Ignorance of prohibitory rights of marks inherent in cancellation system

The second section of article 49 of the Trademark Law specifies that “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 consecutive years without any justifiable reasons, any entity or individual may request that the Trademark Office make a decision to cancel such registered trademark”. This provision is the so-called “trademark cancellation after three years unused”, which has a pronounced function to prevent trademark squatting by cleaning out idle and unused trademarks. The provision aims to benefit market entities that have a bona fide intent to register and use the trademarks.

Other than reasons such as force majeure, government policy restrictions or bankruptcy and liquidation, the sole criterion for identifying dead trademarks is to verify whether they perform the identification function in commercial use by trademark rights holders. Plenty of trademarks, especially defensive marks and/or associated marks of well-known and famous trademarks, are cancelled due to this provision.

However, the aim of registering these trademarks is to take advantage of the prohibitory rights, instead of simply using them as identification marks. Considering usage as the sole criterion of a trademark and ignoring the value of prohibitory rights puts relevant enterprises in a dilemma in administrative trademark cases.

Jiang Fengtao is the managing partner and Wang Hua is an attorney of Hengdu Law Offices