In general, trademark right entitles its right holder to exclude others from using the trademark in the same or similar products or services, because such use may create confusion among the relevant consumers, making them believe the products they purchase come from the same source, while in fact, they do not. However, not every use of trademark would necessarily constitute actionable trademark use. It is because under certain context, the trademark is not used to identify the source of goods. For example, sometimes it is permissible for one to show other’s trademark in order to demonstrate or explain product compatibility.
Article 36.1.1 of Taiwan’s Trademark Law
provides further guidance in this regard. Per Article 36.1.1, a registered
trademark shall not entitle the proprietor to prohibit a third party from……
indicating his/her own name, or the term, shape, quality, nature,
characteristic, intended purpose, place of origin, or any other description in
relation to his/her own goods or services, in accordance with honest practices
in relevant industry and not using it as a trademark. Nonetheless, it is not always
clear whether the use is compliant with “honest practices”.
In 109-Ming-Zhuan-Su-Zi No. 27, the
Intellectual Property Court (IPC) dealt with this issue. In this case, the
plaintiff, LEGO Juris A/S (“LEGO”), filed trademark infringement lawsuit
against a local vendor, who allegedly used plaintiff’s trademarks (see below)
in selling Lego product. LEGO did not dispute that the products sold by the
defendant are genuine, but argued that when marketing and promoting its business,
the defendant illegally used LEGO’s trademarks on the advertising materials,
such as the banners, exhibition board, and posters.
The defendant argued that the Lego stickers
it used on the banners and exhibition board are all genuine products purchased
from local market, so LEGO’s trademark right should be exhausted. The defendant
further argued that its business name is also displayed on the banners, so
there is no intent to use LEGO’s trademark, and the defendant should be exempt
from LEGO’s trademark right. The IPC disagreed.
After taking a close look at the defendant’s
banners and exhibition boards, the IPC noted that in comparison with the
displayed Lego sign, the font size of defendant’s business name is quite small,
which could hardly be noticed by consumers. If the true intent is to show the
defendant’s business name, it makes no sense for the defendant to highlight LEGO’s
stickers and make the real business name less visible. In fact, it would be
unreasonable and unnecessary for the defendant to enlarge the Lego sign on its
banners and posters. Thus, the IPC is not persuaded that defendant’s use is compliant
with honest practices in the relevant industry.
As for defendant’s exhaustion defense, the
IPC noted that the Lego stickers used by the defendant are genuine, and thus
are subject to doctrine of exhaustion. However, the IPC held the view that the scope
of exhaustion is limited to the resale of stickers, and shall not extend to defendant’s
subsequent use for marketing or promoting the product it sold. When the defendant
used the Lego stickers to promote the products it sold, such use has nothing to
do with the resale of the stickers, and should not be subject to exhaustion
doctrine.
In view of the above, the IPC ruled in
favor of LEGO by entering an interlocutory decision, confirming defendant’s
infringement liability. The IPC will review issue of damages at a later stage.
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