The most important function of trademarks is to identify the source of goods/services and enable consumers to distinguish goods/services of one undertaking from those of others. In order to maintain the distinguishing function of a trademark, ensuring that no likelihood of confusion will occur among relevant consumers is one of the core criteria during examination for new trademark applications. Under current local practices, if the Taiwan Intellectual Property Office (TIPO) deems that there exists a possibility that relevant consumers will misidentify the source of the goods/services (due to the existence of a prior trademark) when examining a newly filed trademark, a Preliminary Objection will be issued. After receiving the Preliminary Objection, the applicant is allowed to make a statement to persuade the Examiner that no likelihood of confusion will occur among relevant consumers by arguing the dissimilarity between the trademarks and/or by submitting a substantial amount of evidence to prove that relevant consumers are familiar with the later-filed trademark through the applicant’s extensive use.

If a later-filed trademark is already well-known in the market and even overshadows the prior trademark, which may cause “reverse confusion,” whether relevant evidence be the main factor to persuade the Examiner to approve the trademark registration? In recent years, several judicial judgments in Taiwan have discussed the application of reverse confusion in trademark application cases. The concept of “reverse confusion” refers to a situation where the trademark proprietor of a later-filed trademark takes advantage of its dominant position in the market to saturate the market with its trademark, which eventually causing relevant consumers to believe that the prior trademark originated from the later-filed trademark. Since reverse confusion can diminish the value of the prior trademark, it is viewed as a form of trademark infringement under US law, and it is quite interesting that the judicial system in Taiwan discusses such concepts in trademark application cases. This article reviews how the concept of reverse confusion has been applied in recent judgments.

(1)    Trademark Act
 

Articles 2 and 30-I-10 of the Taiwan Trademark Act read,

“Any person who wishes to obtain the rights of trademark … shall apply for registration therefor in accordance with this Act.”

“A trademark shall not be registered if it is identical with or similar to another person’s registered trademark or earlier filed trademark and to be applied for goods or services identical with or similar to those for which the registered trademark is protected or the earlier filed trademark is designated, and hence there exists a likelihood of confusion on relevant consumers, unless the consent of the proprietor of the said registered trademark or earlier filed trademark to the application has been given and is not obviously improper.”

(2)    Examination Guidelines on Likelihood of Confusion

Points 4 and 5.6 of the Examination Guidelines on Likelihood of Confusion read,

“In judging whether two trademarks are likely to cause confusion, eight relevant factors for consideration are listed below after referring to the relevant factors stated in domestic and foreign precedents: (1) level of strength of distinctiveness of the trademark(s); (2) whether the trademarks are similar and if yes, the extent of degree of similarity between them; (3) whether the goods/services are similar and if yes, the extent of degree of similarity between them; (4) status of the diversified operation of the prior right holder; (5) circumstances of actual confusion; (6) the extent to which relevant consumers are familiar with the trademarks concerned; (7) whether the applicant of the trademark at issue in question has filed such an application in good faith; and (8) other factors that may cause confusion.”

“The extent to which relevant consumers are familiar with the trademarks concerned should be determined by the extent to which the trademark is used on individual goods. In other words, not all goods covered by a trademark application can be considered familiar to consumers. Also, the party that makes such claim shall submit relevant evidence to prove the actual use of the trademark on the claimed goods/services. In principle, Taiwan’s Trademark Act adopts the first-to-file system. In order to prevent later-filed trademarks from infringing on the interests of earlier registered trademark proprietors through extensive marketing, the factor ‘the extent to which relevant consumers are familiar with the trademarks’ is not decisive, and other factors shall also be taken into consideration. If relevant consumers are quite familiar with two conflicting trademarks, that is, the concurrent existence of the two conflicting trademarks in the marketplace is recognized by relevant consumers and thus allows the consumers to identify them as coming from different sources, such a burden of proof shall be upon the later-filed trademark to prove that the trademark has been used to the extent that relevant consumers can distinguish the source of the two trademarks; the fact of concurrent existence shall be maintained, if possible.” ^[1]

1.      Carl Zeiss Meditec AG v. the TIPO ^[2]

(1)    Synopsis

The plaintiff lodged an Administrative Suit before the Intellectual Property and Commercial Court (IPCC) because the TIPO made a decision to reject the application for the trademark No. 110880106 “SMILE” for use on services in Class 44 owing to the similarity to the prior trademark Reg. No. 01108399 based on Article 30-I-10 of the Trademark Act. The TIPO’s decision was upheld in the administrative appeal decision made by the Ministry of Economic Affairs (MOEA).

