Trademark case is a warning for rights holders to act promptly

A trademark owner must initiate litigation to enforce its trademark rights and claim compensation for trademark infringement as soon as possible once it becomes aware of a possible infringement (eg, if the infringer advertises its services on signage or a web page). Recently, Taiwan’s IP Court issued a judgment regarding how to calculate when a right to compensation for trademark infringement expires.

Article 69(3) of the Trademark Act stipulates that “the rights to raise a claim for compensation referred to in the preceding paragraph shall become extinguished if not exercised within two years from the date on which the proprietor become aware of the damage and of the party liable for such damages. This right shall also become extinguished if it is not exercised within ten years from the time of the infringement.” As types of trademark use vary, it is traditionally difficult to determine exactly when a trademark owner became aware of the damage and thus when to mark the beginning of this extinctive prescription – especially where the trademark at issue has been used to sell a service rather than goods.

Businesses usually use marks to promote a service on either signage or web pages which rarely, if ever, need updating. Thus, the number of times infringing actions take place with respect to a service will likely be nowhere near as high as for infringing goods, as these are usually produced continuously, with the mark at issue being used – and thus infringed – every time that an item is sold. However, although an infringer which provides services rather than goods may use the infringed mark only once, the infringement is deemed to exist continually for as long as the signage or web pages bear the mark at issue.

In this particular case, the defendant started to use the infringed mark in 2005; the plaintiff filed invalidation and revocation applications against him in 2009. The court thus held that as the type of use of the mark shown on the signage and web page remained unchanged from 2005 until the time of the trial, the defendant committed one incident of infringement only. As there was no evidence showing that the defendant committed a second or other new infringement, the existing infringement was considered an extension of the defendant’s first instance of infringement. The infringement was fixed and the plaintiff was aware of it because it filed invalidation and revocation applications in 2009. Finally, the court rejected the plaintiff’s request for compensation for trademark infringement due to the lapse of the extinctive prescription period, as the plaintiff was aware of the infringement in 2009 when it filed for invalidation and revocation against the defendant’s mark, but deferred seeking compensation until it filed litigation in 2015.

Although this decision is only an IP Court first-instance judgment, it puts all trademark owners considering making a demand for trademark infringement compensation on notice that they should initiate litigation for compensation as soon as possible once they become aware that a third party is using their mark on its signage or web page to promote its service. A trademark owner should not assume that there is no extinctive prescription in cases where the infringement exists continually and is ongoing. Otherwise, it may well lose its right to claim compensation for damages suffered due to infringement.