Content

The Test for Well-Known Trademarks in Taiwan

UCC Holdings Co. Ltd. v. Ministry of Economic Affairs

SAC, Pan Zi, NO. 48,2012,

IP Court, Xingshang gengyi Zi, No. 1, 2012

Taiwan’s Trademark Act has protected well-known trademarks from dilution since 2003. A trademark shall not be registered if it is identical or similar to the well-known trademark or mark of another person, and is likely to cause confusion or misidentification by the relevant public, or is likely to dilute the distinctiveness or the reputation of the well-known trademark or mark. Trademark Act §30(1)(11).[1]

Thus to receive protection against dilution, a trademark must be well-known (zhuming). Although the Act itself does not define “well-known”, the Ministry of Economic Affairs has defined the term “well-known” in the Enforcement Rules to the Trademark Act as referring to a mark that “proven by sufficient evidence, is commonly known by the relevant enterprises or consumers.”[2]

Nonetheless, in some cases Taiwan’s Intellectual Property Court (“the IP Court”) has effectively upheld an extra element to the test for dilution by holding that to receive dilution protection a mark must be a “highly well-known trademark” (gaodu zhuming), which is recognized by or well-known to the general public and not just by the relevant enterprises or consumers. This “highly well-known test” came from TIPO’s (Taiwan Intellectual Property Office) Examination Guidelines for the Protection of Well-known Trademarks of 2007. In a recent case, though, Taiwan’s Supreme Administrative Court (“SAC”) has rejected this view and adopted a more expansive standard whereby a mark may receive dilution protection if it is either commonly known to the general public or the relevant consumers or enterprises.

The case involves the UCC trademark registered by UCC Holdings Co., Ltd., (“UCC Holdings”) a leading Japanese coffee company. UCC Holdings owns a number of registrations for the well-known UCC mark “” that designates use on coffee and related goods and services in classes 7, 8, 11, 16, 20, 21, 22, 24, 25, 29, and 55. Peakwheel & Co., Ltd. (“Peakwheel”) applied to register the UCC mark “” in connection with bicycles and bicycle parts in international class 12. UCC Holdings opposed the registration of Peakwheel’s UCC mark on the grounds that it created a likelihood of confusion or dilution of the distinctiveness of UCC Holdings’s well-known UCC mark. The TIPO approved the opposition on the grounds that Peakwheel’s registration of the UCC mark was likely to dilute the distinctiveness of UCC Holdings’s highly well-known UCC mark, but the Ministry of Economic Affairs (“the MOEA”) vacated that decision on the grounds that UCC Holdings’s UCC mark was not highly well-known, and thus UCC Holdings could not claim protection against dilution. The IP Court upheld the MOEA’s decision that the registration of Peakwheel’s UCC mark did not create a likelihood of confusion or dilute the distinctiveness of UCC Holdings’s UCC mark. UCC Holdings appealed to the SAC and the SAC vacated the IP Court’s judgment in UCC Holdings Co. Ltd. v. Ministry of Economic Affairs, holding that the IP Court had erred in providing in limiting its protection against dilution only to “highly well-known” marks.

In its reasoning, the SAC explained that while determining whether dilution of distinctiveness or reputation exists, the court should examine the similarity between the conflicting marks, the comprehensiveness of the use of the well-known mark, the degree of inherent or acquired distinctiveness, the degree to which the mark is well-known and other factors.

The SAC found that the marks at issues were highly similar. The IP Court had found that UCC Holdings’s UCC mark was well-known to the relevant businesses and consumers but that it was not “highly well-known” by the general public. The SAC ruled that the IP Court has no legal basis on which to create a new category in which a well-known mark must be “highly well-known” before it is entitled to the anti-dilution protections contained in the Trademark Act. The SAC found that the record showed that UCC Holdings had used its marks extensively with coffee, cream powder, paper, stove, water heater products and its fame was upheld by 12 TIPO invalidations and one court judgment since 1996.[3] The SAC also questioned the IP Court’s finding of fact that the well-known UCC mark was not in fact “highly well-known” by the general public, but stated that this was not the appropriate standard to apply.