The trademark particulars of the trademarks involved are listed as follows:
 

Except for arguing the dissimilarity between the two parties’ trademarks, the plaintiff also emphasized that since the subject trademark has been extensively used prior to the filing date, relevant practitioners and relevant consumers are more familiar with its “SMILE” series trademarks. The plaintiff further argued that the cited trademark is used by a regional dental clinic, which means that the use of the cited trademark is quite limited and given the sophisticated divisions in the medical field, it is quite impossible for the trademark holder of the cited trademark to render services other than dental services. Lastly, the subject trademark was filed in good faith without the intent to free ride on the cited trademark’s fame and the plaintiff’s “SMILE” series trademarks have been recognized as well-known trademarks by the court. Since actual confusion between the two trademarks has never occurred among relevant consumers, Article 30-I-10 of the Taiwan Trademark Act should not be applicable.

(2)    The court’s opinion

The IPCC upheld the TIPO’s opinion. In the judgment, the IPCC agreed that due to the similarity in the two trademarks’ appearances and the fact that these trademarks are designated for use on similar services, the likelihood of confusion on relevant consumers cannot be ruled out. The IPCC also pointed out that since the cited trademark has no direct relationship with the designated services, the cited trademark is relatively distinctive and shall enjoy a higher level of protection. Although the word “SMILE” has been extensively used by the plaintiff, such word is also an abbreviation of a surgery name/method, rather than a trademark that can identify the source of goods or services. Whether relevant consumers are able to recognize the subject trademark as a trademark and distinguish the sources of the two trademarks requires further evidence. According to Article 2 of the Trademark Act, Taiwan adopts the first-to-file system, which means that even if a prior trademark is not well-known or widely recognized by relevant consumers, the trademark proprietor can still claim rights in accordance with the law. In addition, in order to maintain fair competition in the market and prevent companies with strong financial resources from using their marketing capabilities to seize trademarks that were registered earlier, the doctrine of “reverse confusion” is not adopted under current local practices, and Article 30-I-10 of the Taiwan Trademark Act is applicable in this case. 

2.      Wowprime Corp. v. the TIPO ^[3]

(1)    Synopsis

The plaintiff lodged an Administrative Suit before the Intellectual Property Court (IPC) because the TIPO made a decision to reject the application for the trademark No. 107051925 “ ” for use on services in Class 43 owing to the similarity to the prior trademark Reg. No. 01878458 based on Article 30-I-10 of the Trademark Act. The TIPO’s decision was upheld in the administrative appeal decision made by the MOEA.

The trademark particulars of the trademarks involved are listed as follows:
 

 

The plaintiff argued that the two trademarks’ appearances and pronunciations are different. Moreover, although the two trademarks are designated on almost identical services, as they target different consumers in the market, the services they provide should not be deemed similar. Furthermore, the plaintiff also argued that since their establishment, they have focused on the catering business and have successfully created more than 20 catering brands through multi-brand business strategies, whereas the cited trademark is used by a single store that has no other branches, and no evidence shows that the trademark proprietor has any plan to expand their business. The use of the cited trademark shall be considered limited, and since relevant consumers will not be confused, the scope of protection of the cited trademark should be limited. Regarding the TIPO’s argument that in order to maintain fair competition in the market and prevent companies with strong financial resources from using their marketing capabilities to seize trademarks that were registered earlier, Taiwan has not yet adopted the reverse confusion doctrine, the plaintiff responded that the purpose of actively promoting the subject trademark was for relevant consumers to become familiar with the subject trademark so no confusion will occur. They had no intention to override the earlier registered trademark. Based on the above, the plaintiff requested the IPC to revoke the decision made by the TIPO and grant registration to the subject trademark.

 

 

The IPC upheld the TIPO’s opinion. In the judgment, the IPC opined that the two trademarks are highly similar in their appearances and designated services, although the plaintiff argued that they have diversified their business operations; as all the businesses are related to catering, multi-brands cannot be deemed as diversified business operations. Regarding the argument that relevant consumers are familiar with the trademarks concerned and therefore coexistence of the trademarks should be allowed, the burden of proof rests on the plaintiff. Nonetheless, the amount of evidence submitted by the plaintiff was insufficient to support that the subject trademark had become familiar to relevant consumers and could be distinguished from the cited trademark. Although the plaintiff insisted that it is a well-known chain restaurant operator and the application of the subject trademark was made in good faith and no actual confusion has ever occurred, these are only some of the elements in determining likelihood of confusion. Article 30-I-10 of the Taiwan Trademark Act is applicable in this case.

 

 

 

The plaintiff lodged an Administrative Suit before the IPC because the TIPO made a decision to reject the application for the trademark No. 107880075 “ ” for use on goods in Class 30 owing to the similarity to the prior trademarks Reg. Nos. 01068061 and 01895530 based on Article 30-I-10 of the Trademark Act. The TIPO’s decision was upheld in the administrative appeal decision made by the MOEA.

