In Short

The Situation: The Court of Justice of the European Union ("CJEU") confirmed in a recent decision that a party initiating a trademark revocation action on the grounds of non-use is not required to provide evidence of market research concerning possible use of the trademark in question, or to make substantiated submissions in that regard in support of its application. This case falls in line with the recent global trend of decreased procedural burdens for filing trademark revocation actions.

The Background: A trademark registration is liable to face partial or full revocation if it has not been put to genuine use in connection with the designated goods and services for a continuous period of time (five years in the European Union and the United Kingdom, three years in the United States and China). Under EU law, any natural or legal person may initiate such proceedings without the need to demonstrate their interest in cancellation of the trademark or provide any evidence supporting their request. This means that the onus for proving genuine use of a trademark rests solely on the trademark proprietor.

Looking Ahead: Some commentators have speculated that the recent trend in the decrease of procedural burdens for requesting trademark revocation will result in the increase of such proceedings. Hence, it is important now more than ever for trademark proprietors to work actively on keeping track of their trademark use. On the other hand, parties planning to request trademark revocation should still be wary of potential pitfalls, such as being ordered to bear full costs of the proceedings.

CJEU Decision

In Maxxus Group GmbH v Globus Holding GmbH C-183/21, the CJEU was asked whether German procedural rules were consistent with Article 19 of the Directive (EU) 2015/2436 on revocation of trademark rights for absence of genuine use.

German case law draws a distinction between the burden of proof and the burden of setting out the facts. While trademark proprietors are responsible for demonstrating evidence of their trademark's genuine use (the burden of proof), parties requesting revocation do not get off scot-free-according to Section 53(1) of the 1994 German Trade Mark Law, they are required to provide "facts and evidence" supporting their application (the setting out of the facts). This usually results in an obligation on the applicant to use its own resources and carry out an investigation or market research to ascertain whether the trademarks in question are truly not put to use by their proprietors.

In the judgment of March 10, 2022, the CJEU responded that the German rule requiring the carrying out of market research is not in line with the Directive 2015/2436, notably because it places burden of proof on the requesting party "at least partially." This position is unsurprising and confirms the 2020 Ferrari ruling, in which the CJEU declared that the burden of proving "genuine use" could only be put on trademark proprietors (C-720/18).

European judges rejected the argument that removing the market research requirement would result in proliferation of revocation proceedings, even in circumstances where the requesting parties also do not need to demonstrate any legal interest in initiating cancellation proceedings (Color Edition, C-408/08). They maintained that other procedural rules would still serve as sufficient burdens to abuses of the trademark system. In this regard, we note a relevant Grand Board of Appeals judgment that confirmed the EUIPO's decision to reject a trademark revocation request on the grounds that its applicant had initiated the action with a "fraudulent end," forcing the party to bear the costs incurred by the trademark proprietor as well (R 2445/2017-G).

The Situation in France and the United Kingdom

Under French and UK law, anyone may file a trademark revocation action directly before the Intellectual Property Office without the need to demonstrate interest or provide any substantiated claims supporting the request. The burden of proof lies solely on the trademark proprietor.

However, under UK legislation, if a party files an application for revocation of a trademark without first notifying the trademark proprietor, and the trademark proprietor surrenders the registration without defending it, then costs will not be awarded to the party applying for revocation.

The Situation in the United States and China

United States. In the United States, a party may petition to cancel a mark "[a]t any time" if the registered mark "has been abandoned." There are two elements to an abandonment claim that a cancellation petitioner must prove: (i) non-use, and (ii) intent not to resume use. Because registrations are presumed valid, the party seeking cancellation based on abandonment bears the burden of proving a prima facie case. Non-use "for 3 consecutive years" constitutes "prima facie evidence of abandonment."

Thus, if the petitioner can show non-use for three consecutive years, "[t]he burden of production, i.e., going forward, then shifts to the registrant to produce evidence that it has either used the mark, or intended to resume use," and the "burden of persuasion remains with the plaintiff to prove abandonment by a preponderance of the evidence" (Shutemdown Sports, Inc. v. Carl Dean Lacy, 102 U.S.P.Q.2d 1036 (T.T.A.B. 2012)).

In addition to cancellation based on abandonment of a mark, the regulations implementing the Trademark Modernization Act ("TMA") of 2020 created new ex parte proceedings to cancel marks that have either never been used or that were not used in commerce before a particular relevant date. A petition for expungement or reexamination filed pursuant to the TMA must include a verified statement that a reasonable investigation was conducted to determine whether the trademark has been used in commerce with specified goods or services and evidence supporting a prima facie case of non-use in commerce. If a prima facie case is shown, the Director will grant the petition, institute the proceeding, and require the registrant to respond with evidence of use or excusable non-use. In other words, the TMA did not alter the burden of the party seeking cancellation.

China. In China, any individual or entity, without demonstrating interests, can file a cancellation request against a registered trademark by providing preliminary evidence to prove a prima facie case that the trademark has not been used for three consecutive years before the China National Intellectual Property Administration ("CNIPA"). The burden of proving the contrary (i.e., actual use or no non-use situation) will then be shifted to the proprietor of the trademark. The proprietor's failure to prove the actual use (no intended use is acceptable) will result in the cancelation of the trademark. If proprietors or requesting parties do not agree with the CNIPA's decision to cancel or not to cancel, they may resolve the dispute to court, where the proprietors have the same burden of proof. As such, it is a wise and vital practice for trademark proprietors to proactively use their trademarks and keep use records.

Official fees for filing a cancellation request are chargeable to the requesting party. Currently, there is no sanction imposed on a requesting party for abuse of law or procedure. In fact, it is the CNIPA's public policy to encourage cancellation of trademarks without actually being used or intended to use. In view of the tremendous amount of trademark registrations in China (in total, 37.24 million as of 2021) and for the purpose of "avoiding waste of trademark resources," it should be understandable to adopt such a system to prevent bad-faith parties from "hoarding" trademarks with the intention to "sell for profits" but not to "use," and balance the interests of market players.

Two Key Takeaways

  1. It is yet unclear how the trend of facilitating access to trademark revocation actions on the ground of non-use, including the CJEU decision to remove market research requirement, will affect the number of such proceedings.
  2. However, proprietors can make sure to keep proof of use of their trademarks in order to limit eventual costs in case of potential revocation actions. On the other hand, parties planning to initiate revocation actions should still be wary of the potential of having to bear court costs or, in exceptional cases, being condemned for abuse of process.

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.