When the services provided by the trademark owner are overseas, how can it be determined that the trademark has genuine use in Taiwan?
[ October 2024 ] >Back| Trademark | ||||
| I. | When the services provided by the trademark owner are overseas, how can it be determined that the trademark has genuine use in Taiwan? | |||
| 1. | Case Process: | |||
| An Australian company registered the “CROWN” trademark in Taiwan, designating services such as "hotels, accommodations, restaurants, cafes, beverage shops, breweries, and bars." In 2020, a third party filed a non-use revocation against the trademark. The case went through various proceedings, including cancellation, administrative appeals, and litigation, and was ultimately affirmed in March 2024 (Intellectual Property and Commercial Court Case No. 14 of 112). | ||||
| 2. | Judgment Summary: | |||
| Although the "CROWN" hotel and accommodations located in Australia do not have service locations or operate hotel services in Taiwan, they market their services through travel agencies in Taiwan. Additionally, Taiwanese consumers can book stays via websites such as Tripadvisor and ezTravel. This indicates that a portion of the transactions related to the "CROWN" trademark services has been completed within Taiwan. Therefore, the "CROWN" trademark possesses economic significance in establishing or creating a market or channel for its services in Taiwan, aligning with the principle of trademark territoriality. This is sufficient to affirm that the "CROWN" trademark has genuine use in Taiwan. | ||||
| 3. | Conclusion | |||
| After obtaining a trademark registration, the trademark owner has an obligation to use the trademark. However, multinational companies may not necessarily establish local branches or physical operations in every country where they have trademark interests. Trademark owners can collaborate with local businesses or leverage online shopping and social media to promote the goods or services associated with their trademarks. If courts recognize that part of the transaction process, such as placing orders, paying deposits, or receiving goods, occurs within Taiwan, along with supporting evidence like local media reports, online articles, or forum discussions, the trademark may be deemed to have genuine use in Taiwan. This could effectively protect the trademark rights. | ||||
| II. | The Impact of Trademark Revocation on Infringement Lawsuits- Introduction of Supreme Court Civil Judgment No. 113 Taishangze 275 | |||
| According to the Trademark Act§63 I② in Taiwan, a trademark may be revoked if it has not been used for three consecutive years without legitimate reasons. The Intellectual Property Office (IPO) may revoke the registration either upon request or on its own authority. Furthermore, Intellectual Property Case Adjudication Act§41 II stipulates that “the holder of the IP right shall not claim in a civil action any rights against the opposing party where the court has recognized the grounds for cancellation or revocation of the IP right.” According to this article, if a defendant argues that the plaintiff's trademark is subject to revocation for 3 years of non-use, and the court agrees, the plaintiff cannot claim infringement against the defendant. The irrationality here is so obvious: the trademark is revoked for a 3-year non-use, which means, it is sound and valid during and before the 3-year period. But the IP Case Adjudication Act §41 II, on its face, denies compensations to the IP right holder for infringement occurred during this period. The Supreme Court Civil Judgment No.113 Taishangze 275, has identified the problem and fixed it with a detailed interpretation of the IP Case Adjudication Act§41 II. |
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| Case Background: | ||||
| The plaintiff, as the trademark owner, claimed that the defendant used its trademark without permission from November 2017 to September 2021, constituting trademark infringement. The defendant countered that the trademark has not been used for a continuous period of 3 years before July 20, 2020, providing grounds for revocation. In the second instance, the Intellectual Property and Commercial Court (the IP court) found the facts above, and ruled that the plaintiff cannot claim any rights against the defendant, based on the Trademark Act§63 I② and the IP Case Adjudication Act§41 II. |
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| The Supreme Court’s decision: | ||||
| The Supreme Court overruled the previous decision, stating: "Trademark revocation applies to registered trademarks if they have not been used or misused. The trademark registration is invalid from the date of revocation. The Trademark Act does not explicitly state whether the effect of revocation is retroactive. However, in light of the Trademark Act§65 III “Where the trademark registration was revoked… a trademark… shall not be applied for registration by the former proprietor…” and the Administrative Procedure Act §125 “A lawful administrative disposition shall become ineffective as of the date of its revocation,” the trademark registration is only invalidated from the revocation date onwards, rather than retroactively. As a result, a plaintiff can still claim damages for infringement that occurred while the trademark was valid, and their right to compensation is not affected by the revocation. | ||||
| The Analysis of the Supreme Court’s decision: | ||||
| The legislative rationale behind IP Case Adjudication Act§41 II is that: the validity of registration of IP is determined by IPO or administrative courts, while infringement cases are tried by civil courts. If an IP right was challenged during a civil action, the court would have to pause the proceeding until an administrative decision concerning the validity of the right was made. This caused delays and hindered the rights holder from timely protection. Therefore, to speed up the civil trial proceeding, the Act allows civil courts to decide on the validity of IP rights and grant damages accordingly. The civil courts are temporarily playing the role of administrative courts, anticipating what the administrative court might decide regarding the validity of the IP and using it as the basis for their rulings. Nonetheless, the civil court’s decision only affects the pending case and does not affect the validity of the IP registration, which still requires administrative confirmation. Here, the IP court found that the trademark owner had not used the trademark for 3 years prior to July 20, 2020, providing grounds for revocation. Since the defendant’s infringement occurred from November 2017 to September 2021. Can the plaintiff claim rights for infringements occurring from November 2017 to July 20, 2020? On the face of the IP Case Adjudication Act§41 II, the answer is no, and the IP court ruled accordingly. However, this decision is hardly reasonable. The purpose of trademark revocation is to deprive the owner of exclusive rights due to non-use for three years, but the trademark was still valid during those three years. Generally, to revoke a trademark, an applicant must file a request for revocation with the IPO, stating that the trademark in question has not been used for a continuous period of 3 years prior to the date of filing. That means, the revocation can in no way take effect before the filing date, which is, in a suit, the date the defendant use revocation as a defense. Therefore, the Supreme Court’s ruling that trademark revocation takes effect from the date of revocation, not retroactively, is a more reasonable interpretation of the IP Case Adjudication Act§41 II and the Trademark Act§63 I② |
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| Conclusion: | ||||
| If a civil court finds grounds for trademark revocation in an infringement case, the revocation does not have a retroactive effect. A plaintiff can still claim damages for infringement that occurred while the trademark was valid. However, this conclusion does not appear in the "plain language" of the statutes, so trademark owners should be aware of the Supreme Court's decision. | ||||
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