In addition the SAC held that when using same or similar marks on different goods or services dilutes association with the sources of specific goods or services on which the well-known mark is used, there is a likelihood of diluting the distinctiveness of the well-known mark and that the anti-dilution provisions of the Trademark Act should apply.

The SAC emphasized that the application of the Trademark Act’s anti-dilution provisions does not require the owner of well-known marks to use it on several different services or goods in order to claim protection against dilution. Even if the junior mark is used with completely different and irrelevant goods or services from/to those with well-known mark, the anti-dilution protections should still apply. The lower court also misconstrued the law by implying that UCC Holdings should have demonstrated a connection between its UCC trademark and bicycle products. The SAC found that UCC Holdings had registered the UCC mark for use with food, apparel, stationary, utensils, kitchenware and facilities of bathroom and air conditioning as well as different services including food stores, restaurants, hotels and cafes. Thus, the SAC also questioned the finding of the lower court that UCC Holdings showed no likelihood of using the well-known mark with bicycle goods.

The SAC found that the combination of letters in “UCC” is uncommon and that the mark was inherently distinctive. UCC Holdings had long marketed and protected the trademark, and it had acquired high distinctiveness as a result as well. For these reasons, the SAC vacated the IP Court’s judgment and remanded the case back to the IP Court.

The IP Court delivered its latest judgment on July 2012 and upheld the TIPO’s original decision approving UCC Holding’s opposition and revoking the registration of Peakwheel’s UCC mark. It concluded that the conflicting marks are highly similar and that UCC Holdings’s UCC trademark was well known. If Peakwheel were to use and market the junior mark for a period of time in the future, the UCC mark will indicate more than one source of goods to the consumers. Thus, Peakwheel’s registration of UCC mark will dilute the distinctiveness of UCC Holdings’s UCC trademark. Interestingly, the IP Court also found that Peakwheel’s registration of the UCC mark in connection with bicycle products would dilute the potential distinctiveness of UCC Holdings’s UCC trademark and affect the possibility that UCC Holdings might use its trademark in the vehicle market. The IP Court therefore held that there is a likelihood of dilution of the distinctiveness of UCC Holdings’s well-known UCC mark and the registration of Peakwheel’s UCC mark was properly revoked. However, the use of the very same mark on bicycle goods does not create any negative associations, and thus the dilution by tarnishing was not found.

As dilution of well-known marks remains a relatively new issue in Taiwan, the SAC’s clear rejection of “highly well-known test” affords some clarification on the level of protection provided to well-known mark owners. If a mark is well-known as provided by the Enforcement Rules, it deserves protection both from likelihood of confusion and that of dilution by blurring and tarnishment.

We note, however, the UCC case is not final yet, and the Ministry and Peakwheel may appeal the most recent IP Court decision to the SAC again. It is worth noting that the IP Court specifies in its dicta that even if the highly well-known test had been applied, the UCC trademark would still be highly well-known to the general public. Future judgments will reveal whether this dicta is merely a response to SAC’s doubts about whether UCC Holdings’s UCC mark is highly well-known or somehow reflects the reluctance of the IP Court to follow the SAC’s holding on this issue.

Endnote

The UCC Case History

Date of Result Procedure Result
2008.11.27 Peakwheel applied for the registration of UCC trademark “”. TIPO approved the registration.
2010.7.23 UCC Holdings opposed to Peakwheel’s registration. TIPO invalidated the registration.
2010.12.22 Peakwheel filed an administrative appeal to the MOEA, the superior agency of TIPO. The MOEA reversed TIPO’s invalidation in its administrative decision
2011.7.28 UCC Holdings brought an action against the MOEA. The IP Court held for the MOEA.
2012.1.12 UCC Holdings appealed to the SAC. The SAC vacated the judgment and remanded it to the IP Court.
2012.7.26 The IP Court delivered the latest judgment. The IP Court held for UCC Holdings and vacated the decision of the MOEA.

[1] 相同或近似於他人著名商標或標章,有致相關公眾混淆誤認之虞,或有減損著名商標或標章之識別性或信譽之虞者。

[2] 本法所稱著名,指有客觀證據足以認定已廣為相關事業或消費者所普遍認知者。

[3] UCC Holdings had submitted history of the company, sales figures from NT$2-300 million per year from 2002 to 2007, the record of UCC Holdings’s products entering into Taiwan’s market since 1985, records of promotions in all kinds of event and mass media, and its successful opposition records in TIPO, appeal decisions from the MOEA and court judgments from the IP Court.

