Study on the Illegal Situations on Cases Regarding Ceasing to a Registered Trademark not Used

Introduction: to put into use means life to trademarks. Trademark can develop its pricipal characteristic to distinguish its orginal functions of products or service only by using publicly in the business activities. The object of trademarks usually is seemed as a kind of resource in words, image, ect. If the registrant only obtained and monopolized such resource, without putting such resource into actual use, such resource shall return to the society. That is also the original intention for the system set up in China Trademark Law for cancellation of registered trademark not to be used. However, if the use of trademark violates other law or regulations, can it be regarded as a trademark use as stipulated in the Trademark law? Would trademark with using shortcomings be canceled? This article will forward an initially study on such topic.

Illegal trademark use usually refers to the registrant putting registered trademark into use on the designated commodities producing and operation without fulfiling the necessary formalities stipulated by administrative law. For example, the behaviors using registered trademarks on the designated commodities producing without obtaining production license, health license as well as import and export license. The relevant field involving using trademark illegally mainly includes foods, medicine, Cosmetics, medical equipment, import and export, etc.

Case I: Case regarding cancelation of TM “康王”and Administrative Litigation (Case No.: Notice of second instance application for rejection of The Supreme Court (2007) X.J.Z. No. 184-1 )

Situation for using trademark illegally：The user of tm “Kangwang”, Yunnan Zhenhong Company violated the compulsory stipulations of administrative regulations for producing cosmetic during disputed period without obtaining production license and health license which is necessary to production and selling cosmetic.

The Verdict: The evidence is illegal and tm “康王”， No. 738354 and shall be canceled.

The view point of the Supreme Court: The “use “stipulated in article 44 (4) in trademark law shall be the trademarks used in public, authentic and legal in business activities. According to the stipulations of Article of 45 of trademark law, the legal basis to judge whether the trademark use is legal shall not limit to China’s Trademark Law or supporting regulations. As for the using behaviors in the producing and operating activities infringing the stipulations suppressed by law and prohibited by regulations, if the law effective is affirmed, the illegal behaviors may be encouraged and indulged, there must be not applicable to the original meaning stipulated by China Trademark Law on the relevant trademark using behaviors.

Case II: Case regarding cancelation of TM “卡斯特”and Administrative Litigation (Case No.: Administrative Decision on The Supreme Court (2010) Z.X.Z. No. 55 )

Situation for using trademark illegally：The licensee of tm “卡斯特”violated the Measures for the management of import and export of alcohol in the domestic market during dispute period selling red wine under the situation without obtaining the approved certificate of import and export of red wine food label.

The Verdict: The using evidence is effective and tm “卡斯特”No. 1372099 shall be valid.

The view point of the Supreme Court: The purpose of stipulation of Article 44(4) of China Trademark Law is to stimulate trademark resource and clean free trademarks. To cancel trademark application is just a way instead of the purpose. So, if the registrant used the registered trademark publicly, authentically in business activities and the use it has not violated this Article, it shall be deemed that the registrant has fulfilled the obligations stipulated by law. In this case, the evidence provided by Li Daozhi shall be deemed that the trademarks have been used publicly and authentically in business activities. As for the issues whether the involved trademark has violated stipulations on import and sale field or other field on the other relevant business activities, it shall not be the problems to be regulated and adjust by Article 44(4) of China Trademark Law. So, the Supreme Court decides to reject the second instance application from France Kasite Company.

※Article 44 (4) Ceasing to use the registered trademark for three consecutive years.

Article 45 Where registered trademark is used in connection with shoddily manufactured goods or with inferior-quality goods passed off as superior-quality ones so as to deceive consumers, the administrative authorities for industry and commerce at any level shall order that the situation be rectified by a specified time and, depending on the circumstances, circulate a notice of criticism or impose a fine. The Trademark Office also may cancel the registered trademark.

Regarding the issue that trademark shall “be used publicly, authentically, and legally in business activities” and how to use legally, the problems has still existed some certain disputes. One point to be hold that if the trademark used has not violated the compulsory and prohibition stipulations, it shall be deemed as used legally; as for the other illegal behaviors, the registrant may undertake the corresponding responsibilities bound by other laws but not influence on the results. The other points that if the trademark using behaviors violated law and regulation, the behaviors shall be deemed as the trademark used illegally. The said two case judged by the Supreme Court shall be the typical cases to prove this point.

This article agrees the points by the supreme Court regarding tm “卡斯特”. Firstly, The literal meaning of Article 44(4) “Ceasing to use the registered trademark for three consecutive years.” and Article 3 of Implementing Regulations of the Trademark Law of the People’s Republic of China “The use of trademarks referred to in the Trademark Law and these Regulations include, among other things, the use of trademarks on goods, Packages or containers thereof and commodity trading instruments, or use of trademarks in advertisements, exhibitions and other commercial activities” is quite obvious, if the trademarks has used the trademark publicly and authentically within 3 years, the trademark shall not be canceled, there are not any other definition of violating law and regulations in using of the trademark.

Secondly, as for the purpose of legislation of ceasing to use the registered trademark for three consecutive years in China Trademark Law, just as mentioned in the part of Introduction, trademark is a kind of recourses, the obtaining of trademark right not means the resource shall be monopolized and excluded. So the purpose of legislation on ceasing to use the registered trademark for three consecutive years is to clean the dead trademark and release the obstacle for other applicant to register and use such relevant trademark not for consider whether shortcoming existed during the using of trademark process by the registrant. The verdict of tm “康王”is not applicable to the legislation purpose of Trademark Law.

This article holds the point that, no matter the trademark use has some shortcomings, the trademark used with the mark of origin of commodities shall be applicable to the actual use in the meaning of China Trademark Law. Besides, according to the stipulation of administrative law, as for the behaviors infringing commercial activities, only administrative responsibilities shall be undertaken by the operators and the results trademark shall be ceased shall not to be undertaken. Even though the registered trademark applied on the designated commodities has violated relevant stipulations of administrative law, the trademark has still developed the distinctive functions. So, it is necessary to protect the credit collected on the actual use of the registration trademark and promote the development of the industry. That is to say, in order to remain the using registered trademark, the legal results violating trademarks law and administrative shall be judged respectively.

Aiming at the topics on ceasing to the registered trademark for three consecutive years has existed lots of disputes, law and regulations shall be perfected and defined. Therefore, only to study legislative background and size the legislative purpose, the effective solution shall be found to resolve such problems in the future.