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During the COVID-19 Pandemic, the Restriction on Dine-In Services Resulting in the Non-Use of a Trademark Does Not Constitute a "Justifiable Reason" As Referred to in Article 63, Paragraph 1, Subparagraph 2 of the Trademark Act
1. Grounds for Revocation Due to the Non-Use of a Trademark for a Continuous Period of No Less Than Three Years under the Trademark Act and Relevant Provisions
Pursuant to Article 63, Paragraph 1, Subparagraph 2 of the Trademark Act, the Taiwan Intellectual Property Office (IPO) shall revoke the registration of a trademark at its discretion or upon an application filed by any third party if such trademark has not been used or has been suspended from use for a continuous period of no less than three years without justifiable reasons, unless the trademark has been used by a licensee. Furthermore, Article 67, Paragraph 3 of the Trademark Act provides that Article 57, Paragraph 3 shall apply mutatis mutandis where the owner of a revoked trademark submits proof of use; such proof must be capable of establishing the genuine use of the trademark in accordance with general commercial practices.
In addition, according to Article 3.3 of the Notice on the Use of Registered Trademarks, as amended and promulgated on 23 August 2019 by order of the MOEA under No. 10820032230 and enforced on the same day, a trademark owner citing a "justifiable reason" for non-use of its registered trademark means that it is unable to use the trademark due to a factual obstacle or any other circumstance that cannot be attributed to itself. Such circumstances include the following:
(1) Before the launch of a drug, approval by the competent authority in charge of pharmaceutical affairs must be obtained. Before the examination is complete and the drug is approved, use of the drug is not allowed. This state of affairs constitutes a justifiable reason for non-use.
(2) As yet, alcoholic products made in China are not permitted to be imported for sale in Taiwan. This constitutes a justifiable reason for non-use.
(3) Cutoff of maritime transport, shortage of raw materials, and occurrence of natural disasters leading to material damage to factory machinery, which in turn causes factory production or sale to be discontinued, are considered justifiable reasons for non-use (see the Administrative Court Judgment No. 55-Pan-Zi-301).
(4) Bankruptcy and liquation: Besides settling pending affairs and facilitating liquidation, a company during the period of bankruptcy or liquidation loses the capability to operate its business. However, being a valuable property in commerce, a trademark is part of a company's assets. To ensure that the trademark does not become unusable and is not revoked during bankruptcy proceedings, which in turn would prevent repayment to creditors, it should be deemed that there is a justifiable reason for non-use of the trademark.
Therefore, the owner must make genuine use of the registered trademark, and such use must conform to general commercial practices. This requirement is often referred to as "trademark use for preserving the right," which serves to maintain the owner's trademark rights. If a registered trademark has not been used or has been suspended from use for more than three years, this constitutes grounds for revocation of the registered trademark. Whether the trademark has been genuinely used shall be determined as a matter of fact by considering factors such as the period of transactions, the types of goods, the volume of sales, and whether the manner of trade accords with general commercial practices (see the Supreme Administrative Court Judgment No. 110-Shang-Zi-303).
2. Background of the Case
The Plaintiff is the owner of the registered trademark "凱仕KISS" Reg. No. 24002 ("trademark at issue"), designated for the services "restaurants; coffee shops; bar services; hotels; guesthouses; motel services; travel agencies and other hospitality-related services" in Class 43. On 1 November 2022, the intervenor filed a non-use revocation action with the defendant IPO, requesting revocation of the trademark at issue on the ground that it had not been used for a continuous period of more than three years without justifiable reasons. On 13 June 2024, the IPO issued a decision revoking the registration of the trademark at issue. Dissatisfied with the IPO's decision and wishing to challenge it, the Plaintiff filed an administrative appeal with the Ministry of Economic Affairs ("MOEA"), which was subsequently dismissed. It then filed an administrative lawsuit with the Intellectual Property and Commercial Court ("IPC Court").
3. IPC Court Decision
The Plaintiff asserted that in response to the COVID-19 pandemic, the Taiwanese government announced a Level 3 epidemic alert in May 2021, under which dine-in services were prohibited, resulting in the suspension of the Plaintiff's business operations. The Plaintiff therefore argued that its failure to continue using the trademark at issue during the Level 3 epidemic alert period should constitute a justifiable reason for non-use.
The Court held that although during the COVID-19 pandemic the government mandated that restaurants provide only take-out services and prohibited dine-in services, such measures did not amount to a complete shutdown of the food and beverage industry. Moreover, even in the face of force majeure, a trademark owner is still expected to maintain effective use of the trademark to the extent possible, such as through licensing or online sales, in order to mitigate the risk of revocation. The use of the trademark at issue was therefore not entirely impossible. If the Plaintiff had indeed ceased operations during that period, it could have submitted evidence and sought relief from the IPO after the pandemic restrictions were lifted. Furthermore, from the end of the Level 3 epidemic alert (27 July 2021) until the intervenor filed the non-use revocation action (1 November 2022), the Plaintiff still had more than one year during which it could have used the trademark at issue.
The Court found that the evidence submitted by the Plaintiff was insufficient to establish that it had used the trademark at issue in connection with the designated services, i.e., "restaurants; coffee shops; bar services; hotels; guesthouses; motel services; travel agencies and other hospitality-related services," within the three-year period preceding the revocation application. The Court further determined that the Plaintiff lacked any justifiable reason for non-use. Accordingly, Article 63, Paragraph 1, Subparagraph 2 of the Trademark Act applied, and the Court dismissed the Plaintiff's action seeking the revocation of the IPO's decision and the administrative appeal decision (Intellectual Property and Commercial Court Judgment No. 113-Xing-Shang-Su-Zi-66).
4. Conclusion
In determining whether a trademark owner's failure to use a registered trademark for a period of three consecutive years constitutes a "justifiable reason" under Article 63, Paragraph 1, Subparagraph 2 of the Trademark Act, Taiwanese courts apply a case-by-case analysis. Nevertheless, in the present case, the Court expressly held that the trademark owner's reliance on the government's Level 3 epidemic alert during the COVID-19 pandemic—specifically the prohibition on dine-in services—as a basis for claiming an inability to use the registered trademark during that period is insufficient to constitute a "justifiable reason," as the trademark owner could still have used the registered trademark on takeout packaging, physical or online promotional materials, or through other available means so as to ensure right-preserving use under the Trademark Act and to reduce the risk of revocation. Additionally, whether a restaurant chose to suspend its operations during the pandemic is a voluntary business decision and not a circumstance beyond the trademark owner's control. Accordingly, such a claim cannot be regarded as establishing a "justifiable reason" for non-use.