Territory principle applies to products never displayed in Taiwan

In a trademark revocation application that is based on more than three years of continuous non-use, a trademark owner must submit evidence to prove that it has used the targeted mark in Taiwan within the previous three years. In addition to showing the date, trademark device and products, evidence must also show that the trademark was used in Taiwan. However, if the products were never exhibited in Taiwan, but the trademark owner accepted and handled orders there, does this satisfy the territory requirement (ie, that the targeted trademark was used in Taiwan)?

The Supreme Court has issued Decision 107 pen zi 1427 in which it stated that trademark use constitutes products that were never displayed in Taiwan but were ordered from there. According to Article 5 of the Trademark Act, there are no requirements for the products’ method of sales. Based on Taiwan’s past trademark practice, a trademark owner who exports its products from Taiwan is using the mark there, even though local consumers may not be aware of this.

In this case, the trademark owner was entrusted by a Saudi Arabian client to manufacture shoes bearing the mark. The trademark owner then assigned a Hong Kong company to manufacture the shoes in China. The Hong Kong company subsequently exported the finished shoes directly from China to Saudi Arabia.

The revocation applicant argued that the products were never displayed in Taiwan and that the trademark owner’s profits were from commissions rather than the sale of the products. As the Saudi Arabian client also owned a trademark registration in Saudi Arabia, it used its own mark there. The applicant therefore argued that the targeted mark was never used in Taiwan. It claimed that the client’s orders sent to the trademark owner (even though they displayed the targeted trademark device) did not constitute evidence of use in Taiwan. Thus, the applicant indicated that the ruling of the IP Court was in error. 

The Supreme Court agreed with the IP Court. It stated that because the related transaction documents were issued from Taiwan, the targeted mark was legally used there.

Further, the Supreme Court indicated that all related orders were completed in Taiwan by the trademark owner, they were all issued from Taiwan and displayed the targeted trademark. This constituted sufficient evidence of use. Also, the owner of the targeted mark was not the Saudi Arabian client. Thus, the mark was legally used in Taiwan.

The key point in this case is that although the mark was never displayed in Taiwan, its inclusion in transaction documents constitutes trademark use according to the territory principle. The method of sales, in which the vendor entrusted a third-party manufacturer in a third country to export products directly to the purchaser, is a common arrangement in the modern market, especially for an exporting country such as Taiwan. It is reasonable and fair to have to demonstrate trademark use in such types of international transactions.