Significance of Trademark Application in Taiwan

In the past, most brands with no plan to enter the Taiwan market tend not to apply for trademark applications in Taiwan. However, with the massive trademark squatting disputes arising cross-strait in the past couple of years, now Chang Tsi & Partners recommends brand owners who would like to develop business in the Greater China area to consider applications for trademark protection in Taiwan.

Specifically, we would like to use a newly released case made by Taiwan IP Court to reveal how prior registrations/ trademark squatting in Taiwan will potentially affect your business in the Greter China market.

NeuEvo Blend is a famous glucosamine product sold in Taiwan by NEUEVO CORPORATION (hereinafter “NEUEVO”). NEUEVO also registered “紐力活” (the Chinese translation of NeuRvo) under registration no. 01385383 in Class 5 and no.01403659 in Class 32 in Taiwan.

TOP GREATS BIOTECH CO., LTD. (hereinafter “TOP Co.”) is a Taiwanese company and the trademark owner of “纽力活” in Mainland, China under registration no. 11722168 in Class 5. TOP CO. has licensed the trademarks to two Chinese companies, and both Chinese companies placed the order to TOP Co. requesting to manufacture several enzyme drinks with the logo “纽力活” in 2017. All the enzyme drinks manufactured by TOP Co. with the logo “纽力活” were all exported to Mainland, China. However, NEUEVO still filed the trademark infringement lawsuit against TOP Co. in Taiwan, and the IP Court ruled the enzyme drinks manufactured by TOP Co. with the logo “纽力活” constituted trademark infringement and requested TOP Co. to cease the infringing activities.

The Court ruled the enzyme drinks manufactured by TOP Co. with the logo “纽力活” constituted trademark infringement based on below reasons:

1. The logo used on the enzyme drinks is confusingly similar to the trademarks registered by NEUEVO. Moreover, enzyme drinks are considered as the nutrition supplements in Taiwan, which is highly similar to the designated goods of NEUEVO. Thus, the judge concluded the enzyme drinks with the logo “纽力活” will cause confusion to the relevant consumer.
2. Both NEUEVO and TOP Co. are in the nutrition supplement industry. Thus, TOP Co. shall notice the brand “纽力活” in Taiwan.
3. The judge found the manufacturer of enzyme drinks with the logo “纽力活” by TOP Co., has constituted trademark infringement. To this, TOP Co., mainly argues that TOP is the legitimate trademark owner of “纽力活” in Mainland, China and therefore it licensed “纽力活” to two Chinese companies. TOP Co., just manufactured the order placed by the two Chinese companies who own the legitimate trademark licensees. As all the products were exported to Mainland, China, the manufacture of TOP Co., shall not be treated as use of a trademark in Taiwan. Nevertheless, the Court concludes manufacturing the products with highly similar logo is a kind of use of a trademark. Thus, TOP Co., has infringed trademark rights of NEUEVO.

Our comments

In the past, when examining if the action has constituted a trademark infringement, the main principle is whether the infringer uses the trademark in the course of trade where such a trademark can be recognized by relevant consumers as a trademark. The main argument of TOP Co. is they did use the trademark but NOT in the course of trade. They simply manufactured the products by order of the trademark licensee, not for themselves. The Court rules even TOP CO. is the OEM of the trademark licensee, the trading between these entities is still count as in the course of trade. Even the enzyme drinks were all exported to Mainland, China, but cross-strait online shopping are very popular that Taiwanese consumers could still purchase the enzyme drinks with the logo “纽力活.” Thus, the manufacture of the enzyme drinks with the logo “纽力活” constitutes trademark infringement.

In this case, Taiwan trademark owner fights against the trademark owner who registered highly similar trademark in Mainland, China and would like to manufacture similar products with such trademark in Taiwan.

What if that’s your brand? You legitimately registered the trademark in Mainland, China and would like your Taiwan OEM partners to manufacture the products with the trademark for you. All the products will be shipped to Mainland, China. Meanwhile, there is a bona fide third party/ malice trademark squirter registered a highly similar (identical) trademark in Taiwan. Your brand may face the risk of being sued as trademark infringement in Taiwan.

Or, the malice trademark squirter who registered the trademark in Taiwan may manufacture products with a highly similar (identical) trademark in Taiwan and ship them to Mainland, China by parallel import or other channels to damage your market share in Mainland, China.

Takeaway

1. Seek Attorney’s assistance to review your trademark protection strategy in the Greater China area.
2. Consider registering trademarks in Taiwan to better protect your brand even your brand did not plan to enter the Taiwan market. Best way to prevent trademark squatters from leveraging the Taiwan trademark registration to damage your brands in Mainland, China. In the past 2 years, we located more and more trademark squatters registering famous Chinese trademarks in Taiwan.