For foreign companies intending to enter the Taiwan market, it’s not just about doing the necessary preparations such as market research or human resources, we strongly recommend a comprehensive understanding of Taiwan’s trademark regulations. Among these, the most overlooked part is the restriction on the extent of trademark rights, that is, the existence of “good faith prior use”. In the following article, we will introduce a practical instance where in Taiwan, the threshold for “good faith prior use” claims by anyone is quite low. Consequently, trademark owners may find themselves having to tolerate the unauthorized use of their mark by competitors. It is also recommended that foreign companies consult with a trademark agent in Taiwan prior to commencing business operations.
Taiwan, like many civil law countries adopts “first to file” trademark system. This means whoever files a trademark application first secures the trademark registration. The trademark owner could actively assert the rights to exclude others from using the same or similar trademark words or patterns. However, Including Taiwan, many countries also adopt a “good faith prior use” principle at the same time. This principle serves as an exception to the exclusivity of trademark registration, aligning with the concept of fairness and practical use.
“Good faith prior use” refers to situations where an individual or entity has previously used a similar mark for similar goods/services without being aware of the trademark owner’s application for registration. In other words, if the bona fide first user does not know that someone has applied for trademark registration and continues to use the trademark in the market, his right as an early user are safeguarded, so that they will not be excluded by the trademark owner from using mark on the goods/services.
Good faith prior use doctrine was formally introduced into the Taiwan Trademark Act in 1993, we have observed that a notable characteristic in Taiwan of ‘good faith prior use’ is its low threshold. In Taiwan’s judicial practice, the principle of good faith prior use can be directly used as the defense means based on early commercial usage. Let’s take the following restaurant trademark dispute as an example:
A trademark owner has been running a restaurant called “Jin Zhi Yuan” since 1988. Its most famous dish is the fragrant strawbag rice, but the trademark registration of the restaurant name was not completed until November 2018.
Starting from 2020, this restaurant has been recommended by the Michelin Guide Bib Gourmand for three consecutive years, making it a popular restaurant with long queues.
The accused person was an employee of the branch of “Jin Zhi Yuan” restaurant, and took over the operation of that branch in 1996. Although a new business entity and a new restaurant name were established in the commercial registration, in actual operation, this new store still claimed to be a branch of the “Jin Zhi Yuan” with the trademark owner’s implicit consent.
This situation changed after “Jin Zhi Yuan” was recommended by Bib Gourmand in 2020. The defendant made significant changes in 2021, including replacing the signboard and product packaging, and using the brand name more directly. The trademark was prominently printed on the lunch boxes of the same product “fragrant strawbag rice”, which caused displeasure of the trademark owner, who believed that the defendant intentionally associated themselves with the reputation of the plaintiff’s Bib Gourmand-recommended restaurant.
“Jin Zhi Yuan” claimed that defendant’s action of replacing the signboard and product packaging in 2021 infringed his trademark right. At first, the litigation strategy focused primarily on the criminal liability of trademark infringement, however, the prosecution declined to press charges twice, and the plaintiff’s application for civil court was also rejected. The main reason why the plaintiff failed to sue repeatedly is that the defendant used the mark prior to the trademark owner applied for registration, which means, a prior bona fide use does not constitute infringement.
Good faith prior use does not require the prior user to have reached a “well-known level”. Just like the above case, even if it is just an ordinary restaurant with a small signboard, as long as the store owner does not know the trademark application beforehand, uses the signboard earlier than the trademark owner’s application date, and has continuous use, then his rights and interests as a previous user will be protected.
The only restriction is that the items of goods must be “limited to the goods or services originally used.” However, it should be noted that the latest amendment of Taiwan Trademark Act, the text has been amended from “…provided that the use is only on the original goods or services; …” to “…provided that the use is within the original scope; …”.
According to the official legislation remarks, the updated “original scope” may refer to “goods or services, geographical regions, scale of productions and sales, marketing channels and other factors that may determine how the trademark was used.” In other words, the updated Taiwan Trademark Act will limit the scope of rights of bona fide prior users.
In summary, in Taiwan, “good faith prior use” is a means of opposing the rights of the trademark owner, and one can even actively take legal action for asking the court to confirm that the right of trademark owner to be restricted.
For foreign companies interested in entering Taiwan market, we believe that the only way to address this issue is to establish a solid trademark planning in Taiwan at an early stage, and as well, should be one of the prioritized business decisions. In addition, the trademark registration process usually takes quite some time, including steps such as trademark search, preparation of application documents, examination and registration. Therefore, we recommend that companies start planning their overall trademark strategy as early as possible before entering Taiwan market.
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Stardust IP Inc. is an intellectual property consultancy with professionalism and best conscience in handling all aspect of IP issues. The expertise, global thinking, and extensive experience in providing high-quality services to our client, bringing your idea to trademark, design, and patent in Taiwan and worldwide.
