Strategic “Cicada Shedding Its Shell”: Safeguarding a Middle Eastern Brand Amid Trademark Cancellation

In international trade, a well-structured intellectual property (IP) strategy functions as a critical moat for companies expanding into overseas markets. Yet maintaining this moat is an ongoing process rather than a one-time effort. Under Article 49 of China’s Trademark Law, the system for revoking trademarks that have not been used for three consecutive years, commonly referred to as “non-use cancellation”, often looms over international brands like a sword of Damocles.

Once a trademark is revoked, products manufactured and labeled with that mark in China may face compliance risks. Market access credentials, such as energy efficiency certifications and testing reports, may also become invalid, potentially resulting in significant commercial losses.

Recently, Winson Law Firm’s IP team successfully represented a Middle Eastern HVAC brand in a non-use cancellation review involving its core trademark in China. Although the original trademark was ultimately revoked under China’s stringent evidentiary standards, the team adopted a forward-looking dual-track strategy. By securing a new trademark registration during the review process, they effectively preserved the client’s brand rights in substance.

I. Case Overview: A Middle Eastern HVAC Brand Confronts a Non-Use Cancellation Challenge in China

The client has cultivated a strong presence in the Middle East over many years, enjoying substantial regional goodwill. To support its China-based supply chain, it registered its primary English trademark for core products, such as “air-conditioning equipment”(Class 11)at an early stage.

Its business model reflects a typical global division of labor: leading Chinese manufacturers produce air conditioners bearing the trademark, and all finished products are exported to the Middle East and Europe, with no domestic sales in China. While common in cross-border trade, this model presents distinct compliance challenges under Chinese trademark law.

In October 2023, a third party filed a non-use cancellation application with the China National Intellectual Property Administration (CNIPA), alleging that the trademark had not been used for three consecutive years.

At the trial of first instance, although the client submitted evidence such as authorization letters, commercial invoices, and product photographs, CNIPA concluded that the materials failed to establish a complete chain of use. It determined that the trademark had not been genuinely, lawfully, and effectively used during the relevant period. In March 2024, the trademark was officially revoked.

II. Core Issue: Does Export Manufacturing Constitute “Trademark Use”?

The central issue in this case, both typical and widely encountered, was whether, under a “manufactured in China, entirely exported” model, affixing a trademark to goods within China constitutes “use” as required under Article 49 of the Trademark Law.

This issue is particularly complex for three main reasons:

1. Stringent Legal Standards

Chinese administrative and judicial authorities apply rigorous scrutiny to evidence of use in non-use cancellation cases. Manufacturing alone does not automatically qualify as trademark use. The trademark must perform its essential function of identifying the source of goods, and such use must occur within China.

2. High Evidentiary Threshold

Under an export manufacturing model, every stage of trademark useauthorization, production, labeling, packaging, and exportmust be supported by documentary evidence. These materials must corroborate one another to form a coherent and complete evidentiary chain. Any gap or inconsistency may undermine the entire case.

3. Practical Challenges in This Case

The client and its affiliates operate across multiple jurisdictions, involving various parties including the trademark owner, overseas brand operators, and Chinese manufacturers. Evidence was dispersed across different regions. In addition, the statutory deadline for filing a review is only 15 days, making it highly challenging to collect, organize, notarize, and submit evidence globally within such a short timeframe.

III. Strategic Breakthrough: Rebuilding the Evidence Framework and Deploying a Dual-Track Approach

Faced with tight deadlines and a substantial burden of proof, Vincent’s IP team acted swiftly. Rather than relying solely on a conventional review defense, the team implemented a comprehensive strategy combining both defensive and proactive measures.

At the legal review and defense phase, the team guided the client in systematically gathering and organizing significantly more comprehensive evidence than at the initial stage, with the goal of building a robust, multi-layered evidentiary framework. Key steps included:

·Clarifying the Chain of Trademark Rights

By submitting shareholder records, trademark licensing agreements, and business licenses of affiliated entities, the team established clear control relationships between the client and the actual user of the trademark, thereby reinforcing the legitimacy of the use.

·Focusing on Contract Manufacturing Relationships

The team compiled extensive evidence relating to manufacturing arrangements with leading Chinese air-conditioner manufacturers. This included product design drawings bearing the disputed trademark, proofreading records, multiple SGS testing reports, complete sets of commercial invoices, export bills of lading, and product photographs clearly displaying the trademark.

Notably, the proofreading records confirmed that the design of energy labels and packaging was finalized within the relevant three-year period, and the SGS testing reports were also dated within that period, providing strong evidentiary support.

·Supplementing Energy Certification and Export Documentation

The team submitted multiple energy efficiency registration certificates indicating China as the country of origin, along with complete logistics documentation for shipments to Middle Eastern destinations. These materials collectively demonstrated that the goods had entered international commercial circulation and that the trademark had fulfilled its function of identifying the source of goods.

Furthermore, given the extremely stringent requirements regarding the probative value of evidence in the review proceedings for the cancellation of a trademark registration, the IP team at Vincent Law Firm did not pin all their hopes on a single procedure. Instead, whilst initiating the review, they precisely identified and effectively utilised the legal window period between the issuance of the cancellation decision and the entry into force of the review result, decisively launching a new protective trademark registration application on behalf of the client. This new application covers both word marks and figurative marks, forming a more comprehensive network of rights protection.

IV. Outcome: Seamless Continuity of Trademark Rights and Maximized Commercial Protection

Following review, CNIPA upheld the revocation of the original trademark, consistent with its traditionally strict approach in such cases.

However, the true value of this case lies not in reversing the outcome, but in safeguarding the client’s core commercial interests through strategic planning.

Thanks to the parallel filing strategy initiated at the outset of the review, the client’s new trademark was successfully registered during the pendency of the proceedings. As a result, there was no gap in trademark protection. Instead, the client secured a stronger and cleaner legal position through a newly registered mark free from historical encumbrances.

The revocation of the original trademark had no substantive impact on the client’s business operations. On the contrary, it provided an opportunity to optimize its IP portfolio and eliminate potential risks.

V. Key Takeaways: Strategic Thinking in Cross-Border IP Protection

This case offers several important lessons for companies operating in international markets:

1. Systematic Management of Use Evidence Is Essential

Companies should establish robust mechanisms for collecting and preserving evidence, including authorization documents, production records, export documentation, and packaging materials, to ensure preparedness in administrative proceedings.

2. Business Models Shape Compliance Strategies

For companies engaged in export manufacturing, it is critical to understand the unique implications of their business model under Chinese trademark law and proactively build a compliant evidentiary framework.

3. IP Protection Requires a Holistic Strategic Perspective

Complex trademark disputes rarely have a single solution. True professional value lies in mastering procedural rules, identifying critical timing opportunities, and designing alternative strategies. In this case, the dual-track approachcombining review defense with new filingsultimately ensured maximum protection of the client’s commercial interests.

Conclusion

The purpose of the non-use cancellation system is to clear inactive trademarks, not to undermine the survival of legitimate brands. The conclusion of a cancellation proceeding does not necessarily mark the end of trademark rights.

When a review cannot reverse a cancellation decision, alternative filing strategies can ensure seamless continuity of rights. Within the framework of legal procedures, the ability to identify and leverage critical timing opportunities often proves more valuable than focusing solely on the outcome of a single proceeding.

Balancing procedural execution with strategic foresight is the essence of effective IP protection.

Like a cicada shedding its shell, what is cast off is a legacy burdenwhat remains is the full vitality of the brand in the marketplace.