Commutation of Sentences to Fines in Taiwan

As the owners of intellectual property are well aware, convictions for lesser crimes in Taiwan rarely result in the offender actually serving jail time. But don’t let this stop you from doing what needs to be done, it doesn’t matter of it’s a family member. If you need assistance in relation to issues involving parentage and child support, please contact your friendly Family Lawyers on 1800 632 930. If a court sentences an offender to a custodial sentence of up to six months for an offense that carries a maximum of five years, the sentence can be commuted to to a fine (yike fajin ) at a daily rate of NT$1,000 (c. US$33) to $3,000 (c. US$100). Criminal Code § 41.

IP conviction commuted to fine

For example, criminal trademark infringement carries a maximum sentence of three years. Trademark Act § 95.  Consequently, sentences for criminal trademark infringement are almost always commuted fines. This is illustrated by a 2011 case in which the Shilin District Court sentenced an offender surnamed Liu to a custodial sentence of 40 days for selling counterfeit computer accessories bearing the Hello Kitty and Audio-Technica marks. The sentence was suspended for two years and commutable to a fine of NT$1,000 per day. Shilin District Court, ShenZhijian 18 (2011).

Commutation is discretionary

While most such sentences are in fact commuted, commutation is not automatic but at the discretion of the prosecutor. Taiwan’s Code of Criminal Procedure provides that the sentences are carried out by the prosecutor at the court that handed down the sentence. § 457. This is construed to mean that the power to commute a sentence is at the discretion of the prosecutor.

Keelung City policy against commutation

The Keelung District Prosecutor’s Office has issued a new policy against drunk driving that illustrates this discretion well. Since June of this year,  Keelung prosecutors have been declining to commute sentences of less than six months for drunk driving to fines where the offender has been convicted of driving under the influence twice in the past five years . The Chinese language media Liberty Times reports that 33 drivers in Keelung have not had their sentences commuted to fine as almost certainly would have been the case in other cities or counties and instead have had to serve time for drunk driving. This had led some members of Taiwan’s legal community to argue that drivers in Keelung are being singled out unfairly because this is a purely local policy with no basis in the national policies of the Ministry of Justice (which administers the procurate) or the law. According to this view, the policy of not commuting sentences for these repeat offenders would justified only if the procurate adopts a uniform national policy against commutation of sentences for repeated drunk driving offenses.

Judicial review

Nonetheless, prosecutorial discretion in carrying out sentences is subject to judicial review. The Code of Criminal Procedure provides that a person who has received a sentence may petition the court to review the prosecutor’s carrying out of the sentence for abuse of discretion (budang).  § 484.  Three offenders have petitioned the Keelung District Court since June for reviews of decisions by the Keelung District Prosecutor’s Office not to commute sentences for drunk driving into fines.  One of the petitioners had his petition granted by the court on grounds that his imprisonment would cause undue hardship since he was the sole source of support for his extended family which included his 80 year old mother, young children, and his disabled younger brother. He also promised to reform and not to offend again.

Winkler Partners Welcomes New IP Associate

The newest member of  the Winkler Partners team is Stefan Yao.

Stefan worked for several years as a paralegal at Huang & Partners, specializing in intellectual property rights issues. He graduated from National Taiwan Normal University’s English department and holds a LLM from Shih-Hsin University’s School of Law. Outside of the office, Stefan is a dedicated motorbike rider. He has circled the island of Taiwan on his bike and hopes to take the highway from Beijing to Tianjin on his next ride.

Translations of Taiwan Securities Laws and Regulations Updated

Taiwan’s official portal for securities-related laws and regulations recently published the list of  updated or new translations by Winkler Partners at the end of this post.

The Winkler Partners Translation Department has produced the English translations of securities laws and regulations for the portal since 2002. The portal is updated twice a  month with new and revised content.

Currently, the site contains 1,471 securities laws and regulations, 575 of which have been translated into English.  The site also contains 6,366 administrative letters of interpretation and 1,648 court judgments.

