Wide-ranging draft amendment looks set to reshape trademark landscape

On 9 May 2023 the Taiwanese Congress passed a draft amendment to the Trademark Act. The government has yet to decide the amendment’s implementation date, but its primary features – detailed below – have significant implications for the country’s trademark regime.

Qualifications of trademark agents

Taiwan presently places no conditions on those who can describe themselves as trademark agents. However, due to the growing complexity of trademark practices, the amendment will require that individuals either pass a trademark agent exam held by the Taiwan Intellectual Property Office (TIPO) or else have been engaged in trademark examination for a certain amount of time in order to register as a trademark agent. Conversely, lawyers are still eligible to act as agents without meeting these requirements.

Requests for accelerated examination

Under the amendment, if trademark applicants require timely registration (eg, when their goods are already on the market or when infringement has occurred and litigation is pending), they may request expedited examination by providing the TIPO with a statement of facts and reasons, along with payment of an official fee.

This acceleration programme is unavailable if the office has already issued an official letter requesting a correction or issued an office action to reject the application. Additionally, it does not apply to applications for certification marks, collective membership marks or collective trademarks. 

Functional elements in trademarks

Under the current Article 30.1.1 of the Trademark Act, trademarks “exclusively necessary for the goods or services to be functional” are not registrable. The amendment goes further, stating that trademarks containing functional elements are ineligible for registration unless said elements are depicted using dotted lines. The TIPO’s explanatory notes on the amendment states that functional elements cannot obtain registrability through use and will not be considered in determining trademark confusion. 

If a trademark contains functional elements that cannot be presented in dotted lines (eg, sounds or smells), the applicant must declare that they are not a part of their application.

Enhanced protection of famous organisation names

The amendment prohibits the registration of a mark that is the same as or similar to the name of a famous person, business or other organisation if it is likely to confuse consumers. By adding the words “or similar to” into the current law, the amendment enhances protection for the names of famous organisations.

Indicative fair use

The pre-amended Trademark Act already recognised the “descriptive fair use of trademark[s]” as a form of non-infringement. The amendment now further defines ‘indicative fair use’ to formalise a longstanding practice of the TIPO and Taiwanese courts. 

Under the act’s new Article 36.1.2 trademark rights cannot exclude the use of another person’s mark if the user needs to indicate that person’s goods or services, and if the use is in good faith and consistent with the conventions of commercial transactions.

New exceptions to trademark right exhaustion

Taiwan’s Trademark Act follows the principle of international exhaustion but provides exceptions if the trademark owner intends to prevent changes or impairments to parallel imports after they enter Taiwan’s market or if there are other legitimate reasons.

The amendment further permits exceptions to the exhaustion principle in cases involving the prevention of “unauthorized processing or alteration” of parallel imports. The existing catch-all clause for “other legitimate reasons” remains unchanged.

Retroactive effect of TIPO rulings to revoke registrations due to oppositions or invalidations

Article 54 of the Trademark Act currently states that “if an opposition to a registered trademark is sustained, the registration of the opposed trademark shall be revoked”. This also applies to invalidation actions. According to the Administrative Procedure Act, revoking trademark registration is meant to have a retroactive effect, such that the registration is deemed to have never existed. However, the concise language of the Trademark Act fails to specify the conditions necessary to trigger this effect.

The proposed amendment now specifies that if the TIPO issues a decision to revoke a registration in an opposition or invalidation case, the retroactive effect will be triggered if the registrant chooses not to appeal or if the appeal is dismissed by a non-appealable court decision.

The explanatory note accompanying the amendment clarifies that the term of trademark rights is long and renewable and that the scope of rights may change during appeals. Therefore, if the registration is voided from its inception before the ruling becomes final and non-appealable, it could result in irreparable harm to the registrant’s reputation and to the goods and services bearing the mark currently in circulation.

Retroactive effect of TIPO rulings to cancel a registration in cancellation actions

The amendment stipulates that if the TIPO cancels a trademark registration and the ruling has become final and non-appealable, the registration will be retroactively deemed void from the action’s filing date or the start of the proceeding if initiated ex officio by the office. Most cancellation actions are filed by third parties to challenge a mark’s use status. 

Anyone can file an invalidation action based on absolute grounds of rejection

Under the pre-amendment Trademark Act, only an interested party could file a trademark invalidation action. The amendment relaxes this restriction by granting anyone standing to file a trademark invalidation action based on absolute grounds of rejection (namely, through Articles 29.1 and 30.1.1-30.1.8). Invalidation actions based on relative grounds of rejection (eg, similar registrations or contradictory rights) remain fileable only by interested parties. 

Relaxed Customs proceedings

Under Article 75 of the pre-amendment Trademark Act, if Customs officials seized imported or exported goods suspected of infringing on a registered trademark, the mark’s owner or agent was required to respond within a short time and “appear at the customs house” soon after to identify the items in question and confirm whether they infringe on the registered mark.

The amendment removed this outdated and burdensome requirement of physical appearance by registrants in light of the availability of advanced information technologies. In fact, as of September 2021, Taiwan’s Customs Administration has implemented an information exchange platform to enhance border protection. Trademark owners can now access digital photos of suspected infringing goods on the online platform when notified by the Customs house, eliminating the need for them or their agents to visit on short notice.

This is an Insight article, written by a selected partner as part of WTR's co-published content. Read more on Insight

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