Newsletter
The Difficulty in Pursuing Legal Remedies for Unregistered Trademarks
I. Introduction
Taiwan adopts a first-to-file trademark system. Upon registering a trademark with the Taiwan Intellectual Property Office (TIPO), the trademark owner is within its rights to prevent others from using its trademark unless they are given permission to do so. Otherwise, any use of the trademark without consent may incur civil and criminal liabilities. If another party files for registration of a similar or identical trademark for use on identical or similar goods or services, such application may be rejected by TIPO through administrative proceedings. This shows that obtaining registration of your trademark early in Taiwan gives you the advantage of possessing a viable means of attack and defense.
When it comes to devising trademark strategies on a global scale, foreign companies have to consider a variety of factors, such as the schedule or time frame for trademark planning, the cost of trademark applications, and the number of trademark cases under examination by local trademark registrar offices. Sometimes these factors lead to a situation where foreign companies do not have their trademarks filed, or filed in time, for registration in Taiwan. What happens if their rights are infringed when their trademarks are unregistered? How does one seek legal remedy?
Given that a work or design may simultaneously meet the requirements for obtaining the rights to a number of intellectual property rights and accordingly be under multifaceted protection, companies can attempt to assert its claims on the basis of copyright infringement laws or the provisions on prohibiting unfair competition stipulated in the Fair Trade Act.
The Civil Judgment 110-Tai-Shang-Zi-2923 recently rendered by the Supreme Court gives one such example. In the judgment, the court of first instance ruled that the Taiwanese company shall pay damages in the amount of NT$5,000,000 to the Chinese company. The court of second instance, however, completely overturned the decision with respect to the determination of copyright infringement and unfair competition, and instead dismissed the claims for damages filed by the Chinese company. Subsequently, the Chinese company appealed against part of the judgment to the Supreme Court, which later remanded the case to the court of second instance.
From the judgments of first and second instances, we can see many differences in the determination of various disputes over copyright infringement and unfair competition. Clearly, without recourse to trademark rights, the road to obtaining legal remedy is much more challenging. We briefly illustrate the gist of the judgments in the following:
II. Key differences in the judgments of first and second instances in the determination of various disputes over copyright infringement and unfair competition
(i) Judgment of first instance
At the time the plaintiff filed the civil lawsuit with the court of first instance in Taiwan, it had already obtained copyright and trademark registrations in China and filed for trademark registration in Taiwan. However, as the process of trademark registration was still ongoing, the plaintiff could not directly cite the provisions on trademark infringement in the Trademark Act in its lawsuit to claim that its TM "咪哒miniK" had been infringed by the similar TM "咪噠miniK" registered for use by the defendant's goods and services, with the trademarks differing only in script (Traditional vs. Simplified Chinese).
As the next best course of action, the plaintiff claimed that the defendant infringed its copyright by reproducing and publicly transmitting its artistic work; that the outward design of the defendant's product is similar to that of the plaintiff's product; that the plaintiff's product and trademark have become well-known in Taiwan, so its TM "咪哒miniK" should be a well-known mark in Taiwan; that the defendant's wording on its webpage, namely "引進" (introduce) and "總代理" (general agency), misleads people into believing that the plaintiff and the defendant have a collaborative, agency or licensing relationship; that the defendant has exploited the plaintiff's fruits of labor for increased business opportunities; and that the defendant have violated Articles 21, 22 and 25 of the Fair Trade Act through these actions.
(ii) Judgment of second instance
The case was later appealed to the court of second instance. Given that the copyright had changed hands, the court examined the relevant facts and evidence and determined that the Chinese company bringing the suit did not prove its assignee status as the copyright owner. With this determination, the court soon dismissed the plaintiff's claims of copyright infringement.
Regarding the claim that the reputation of the trademark owned by the Chinese company in China has reached Taiwan and become widely known to the relevant businesses and consumers in Taiwan, the court of second instance completely rejected it and reiterated the following: "As the territoriality principle is inherent in the Trademark Act, the trademark registration obtained by the appellee in China cannot be cited to claim rights under Taiwan's civil law."
In the judgment of first instance, a relatively relaxed determination was made: "Without requiring that the plaintiff give proof to show that it has a clear schedule or plan to enter into the Taiwan market, one could directly examine the "product market" and the "geographic market" factors to determine that the plaintiff may enter into the Taiwan market as a competitor, exerting pressure on existing businesses." Accordingly, the Fair Trade Act was deemed applicable.
In the judgment of the second instance, however, a stricter determination was made: "The appellee has maintained in its claim that it plans to enter into the Taiwan market. Yet, during the proceedings of the court of first instance, it admitted it has no business operations in Taiwan. . . . Hence, the goods and services . . . provided thereby have not entered into the Taiwan market. . . . Furthermore, the appellee is a juridical person in China. If it seeks to do business in Taiwan, it has to apply for an investment permit in accordance with the law. To sell or provide mini KTV goods or services, it also has to set up a place of business or recruit a distributor. However, the appellee . . . did not provide evidence to show the possibility of it entering into the Taiwan market. Therefore, it is not easy for consumers to choose or change the entity with whom to do business." With this reasoning, it was determined that the Chinese company could not claim applicability of the Fair Trade Act.
III. Conclusion
The Supreme Court approached the case from the angle of "well-known trademark," examining whether the facts and evidence submitted by the Chinese company were sufficient to determine that its registered trademark in China was not only well known there but also that it was widely recognized by the relevant businesses and consumers in Taiwan. This determination mattered as a potent legal means of attack, because it would decide whether the provisions of civil liability for damages in the Fair Trade Act would be applicable. The court believed that the judgment of second instance did not examine this issue thoroughly and did not explain how it had determined the facts of and the basis for the requirements of "well-known trademark," and accordingly remanded the case to the court of second instance, which means the polarized results of the judgments of the courts of the first and second instances have to be examined yet again.
Given the outcome of this case so far, it is clear that, in terms of burden of proof or the strength of the effect of the legal liabilities produced, legal remedies other than those based on a trademark registered in Taiwan available through the Trademark Act are not as favorable. Therefore, companies are well advised to undertake overall trademark planning as early as possible. It not only helps to prevent others from engaging in trademark squatting or acts of counterfeiting in countries or regions where your trademarked goods are made and sold, but serves as a strong basis for asserting your rights in case any legal disputes arise in the future.