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Manufacturing Goods in China for Export Purpose Constitutes Valid Use of a Registered Trademark (Original click here - Texto Original click aquí)

Pu Feng

In the case of Hornby Hobbies Limited (hereinafter “HHL”) vs. the TRAB over non-use cancellation action against the Chinese trademark registration No. 731233 “SCALEXTRIC” in respect of “toys” in Class 28, the Beijing Higher People’s Court made a final judgment to overturn the judgment of Beijing First Intermediate People’s Court, which held that the assembling or processing goods for export purpose did not constitute valid use of a trademark.

Winkler International SA filed a non-use cancellation against the Reg. No. 731233 “SCALEXTRIC” with the China Trademark Office (CTMO) on April 3, 2001. CTMO made a decision to cancel the trademark on the ground that the evidence submitted by HHL was insufficient. HHL filed a review against the decision with the Trademark Review and Adjudication Board (TRAB) on February 12, 2003 by further supplementing the evidential materials showing the use of their trademark in China. The TRAB upon examination still held that the evidence available was not enough to prove the trademark had been genuinely used within the frame of the Chinese Trademark Law and made a decision to maintain the CTMO’s decision.

HHL was dissatisfied with the decision and lodged the legal proceedings before Beijing First Intermediate People’s Court. The court held that a trademark should play a role in trade to indicate origins of goods/services provided by different undertakings. As a trademark could only be identified by consumers or customers when it was used in market place, only the mark in commercial use could constitute a valid use. As for marks not put into the market place and couldn’t be recognized by consumers, such a use couldn’t be considered as a valid use. As parts and fittings of toys were sent to China by the plaintiff for assembling or processing and after that, they were exported overseas and not sold in China, there was no possibility for Chinese consumers to know about the toys using the trademark. In this regard, the trademark had no function to distinguish origin of goods from one undertaking to another and it was therefore that the use of the mark did not constitute a valid use as regulated by the Trademark Law.

HHL then filed an appeal before the Beijing Higher People’s Court for a trial of second instance. The court overturned the judgment made by the lower court and held that though the products made by HHL were not sold in domestic market and there was no possibility for Chinese consumers to know about the toys using the trademark, it was unfair to the registrant to cancel the trademark solely based on non use and it was also against the policies of exploring and expanding foreign trade. Additionally, the court considered that the legislation purpose of the cancelation mechanism was to encourage the registrant to actively use their registered trademark in commercial activities and to make a registered mark play a role in trade to indicate origins of goods/services provided by different undertakings. When judging whether manufacture of goods for export purpose meant a manner of valid use of a trademark, the prevention of waste of trademark resources as well as protection of the legitimate rights of the registrant of a registered trademark should be taken into consideration. Based on the above viewpoint, the court held that manufacture of goods for export purpose should be considered as a manner of valid use of a trademark.

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