese food and agricultural products (Announcement No. 35 of 2011) and the announcement on the strengthening of inspection and Surveillance of Quarantine of Food and Agricultural Products from Japan (Announcement No. 44 of 2011) were not justifiable reasons for the mark under examination not to have been used during the specified period.
Moreover, almost 10 years have passed since the publication of these announcements, which means that the defendant has had sufficient time and opportunity to produce goods that pass the inspection and quarantine requirements in Japan and the import into China, or set up factories to produce such products directly in China, or license the mark to Chinese companies, or otherwise use the mark. Consequently, the mark was not used when it could have been.
The review notice indicates that the defendant’s justification for not using the subject mark does not fall under any of the justifiable reasons stipulated in Article 67 of the Trademark Law Regulations, and the registration of the mark should be cancelled.
The respondent (trademark owner), Sky International, argued that it was a major provider of digital pay-TV channels which, together with its subsidiaries, primarily operated pay-TV streaming services, broadband and telephony in the UK and Ireland. The respondent cannot use the trademark designated as a Class 38 “television broadcasting service” in the Chinese market due to the policy restrictions of the central government, which fall within the justifiable reason stipulated in the trademark law.
The review notice states that the Radio and Television Administration Regulations, the Catalog for the Guidance of Foreign Investment Industries and other similar regulations clearly provide that “China prohibits the establishment of radio and television stations in the form of wholly foreign enterprises”. owned by Sino-foreign enterprises or joint ventures”, and restrict foreign investment in sectors such as “telecommunications services”. Therefore, the defendant’s reason for non-use was not substantiated and the mark would be removed from the 38th category of services.
The “policy restriction” is commonly adopted by trademark owners to explain why their trademarks have not been used. However, as can be seen from the above-mentioned cases, the Trademark Office is extremely careful when granting him credit.
In the Marumiya case, while the Respondent’s defense appears justified and reasonable judging by the evidence provided by the Respondent. However, the specified period was almost 10 years after the earthquake in Japan, allowing him enough time and opportunity to overcome the relevant restrictions or otherwise use his trademark in China. Thus, the mark could very well have been used.
In the SKY case, the respondent claimed that China’s Radio and Television Administration Regulations prevented him from using the mark. However, these regulations have undergone three revisions in the past 10 years and have always been clear in prohibiting foreign investment in China’s radio and television industry. Operating in the relevant field, the defendant should be aware of these policies and regulations, as well as the impossibility of using its registered trademark in China. Thus, his defense was not supported.
From the cases mentioned above, we can deduce that the existence of certain policy restrictions does not necessarily support the legitimacy of non-use of trademarks. Rather, it largely depends on whether the trademark owner has taken the initiative and made reasonable efforts to use their registered trademark, while being subject to political restrictions and other justifiable reasons not attributable to the trademark owner.
Therefore, before resorting to “political restriction” as a justification, brand owners should carefully consider whether their industry has indeed been restricted by policies and confirm that they have made every effort to use the trademarks.
Sun Qinghua is a Partner and Trademark Lawyer at Sanyou Intellectual Property Agency
Sanyou Intellectual Property Agency
16/F, block A, corporate square
No.35 Jinrong Street, Beijing 100033, China
Tel: +86 10 8809 1921 / 8809 1922
Fax: +86 10 8809 1920
Email: [email protected]