The Intellectual Property Trial and Appeal Board (IPTAB) recently rendered notable decisions regarding acceptable defenses to non-use cancellation actions against registered trademarks. In particular, the IPTAB found that non-use on cosmetics due to likely consumer confusion with a mark famous for medicinal products was an acceptable defense.

The registrant is a Korean pharmaceutical company which registered the marks "MADECASSOL" and "마데카솔" (Korean transliteration of "MADECASSOL") designating, among other goods, cosmetics. The registrant was also the producer of a very famous medicinal skin product under the same mark "마데카솔" (Korean transliteration of "MADECASSOL"). The petitioner, a Korean cosmetics company, filed non-use cancellation actions against these marks, asserting that they were not used within the relevant three year period by the registrant for cosmetic goods. In response, the registrant acknowledged that it did not use its marks, but argued that it had a legal justification for not using them.

Specifically, the registrant argued that it was abiding by the Cosmetics Act, which prohibits labeling or advertisements likely to mislead consumers into thinking cosmetics are medicines. The registrant argued that it did not use its registered marks on cosmetic products to prevent consumers from being confused with the registrant's mark on medicinal products (fame of the mark on medicinal products was confirmed by Patent Court in a previous decision). In other words, since the mark was found famous for medicinal products, use of the same mark on a cosmetic product would likely cause consumers to believe the cosmetic product was also a medicinal product, leading to a violation of the Cosmetics Act.

The IPTAB accepted the registrant's arguments and rejected the cancellation petitions. As a result, the registrant can prevent its famous marks "MADECASSOL" and "마데카솔" (Korean transliteration of "MADECASSOL"), from being diluted by blocking third parties' registration/use of the "MADECASSOL" mark on cosmetics, even if the registrant cannot use its registered marks on cosmetics.

The IPTAB's decisions (which have become final and conclusive) are noteworthy because the IPTAB broadly interpreted "legitimate reasons" for not using a registered mark. Thus, it will be interesting to see if the scope of "legitimate reasons" for non-use will continue to expand in future cancellation cases.