  1. Taiwan Stock Exchange Corporation Rules for Review of Call (Put) Warrant Listings
  2. Taiwan Stock Exchange Corporation Procedures for Merger or Assignment of Operations of Securities Firms
  3. Taiwan Stock Exchange Corporation Rules Governing Call (Put) Warrant Listing Contracts
  4. Taiwan Stock Exchange Corporation Procedures for Verification and Disclosure of Material Information of Issuers of Call (Put) Warrants

Winkler Partners Welcomes New Associates

Winkler Partners welcomes two new associates: Daniel Yen-chun Chen and Liu Chia-yu.

Daniel is a litigator with experience in criminal defense, administrative law, tort claims against public agencies, and enforcement of judgments.

Daniel holds an LLM in public law and an LLB degree, both from National Taiwan University’s College of Law. He clerked at Taiwan Northern Regional Military Court during his national service. Daniel is admitted to practice in Taiwan.

Liu Chia-yu specialized in maritime and insurance litigation before joining Winkler Partners.  She is a graduate of National Taipei University College of Law and holds a M.Sc. in Risk Management and Insurance from National Chengchi University and an LLM in Intellectual Property Law and Knowledge Management from Maastricht University in the Netherlands.

Chia-yu clerked at the Taiwan High Court in Hualien and is admitted to practice in Taiwan.

Obtaining Samples of Counterfeit Goods from Taiwan Customs

Taiwan’s Directorate General of Customs has updated regulations regarding trademark enforcement on import/export goods in order, the Directorate General says, to facilitate the protection of the rights of trademark owners.

Among the updates are provisions detailing the circumstances under which trademark owners may submit requests to borrow samples of suspected goods for inspection. Taiwan Customs will approve requests only if it is difficult to obtain on-site verification of the trademark’s authenticity. The trademark owner must provide a representative to come in-person for the sample good and provide their name, address, and the amount of the suspected good being taken for inspection, as well as give written agreement not to infringe on the interests of the importer and to not use the sample goods improperly. Pursuant to the Trade Mark Act passed in July, the trade mark owner must also post a security bond equal to 120% of the duty-paid price of the goods and relevant duties and taxes or the FOB price of the exported goods and relevant duties and taxes. The value of this security bond must be greater than 3000NTD. If the goods are not returned within the specified amount of time, if they have been damaged, or if they are not the original goods, the owner of the goods may claim damages and satisfy the judgment from the security deposit posted by the trademark holder.

The update also stated that trademark owners can apply to provide customs with information about the infringement of their trademark.

Taiwan FSC: Unapproved Financial Products May Not be Marketed in Taiwan

Taiwan’s Insurance Bureau recently issued a circular to leading insurance industry groups reiterating that  insurance companies and their salespeople are not allowed to solicit or recommend foreign financial products including viatical settlements unless expressly approved by the Financial Supervisory Commission. According to the circular, if insurers are found selling unapproved financial products,  they will face fines anywhere from NT$ 0.9 million (c. US$ 30,000)  to 4.5 million NTD (c. US$150,000). Insurance Act § 138(3).

The Insurance Bureau also stressed the that insurers have a duty to manage and train their salespeople. The insurer should announce the latest financial products approved by the Commission and update this list regularly. If an insurer fails to meet these duties, the Bureau and the Commission can

  • order the insurer to remedy its deficiencies
  • restrict how the insurer allocates its funds
  • order the insurer not to sell certain insurance products or restrict it from offering new products
  • order the insurer to increase its capitalization
  • order the insurer to terminate its managers or employees.  Insurance Act § 138(3).

Should an insurer fail to comply with one of these orders, the Bureau and the Commission have the the power to

  • revoke  decisions made at shareholder meetings or by the board of directors
  • remove or suspend the directors and supervisors
  • impose other necessary measures,  Insurance Act § 138(3).

Translations of Taiwan securities laws and regulations updated (September)

The following updated or new translations by Winkler Partners were recently published on Taiwan’s official portal for securities-related laws and regulations.

The Winkler Partners Translation Department has produced the English translations of securities laws and regulations for the portal since 2002. The portal is updated twice a  month with new and revised content.

