The Beijing IP Court recently upheld a CNIPA decision to cancel a class 35 trade mark registration despite proof of use submitted by the registrant. Even though the evidence demonstrated sales of the branded products in China, the court affirmed that sales and promotion of own-branded products is not effective use of a registered mark in respect of sales-related services in class 35. This case highlights the difficulty in defending a class 35 trade mark registration, often obtained for defensive purposes, against a non-use challenge in China.
The Cancellation Action
Wild Rizhao Garden Machinery Co., Ltd. (“Wild Rizhao”) is a wholly foreign owned company based in Shandong province, China. It manufactures garden machinery and tools and exports them from China. It owns registrations for its trade mark (DE WILD & Chinese characters & design) in classes 7 & 35, the latter covering, inter alia, “presentation of goods on communication media, for retail purposes; sales promotion for others; import and export agency”.
DE WILD TrademarkA Chinese company applied to cancel the class 35 trade mark registration for non-use in January 2021. Wild Rizhao submitted evidence of use in defence of its registration. In August 2021, the CNIPA decided to maintain the trade mark registration based on the evidence submitted by the registrant.
But the petitioner appealed to the CNIPA Appeal Board to contest the first instance decision. Upon review, the Appeal Board decided to cancel the registration for non-use on the basis that the submitted evidence was unable to prove any commercial use of the mark in respect of the claimed services.
Wild Rizhao appealed this unfavourable decision to the Beijing Intellectual Property Court in October 2022. In its judgement of November 2023, the court upheld the CNIPA Appeal Board decision. The court commented that the services “sales promotion for others” refer to promotional services provided by the registrant to a third party, while the exhibition and promotional materials submitted by the registrant in this case were carried out for the registrant’s own benefit. The court pointed out that sales of own branded goods or the resale of other parties’ goods cannot be treated as “sales promotion for others”.
Comment
Many overseas brand owners secure class 35 registrations in China in addition to registering in the classes that cover their actual products. These class 35 registrations are usually defensive in nature given that the CNIPA does not recognize “retailing” per se as a protectable service, with the exception of retail services that relate to pharmaceutical, veterinary and sanitary preparations and medical supplies. A defensive class 35 registration ostensibly confers protection for the mark for sales related services that can be relevant to retailing, such as import-export agencies, sales promotion for others, advertising and marketing. Also, some China e-commerce platforms, expressly require brand owners to hold a class 35 registration if they wish to promote their branded products on these local e-commerce portals.
But these class 35 registrations are difficult to defend unless the registrant can show that the services are being provided for the benefit of others (i.e. externally). In its Guidance on Registration and Use of Service Marks in Class 35 of December 2022, the CNIPA emphasized that the services listed in class 35 must be services provided to “third parties” rather than for the registrant’s own benefit. Retailing itself is not acceptable whether it relates to sales of the registrant’s own goods or third-party brands. For those parties whose main business is the manufacturing and sales of its own branded products, the CNIPA expressly affirmed that there is no purpose in pursuing additional registrations in class 35.
The decisions of the CNIPA Appeal Board and the Court align with the spirit of the Class 35 Guidance note. On a normal reading of the class 35 services, the clear implication is that the services are intended to be provided to others. For brand owners who seek a class 35 registration, in addition to registrations in the relevant goods classes, there may still be some defensive or commercial value. The registration is only at risk if a third party petitions for its cancellation. The CNIPA itself will not unilaterally challenge the validity of the registration. But where the class 35 registration is subject to a third-party challenge, it could prove difficult to defend. Applicants should proceed with an awareness of this potential vulnerability.
