The life of a trademark lies in its use. To eliminate "deadwood trademarks" and revitalize trademark resources, Article 49.2 of China Trademark Law (hereinafter referred to as the "Trademark Law") and the "Trademark Examination and Adjudication Guidelines" establish the non-use cancellation system. This system allows any entity or individual to apply to the China National Intellectual Property Administration (CNIPA) for the cancellation of a registered trademark if it has not been used for three consecutive years without proper justification. In such cases, the burden of proof rests mainly on the trademark registrant, who must provide evidence of "genuine, lawful, and effective commercial use" of the trademark during the specified three-year period (the "relevant period").
For many foreign registrants, their primary use of trademarks in China occurs through the OEM model, namely a foreign company (the entrusting party) provides the trademark and specifications, a Chinese manufacturer (the entrusted party) produces the goods, and all products are exported overseas. The peculiarity of this model is that the act of "use" (e.g., affixing, processing) occurs within China, but the "circulation" and "consumption" of the goods occur outside China. This once raised a significant controversy: does such export-only OEM use constitute "trademark use" as defined by Article 48 of the Trademark Law, which is intended to "identify the source of goods"?
For a long time, the issue of whether OEM constitutes trademark use has evolved from being a subject of controversy to becoming relatively clear. The "Trademark Examination and Adjudication Guidelines" clearly stipulate in the "cancellation for non-use" section: "If the goods bearing the disputed trademark are not circulated within China but are directly exported, it can be recognized as use of the approved goods." This provision provides direct regulatory support for the use evidence of OEM.
The hierarchy of evidence effectiveness
To make it easier for registrants to understand the probative value of different types of evidence, we adhere to the principle that "objective evidence is superior to subjective evidence, third-party evidence is superior to unilateral evidence, and a chain of evidence is superior to isolated evidence." We can categorize OEM-related evidence into the following three levels:
Level 1: Evidence with strong probative value (Decisive Role)
This evidence is issued by neutral, authoritative third-party institutions, is extremely difficult to alter, and carries the strongest credibility. It is the cornerstone of a successful defense.
1. Customs Export Declaration Form and Related Documents (Most Critical Evidence)
Validity Rating: Extremely High. This is the "trump card" evidence that the registrants should strive to obtain and preserve.
Legal Effect Analysis:
- Official Nature and Objectivity: The declaration form is an official record of the export act by the General Administration of Customs, embodying state authority and possessing the strongest probative value.
- Comprehensive Proof: A complete set of customs documents (including the declaration form, power of attorney for customs declaration, packing list, commercial invoice, and contract for customs) can clearly prove:
Occurrence of the Act: The precise "date of export" falls within the specified three-year period.
Connection between Trademark and Goods: The accompanying invoice and packing list specify the brand (i.e., the subject trademark) and product description, directly linking the trademark to the exported goods.
Scale of Use: The value and quantity of goods demonstrate the genuineness and commercial scale of the use, effectively refuting claims of "token use."
Lawfulness: Clearance by Customs proves the legality of the entire export operation.
2. Ocean Bill of Lading or Air Waybill
Validity Rating: Very High.
Legal Effect Analysis: Issued by international shipping or airline companies, it serves as a document of title and proof of contract of carriage. It corroborates the customs declaration, together constituting complete evidence that the goods "left Chinese territory." Information on the bill of lading (e.g., marks, descriptions) should be consistent with the customs declaration and contract.
3. Bank Payment Records
Validity Rating: Very High.
Legal Effect Analysis: Bank-issued wire transfer confirmations for cross-border payments are the most objective financial evidence proving the actual performance of the OEM contract. A payment from the foreign registrant to the Chinese factory matching the contract amount is highly persuasive.
Level 2: Evidence with medium probative value (Must be Combined with High-Validity Evidence)
This evidence is typically created by the parties themselves. It is a necessary link in the evidence chain but has limited probative value if presented in isolation.
1. OEM Processing/Purchase Contract
Validity Rating: Medium. It is the starting point of the chain, not the end.
Legal Effect Analysis: A contract only proves the "intent to use," not "actual use." Post-dating contracts to counter cancellation actions is common, so examiners scrutinize their authenticity closely. The contract must be combined with performance evidence like payment records, bills of lading, and customs declarations. The contract must clearly specify the trademark, goods, quantity, unit price, and signing date.
2. Commercial Invoice and Packing List
Validity Rating: Medium.
Legal Effect Analysis: Although created by one party, they are essential documents for customs declaration and settlement, closely linked to third-party evidence like customs forms and bills of lading, providing mutual corroboration and enhancing credibility.
Level 3: Evidence with low probative value (Supplementary Role)
This evidence has weak probative value and usually cannot serve as primary evidence.
1. Product Photos, Work Orders
Validity Rating: Low.
Legal Effect Analysis: The specific time cannot be reliably determined, and they are easily fabricated. They can only serve as supplementary materials to illustrate the product's condition and must be combined with dated documents like orders and customs declarations.
2. Unilateral Declarations or Witness Statements
Validity Rating: Very Low.
Legal Effect Analysis: According to the Guidelines, declarations or testimony from interested parties, unsupported by other objective evidence, are generally not accepted.
Practical Operational Guide for Foreign Registrants
Based on the above information, to avoid losing trademark rights due to "non-use cancellation," we recommend that the registrant take the following proactive measures:
1. Establish a Systematic Evidence Archiving System: Designate personnel or a department to systematically archive the complete set of original documents for each project/order, from contract signing to final export. Pay special attention to preserve originals and scans of evidence with high probative value, like Customs Declarations, Bills of Lading, and bank slips.
2. Ensure Completeness and Consistency of the Chain of Evidence: Regularly check the completeness of chain of evidence. For example, a contract should have corresponding payment records, a bill of lading, and a customs declaration. Key information (trademark, product name, quantity, parties) must be consistent across all documents.
3. Clearly Mark the Trademark: Use the trademark exactly as registered in China clearly and accurately on all commercial documents (contracts, invoices, packing lists) and on the product itself (e.g., shown in photos).
4. Maintain Continuity and Scale of Use: Strive to have multiple, continuous transaction records within the three-year cycle. While there is no statutory minimum transaction value, a single order of very small value (e.g., USD 100) is risky. Maintain normal transaction records commensurate with your business scale.
5. Responding to a Cancellation Action: If notified of a cancellation application, promptly engage a qualified Chinese legal counsel and, under their guidance, retrieve the complete evidence chain from your archives for the specified three-year period—do not merely submit one or two contracts.
Conclusion
In summary, in trademark non-use cancellation cases in China, the OEM evidence is now accepted by current law and practice and can serve as proof of genuine, lawful, and effective trademark use. However, its legal validity is not automatic; it is built upon a foundation of a complete, genuine, and mutually corroborating chain of evidence.
For foreign registrants engaged in OEM business, China's non-use cancellation system is not an insurmountable obstacle. The key is to deeply understand the standards for recognizing "trademark use" evidence under Trademark Law and let this guide document management in commercial practice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