Currently, the site contains 1,470 securities laws and regulations, 575 of which have been translated into English.  The site also contains 6,354 administrative letters of interpretation and 1,634 court judgments.

  1. Regulations Governing the Qualification Requirements and Professional Development of Principal Accounting Officers of Issuers, Securities Firms, and Securities Exchanges
  2. Regulations Governing Information to be Published in Private Placement Memoranda by Securities Investment Trust Enterprises When Privately Offering Securities Investment Trust Funds
  3. Regulations Governing Information to be Published in Prospectuses by Securities Investment Trust Enterprises Offering Securities Investment Trust Funds
  4. Regulations Governing Securities Investment Consulting Enterprises (93.10.30 Announced)
  5. Company Act
  6. Regulations Governing Securities Investment Trust Enterprises
  7. Regulations Governing the Offering and Issuance of Securities by Foreign Issuers
  8. Regulations Governing Public Tender Offers for Securities of Public Companies
  9. Regulations Governing Securities Finance Enterprises
  10. Regulations Governing Stock Exchanges
  11. Regulations Governing the Issuance of Call (Put) Warrants by Issuers
  12. Standards Governing Eligibility of Securities for Margin Purchase and Short Sale
  13. GreTai Securities Market Procedures for the Review of Call (Put) Warrants
  14. GreTai Securities Market Supplemental Directions for Applications by Construction Companies for GTSM Listing
  15. Sample Template for XXX Co., Ltd. Remuneration Committee Charter
  16. Regulations Governing Insiders of Securities Firms Opening Accounts at Their Securities Firms for Securities Brokerage Trading
  17. Taiwan Stock Exchange Corporation Rules Governing Contracts for the Listing of Taiwan Depositary Receipts
  18. Taiwan Stock Exchange Corporation Contract for the Listing of Taiwan Depositary Receipts
  19. Taiwan Stock Exchange Corporation Contract for the Listing of Foreign Stock
  20. Taiwan Stock Exchange Corporation Procedures for Routine Regulation and Regulation by Exception Over Financial and Business Affairs of Listed Companies
  21. Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings
  22. Directions for the Conduct of Wealth Management Business by Securities Firms
  23. Operating Rules of the Taiwan Stock Exchange Corporation
  24. Taiwan Stock Exchange Corporation Procedures for Press Conferences Concerning Material Information of Listed Companies
  25. Taiwan Stock Exchange Corporation Procedures for the Exchange of Securities Certificates by TWSE Listed Companies
  26. Taiwan Stock Exchange Corporation Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities
  27. Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies
  28. Taiwan Stock Exchange Corporation Rules Governing Information Reporting by Companies with TWSE Listed Securities and Offshore Fund Institutions with TWSE Listed Offshore Exchange-Traded Funds
  29. Sample Template for XXX Co., Ltd. Rules of Procedure for Shareholders Meetings
  30. Taiwan Stock Exchange Corporation Regulations Governing Contracts for the Listing of Foreign Stocks
  31. Taiwan Stock Exchange Corporation Procedures for Applications by TWSE Listed Companies for the Delisting of Securities
  32. Operational Procedures for the Review of Foreign Securities for Listing by the Taiwan Stock Exchange Corporation
  33. Taiwan Stock Exchange Corporation Operation Directions for the Appointment of Independent Directors by TWSE Listed Companies
  34. Taiwan Stock Exchange Corporation Procedures for Review of the Listing of REIT and REAT Beneficial Interest Securities
  35. Taiwan Stock Exchange Corporation Procedures for Review of Securities Listings
  36. Supplementary Provisions to the Taiwan Stock Exchange Corporation Rules for Review of Securities Listings
  37. Taiwan Stock Exchange Corporation Directions for the Review of Listing of Beneficiary Securities and Asset-Backed Securities
  38. Taiwan Stock Exchange Corporation Regulations Governing Trading of Depositary Receipts
  39. Terms for Establishment of Margin Accounts With Securities Firms for Margin and Stock Loans
  40. Taiwan Stock Exchange Corporation Specific Standards and Procedures for Determining Eligibility of Securities for Margin Purchase and Short Sale Transactions
  41. Taiwan Stock Exchange Corporation Specific Standards and Procedures for Suspending and Reinstating Margin Purchase and Short Sale of Securities, and for Adjusting Margin Purchase Leverage Limits and Short Sale Margin Requirements
  42. Principles for Assignment of Ticker Symbols in the Republic of China Securities Markets
  43. GreTai Securities Market Handling Procedures for Routine Regulation and Regulation by Exception of Financial and Business Affairs of GTSM Listed Companies
  44. GreTai Securities Market Rules Governing Securities Trading on the GTSM
  45. GreTai Securities Market Bond Repurchase/Resale (RP/RS) Master Agreement
  46. GreTai Securities Market Rules Governing Information Reporting by Companies with GTSM-listed Securities
  47. GreTai Securities Market Regulations Governing Over-the-Counter Trading of Financial Derivatives by Securities Firms
  48. Contract for Trading International Bonds on the GTSM
  49. Taiwan Securities Association Rules Governing Underwriting and Resale of Securities by Securities Firms