The trademark particulars of the trademarks involved are listed as follows:
 

 

The plaintiff argued that the trademarks’ appearances, pronunciations and concept ideas are different. In addition, the plaintiff argued that they have actively expended their business and applied for the registration of the trademarks “金鑛” and “金礦,” which are used in cafes, restaurants, coffee, food, cakes, etc.; also, they have established a good reputation in the industry and among relevant consumers, and their business has been widely reported by the media. When relevant consumers see the subject trademark, they can naturally link the subject trademark with the plaintiff. Whereas the cited trademarks are owned by a small business that restricts its business operation to a single brick-and-mortar restaurant in Kaohsiung. Since relevant consumers are more familiar with the subject trademark, greater protection should be given to the subject trademark. Based on the above, the plaintiff requested the IPC to revoke the decision made by the TIPO and grant registration to the subject trademark.

 

 

The IPC upheld the TIPO’s opinion. In the judgment, the IPC opined that as the main distinguishing parts of the trademarks involved are either “金鑛” or “金礦,” they shall be considered highly similar in their appearances and pronunciations; also, the designated goods of the trademarks involved are highly similar. The court then further analyzed the distinctiveness of the trademarks and considered that all three trademarks are arbitrary trademarks, and when used on similar goods, confusion among consumers is likely to occur. Regarding the argument that relevant consumers are more familiar with the subject trademark and coexistence of the trademarks should thus be allowed, the court closely examined the submitted evidence and basically considered the submitted evidence insufficient to establish such a fact when the subject trademark application was filed, and therefore, registration of the subject trademark would cause confusion among relevant consumers. According to the Trademark Act, Taiwan adopts the first-to-file system, which means that even if a prior trademark is not well-known or widely recognized by relevant consumers, the trademark proprietor can still claim rights in accordance with the law. In addition, in order to maintain fair competition in the market and prevent companies with strong financial resources from using their marketing capabilities to seize trademarks that were registered earlier, the doctrine of “reverse confusion” has not yet been adopted under current local practices. Even if it is true that through the plaintiff’s extensive advertising and marketing, relevant consumers have become more familiar with the subject trademark, if the later-filed trademark is granted for registration, such registration would violate the law and also cause confusion in the market. Taiwan’s Trademark Act prioritizes the protection of earlier filed trademarks regardless whether the trademark is widely known to relevant consumers. If a previously registered trademark has not been actually used, instead of arguing that relevant consumers are more familiar with the subject trademark and requesting the TIPO to approve the registration accordingly, the applicant should file a non-use revocation to remove such obstacle. Article 30-I-10 of the Taiwan Trademark Act is applicable in this case. 

 

(1)    Synopsis

 

The TIPO lodged an Administrative Suit before the Supreme Administrative Court (SAC) because its decision to reject the application for the trademark No. 100043286 “ ” for use on goods in Class 33 owing to the similarity to the prior registered trademark Reg. No. 01372770 and the administrative appeal decision made by the MOEA that sustained the TIPO’s opinion were revoked by the IPC in the Judgment of the Intellectual Property Court 2014 Xing Shang Su Zi No. 137. The TIPO requested the SAC to reverse the IPC’s judgment. 

 

The trademark particulars of the trademarks involved are listed as follows:
 

 

As both trademarks were designated for use in Class 33, the appellee (i.e., Takara Holdings Inc.) did not argue that the goods are not similar. Instead, the appellee argued that although the word “MIO” appears in both trademarks, apart from the identical word, each of the trademarks has different distinguishing elements, and relevant consumers can rely on such elements to distinguish the trademarks accordingly. In addition, as the word “MIO” has different meanings and pronunciations in different languages, the pronunciations are not similar. Moreover, the appellee found no evidence that the cited trademark had been used in the Taiwan market. On the contrary, since the appellee has actively promoted the subject trademark in the market, the subject trademark should enjoy greater protection under the Trademark Act.

In the judgment made by the IPC, a favorable decision for the appellee was granted. The IPC reasoned that the trademarks involved are of low similarity based on the overall observations of the two trademarks, and because both trademarks have no direct relationship with the designated goods, they are relatively distinctive, and through the appellee’s extensive promotion, relevant consumers are more familiar with the subject trademark so that the subject trademark has become a sign indicating the appellee, relevant consumers should be able to distinguish the sources indicated by the two trademarks, and no likelihood of confusion will occur. Article 30-I-10 of the Taiwan Trademark Act is not applicable in this case.

