Trademark Act: Use of a cancelled trademark during appeals process

[2014/01/20]

Under Taiwanese law, while registration of trademark is not mandatory, the user of a trademark must register it to obtain trademark protection in most cases. A trademark owner is not only entitled to use or authorize a third party to use the trademark, but also able to prevent any third party from registering and using identical or similar trademark for identical or similar goods and services to the registered trademark from the date of publication. Since the trademark registration is not mandatory and the review process may easily go beyond six months, it is common for businessmen to use the trademark before they file application for trademark registration or the time trademark has been publicized.

From the date that the Intellectual Property Office (“IPO”) publicizes trademark registration, the trademark applicant shall have the exclusive right on the trademark registered but the right is subject to opposition by any third party within three months following the publication. (§§33I, 48I Trademark Act) This public review system is designed to protect the right and interest of the prior trademark registration, avoid consumers confusion, so as to seek balance between the public goods and the private interests. However, once the opposition is sustained and the registration of the opposed trademark is cancelled, the owner of the trademark cancelled will face tough decisions on whether to take an administrative appeal or remedy, as well as whether to recall or continue to sell the goods during the administrative remedy procedure.

To take an administrative remedy or not involves with winning rate of individual case, underlying economic factors and the legal costs to be incurred that we are not going to elaborate here. Instead, this article addresses civil liability and criminal liability that may arise against the trademark applicant who keep using the cancelled trademark before the cancellation decision becomes final and conclusive.

Criminal Liability
Cancellation of registered trademark is an administrative disposition that becomes effective when the decision arrives trademark applicant. When it arrives, the trademark registration shall become null and void retroactively. However, if the trademark applicant disagrees to the cancellation and file appeals, the effect of the trademark registration becomes moot. Then the question left is that whether the applicant is guilty for use of the trademark cancelled before the cancellation decision becomes final. The Taiwan High Courts are divided in this regard.

In not-guilty judgments, the judges explained that since the trademark registration is still pending, whether the trademark applicant has criminal intent shall be determined on underlying facts in each cases and in Judgment No.93-Shang-Yi Tze-313 the judges gave special weight to the fact that different trademark examiners had rendered different decisions in opposition process on the similarity of the trademarks in question and holds that the defendant was acting on reasonable believing. The judgment further indicated that if the person continues to use the trademark cancelled after the cancellation decision is final and binding, the criminal intent exists. On the other hand, the user who believes in trademark registration and use the trademark during the appeal process does not have criminal intent but could incur civil liability.

On the countrary, Judgment No.94-Shang-Yi Tze-951 held that the defendant’s criminal intent may not necessarily be relevant to whether the cancellation decision is pending or not. By comparing the defendant’s product packaging and trademark with the trademark infringed, the Judgment found out they are highly similar, and thereby the Court determined that the defendant has criminal intent. In addition, Judgment No.96-Shang-Yi-636 also held that the defendant is guilty based on the facts that he abandoned using the trademark that he had been using and he cozened the trademark examiner into accepting application by filing applications separately for words and symbol that are similar to the trademark infringed.

Based on the above, we conclude that the courts’ views towards the issue is that the person who use cancelled trademark during the appeals is not guilty if he acts in good faith believing in his trademark is not similar to the trademark registered by another party. However, if there exist facts from which criminal intent can be inferred, such as prior contractual, business or employment relationship between the defendant and the trademark owner, similarity in package or tactic way in filing trademark application, it is more likely the defendant will be found guilty.

Civil Liability
Unlike criminal liability requires element of intent, a person who intentionally or negligently, has wrongfully damaged the rights of another is bound to compensate the injured for his injury. The use is more probable to constitute an infringement of trademark in a civil court than a criminal court.

Given that the law does not expressly regulate that it is legitimate for the use of cancelled trademark during the appeals, and there have been guilty decisions against such use, we suggest once the trademark has been cancelled by the Intellectual Property Office, the applicant should stopping manufacturing, possessing, displaying, selling, importing or exporting goods bearing the trademark cancelled.