Executive Yuan Submits Priority Bills to Legislature

Amendments to the Trade Secrets Act are among the 40 priority bills the Executive Yuan has submitted or plans to submit for consideration during this session of Taiwan’s Legislative Yuan. The proposed amendments to the Trade Secrets Act will be submitted in October and include expansion and revision of the regulations regarding responsibility for trade secret violations, prosecution and increasing penalties in extraterritorial cases, the merging of penalties imposed on legal entities and natural persons, and expediting litigation via revisions to requirements for the defendant’s response.

Other draft bills of interest on the list include revisions to regulations governing the administration of free trade ports and granting favorable tax status to businesses in China and its territories (to be submitted in October); new regulations governing development of the cable and satellite television market (submitted in March); expanding protections of patient privacy (submitted in September); stricter regulations for advertisements of food, health food, pharmaceuticals and cosmetics and heavier penalties for violations (submitted in February); and requiring employees to grant workers paid leave to look after children in the case of school closures due to natural disasters (submitted in February).

This year’s second legislative session began on Tuesday, September 18, 2012, and will run through the end of December.

Highlights of Draft Taiwan IPO Trade Secrets Bill

After a further round of revisions to its draft bill to enhance criminal penalties for trade secret misappropriation, the Taiwan Intellectual Property Office submitted the bill to the Executive Yuan in mid-August where it is currently being reviewed. If approved, the Executive Yuan will send the bill to the Legislature where it enjoys broad support.

While the TIPO has not released the full text of its final version of the draft bill, it released a Chinese-language summary of the bill which we translate here. The most important addition to the earlier drafts is the final  ’duty to make a defense’ that creates a discretionary presumption in favor of the plaintiff  if the defendant refuses to answer the plaintiff’s claims.

Offenses

  1. Acquiring a trade secret by improper means (such as stealing, embezzlement, fraud, coercion, or unauthorized reproduction)
  2. Using or disclosing  a trade secret by the person who acquires a trade secret by improper means
  3. Reproducing, using, or disclosing that trade secret without authorization or by exceeding the scope of authorization
  4. Having been instructed to delete or destroy a trade secret by the owner of the trade secret and failing to delete or destroy the trade secret or continuing to conceal the trade secret
  5. Acquiring, using, or disclosing a trade secret after maliciously receiving it

Criminal Penalties

Imprisonment of up to five years and a criminal fine: NT$50,000 to NT$10,000,000.

Extraterritorial  Enhanced Penalties

Enhanced penalties for any of the offenses where the offender intends to use the trade secrets in a foreign country, the Mainland Region, Hong Kong, or Macau.

Vicarious Criminal Liability

If an employee commits any of these offenses, the employer is also subject to criminal liability unless the employer has made utmost efforts to prevent the offense.

Duty to Make Concrete Defense to Advance Proceedings

When a plaintiff has explained and clarified the facts related to an infringement or likely infringement of its trade secret, and if the defendant denies such conduct, the defendant shall make a concrete defense of what he has denied; if the defendant does not reply to the allegations or fails to provide a sufficiently concrete defense by a deadline, the court may, after considering the circumstances, deem [the facts] explained and clarified by the plaintiff to be true.

 

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