 

 

The SAC reversed the IPC’s judgment. In the judgment, the SAC was of the opinion that since the Chinese character in the subject trademark is rarely used in daily life and the logo in the cited trademark is unpronounceable, the word “MIO” is the main distinguishing part and the part of the two trademarks that consumers would actually pronounce. Accordingly, the degree of similarity between the two trademarks should be considered not low, and when designated on similar goods, relevant consumers will likely be confused. Regarding the IPC’s judgment that no likelihood of confusion would occur due to the fact that through the appellee’s extensive use, relevant consumers are familiar with the subject trademark, and therefore the subject trademark should enjoy greater protection, the SAC emphasized that as Taiwan adopts the first-to-file system, even if a prior trademark is not well-known or widely recognized by relevant consumers, the trademark proprietor can still claim rights in accordance with the law. The IPC erroneously applied the law. The SAC also pointed out that the concept mentioned by the IPC is referred to as “reverse confusion,” which describes the situation in which the later trademark is more widely known to consumers than the prior trademark, hence making consumers mistakenly consider that the prior trademark is a counterfeit of the later trademark, or that the prior trademark and the later trademark come from the same source, or that there is an affiliation, license, franchise or other similar relationship between the users of the two trademarks. Since consumers may mistakenly consider that the prior trademark and the later trademark come from the same source, or that there is an affiliation, license, franchise or other similar relationship between the users of the two trademarks, it is fair to conclude that the later trademark is likely to cause confusion among consumers. According to the first-to-file principle under Taiwan’s Trademark Act, which also serves the purpose of maintaining fair competition in the market and preventing companies with strong financial resources from using their marketing capabilities to seize trademarks that were registered earlier, the protection should be rendered to the prior registered trademark rather than the later-filed trademark.

IV.    Conclusion

The judgments above clearly show that in Administrative Suits involving trademarks whose registration has been rejected due to likelihood of confusion, the courts have always thoroughly examined the eight elements listed in the Point 4 of the Examination Guidelines on Likelihood of Confusion. This standard does not change even if the later-filed trademark has been widely used in the market before the trademark was formally filed. In these cases, although the interpretation of reverse confusion in Taiwan does not diverge from the original concept under US law, it is used as a standard to determine whether the registration of a later-filed trademark will cause confusion among consumers at the filing stage. That is, even if an applicant argues that the later-filed trademark is more familiar to consumers and the TIPO ought to respect such circumstances, for the sake of maintaining fair competition in the market and preventing companies with strong financial resources from using their marketing capabilities to seize trademarks that were registered earlier, a heavy burden of proof is assigned on the applicant who makes such an argument. When applicants claim that relevant consumers are more familiar with a later-filed trademark through their extensive use and submit a substantial amount of evidence to support such claim, if the TIPO deems the two trademarks are highly similar in their appearances and are designated on similar goods/services, the TIPO may still reject the application of the later trademark on the grounds of the possibility of reverse confusion, and the TIPO’s such opinion is generally backed by courts.

To avoid such a disadvantageous situation when filing new trademark applications in Taiwan, it is recommended to conduct trademark searches and consult with a professional intellectual property firm before formally filing new trademark applications, and since under current practices, Taiwan strictly applies the first-to-file system, new trademark applications should be filed as soon as possible. Moreover, when faced with Preliminary Objections citing highly similar prior trademarks, applicants may consider seeking Letters of Consent from the trademark proprietors, or if the cited trademarks have not been used for three years, file non-use revocations against the cited trademarks as alternatives. Tai E provides consultation services for assessing the registrability of a trademark before filing and will endeavor to ensure smooth applications for our clients.

On the other hand, for trademark proprietors of prior registered trademarks, in view of the possible non-use revocation actions as mentioned above and since the TIPO adopts stringent standards in examining evidence of use submitted by trademark proprietors in non-use revocation cases, to mitigate the risk of the trademarks being revoked, trademark proprietors should ensure active use of their registered trademarks on the designated goods/services, and trademarks should always be used in the exact form in which they were originally registered. 

V.      References
 

[1] The underlined parts were added when the Examination Guidelines on Likelihood of Confusion were amended in 2021.
[2] Judgment of the Intellectual Property and Commercial Court 2023 Xing Shang Su Zi No. 28 [智慧財產及商業法院112年度行商訴字第28號判決].
[3] Judgment of the Intellectual Property Court 2019 Xing Shang Su Zi No. 116 [智慧財產法院108年度行商訴字第116號判決].
[4] Judgment of the Intellectual Property Court 2018 Xing Shang Su Zi No. 91 [智慧財產法院107年度行商訴字第91號判決].
[5] Judgment of the Supreme Administrative Court 2016 Pan Zi No. 465 [最高行政法院105年度判字第465號判決].