Patent Amendments ©(Part II of II)

The Recent Taiwan IP Court’s Perspective on the Standard of Serving Bona Fide Prior Use as Grounds for Plea of Non-Infringement

Yu-Li Tsai, Patent Attorney

■ Bachelor of EE from National Taiwan University

■ Master from Telecommunications from National Taiwan University

■ IP Master from New Hampshire Law School (Franklin Pierce)

1. Background

An IP Court decision was rendered in 2014. In this case, the facts show that the Complainant applied for a trademark registration at the TIPO using the words “正點部品” with designated goods such as automobiles and motorcycles, and components and parts thereof on October 21, 2004. On June 16, 2005, the trademark was registered and published and the Complainant obtained the exclusive rights of the trademark (while the words “部品” were disclaimed from the exclusive rights). The Complainant began using the words “正點部品” after registration.

Defendant applied to register and establish Yu Jia Co. on September 24, 2004 and engaged in the business of marketing components and parts of automobiles and motorcycles. Prior to April 14, 2005, Yu Jia Co. commissioned Shih-Li Co. to print stickers bearing the words “‘TWH’, ‘SCOOTER RACING COMPONENT’, ‘正點部品’”, and later on, Shih-Li Co. completed the printing on April 14, 2005. The Defendant also obtained trademark exclusive rights on the mark “TWH” on January 1, 2011.

The Complainant learned that the Yu Jia Co. used the words “正點部品” on the goods without the Complainant’s consent or authorization, and accused that the Defendant of committing the crime of unlawfully selling infringing goods under Article 97 of the Trademark Act on September 5, 2012. In addition, the Defendant stated that it had started to use the words “正點部品” before founding Yu Jia Co. (at the time prior to the registration application date of the trademark at issue) when interrogated by the police.

2. Law explanation of the IP Court on bona fide prior use

In the following circumstances, one is not bound by the legal effect of the trademark rights under Article 36(1)(3) of Trademark Act: using bona fide, prior to the filing date of the other’s registered trademark, an identical or similar trademark on identical or similar goods or services. The legislation purpose of “bona fide prior use” lies in the spirit of the first-to-use principle to balance the interests between parties and the disadvantages of the first-to-file principle. The “bona fide” under this rule is not judged on the basis that one does not know of the existence of the other’s trademark, but on the basis that using the identical or similar trademark on identical or similar goods or services does not result from unfair competition intent to confuse consumers.

3. Decision of the IP Court

It should be noted that before April 14, 2005, Yu Jia Co. had commissioned Shih-Li Co. to print stickers bearing the words “‘TWH’, ‘SCOOTER RACING COMPONENT’, ‘正點部品’”. Therefore, the Defendant should have started using the words “正點部品” on the components and parts of automobiles and motorcycles before April 14, 2005. In addition, the completion date of printing the stickers is prior to the registration and publication date (June 16, 2005) of the trademark “正點部品”. The Complainant started using the words “正點部品” after registration. It can be seen that the Defendant had first used the words “正點部品” on components and parts of automobiles and motorcycles prior to the Complainant had.

Furthermore, although the contents of the Shih-Li Co.’s delivery note do not clearly demonstrate that the Defendant had first used the words “正點部品” on the components and parts of automobiles and motorcycles prior to the time when the Complainant applied to register “正點部品” at the TIPO (October 21, 2004), it had been over 8 years since the Complainant applied to register “正點部品” when the police searched Yu Jia Co. (December 5, 2012). Therefore, in the situation that there was an 8-year time gap, it is hard to expect that the Defendant could keep complete evidence and it is unreasonable to impose this disadvantage upon the Defendant. More importantly, there was no evidence to deny that the Defendant had started using the words “正點部品” before the founding of Yu Jia Co, or before the registration application date, October 21, 2004, of the trademark at issue. Furthermore, at the same time that the Defendant used the words “正點部品” on its goods, it also used the trademark “TWH”, which is sufficient to distinguish Yu Jia Co.’s goods from the Complainant’s goods, and so the Defendant’s use of the identical or similar trademark on identical or similar goods or services did not result from unfair competition intent to confuse consumers. Therefore, the Defendant’s act should be held as meeting the conditions under Article 36(1)(3) of the Trademark Act, being bona fide prior use, and was not bound by legal effect of the trademark rights at issue. Similarly, the Defendant subjectively had no intention to infringe the trademark at issue, and did not violate Article 97 of the Trademark Act.

4. Commentary

We are reminded from this case that the IP Court’s position for judging whether a prior use is “bona fide” use is that whether a defendant knew or should have known of the existence of a complainant’s trademark is insufficient to deny the prior user’s “bona fide” use, and something more must be provided to prove that the defendant have used the identical or similar trademark on identical or similar goods or services with an unfair competition intent to confuse consumers.