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Licensee's Bona Fide Use of Licensed Trademark May Still Be Recognized as Registrant's Legitimate Use Despite Trademark License Agreement Being Cancelled
In principle, Taiwan adopts a "first-to-file" trademark registration system. Therefore, it is not a prerequisite to use a mark in commerce in order to file an application. Even so, the use of a registered trademark is still essential in maintaining of the exclusive trademark rights in Taiwan. According to the Guideline of Registered Trademark Usage issued by the Intellectual Property Office, the main purpose of trademarks is not registration but the association between the mark and the designated goods or services built through actual use.
Under the Article 63 of the Trademark Act, trademark registrant has the obligation to use registered trademarks. Non-use of a registered trademark for consecutive three years will be vulnerable to revocation of the registration. If the registered trademark is licensed, the licensee's use of the trademark will be qualified as the use of the licensor/trademark registrant. However, it is still unclear in practice that whether the trademark use of the licensee can still be recognized as registrant's legitimate use of the trademark if the license agreement is cancelled retroactively. In a recent administrative litigation regarding a trademark revocation, the Supreme Administrative Court in Taiwan expressed an important view on this issue.
In this litigation, the filing party of the revocation action claimed that the Trademark License Agreement provided by the trademark registrant cannot be served as an evidence of use because the representative of the licensee and the licensor is the same person. The filing party argued that this showed that the Agreement was fraudulently signed after the revocation action and was prepared purely for the purpose of this litigation. The filing party further claimed that, the existence of licensing should not be considered as the evidence of trademark use.
However, the Supreme Administrative Court stated that the assessment of trademark use should be analyzed based on whether there is a direct association between the mark and the goods or services. Given this, even if a license agreement is cancelled and loses its effect retroactively, the licensee's bona fide use of the trademark will still be recognized as the legitimate use of the trademark if the licensee relied on the agreement in good faith.
The Supreme Administrative Court further specified that, even though the Trademark License Agreement in this case might be cancelled by the shareholders of the trademark registrant under the Corporation Law in Taiwan because of dual agency, if the licensee actually used the trademark during the licensing period, the use by the licensee can still be recognized as Registrant's legitimate trademark use to maintain the exclusive right.