Under Taiwan’s Trademark Act, general trademark infringement occurs when a registered trademark is used to identify the source of another party’s goods or services, in some scenarios potentially leading to confusion among relevant consumers.[1] However, when a registered trademark is incorporated into a company name, the primary function of the name is to distinguish one business entity from others. Such use does not inherently qualify as traditional trademark use and, therefore, generally does not constitute infringement according to the existing law. The Taiwan Intellectual Property and Commercial Court (“IPC Court”) has recently clarified how trademark rights apply in such scenarios, emphasizing the crucial factors that influence the final decision.

  Under the current Trademark Act, for well-known trademarks, such unauthorized use in company names is explicitly deemed infringement as a form of dilution.[2] However, unfamiliar registered trademarks do not receive the same level of protection. When an unfamiliar trademark is used as part of a company name, courts must conduct a detailed, case-by-case analysis to determine whether infringement has occurred. Two recent IPC Court rulings demonstrate that factors such as evidence of intentional infringement or actual harm caused by the infringer play a crucial role in such a decision.

  The first case involves the registered trademark “敲敲金工” (Choccy Metal, see Fig.1), designated for jewelry-related goods and services, including precious metal retail and wholesale, rings, and bracelets. The plaintiff, the trademark owner of Choccy Metal, alleged that the defendant, “敲金工珠寶有限公司” (Ciao Jewelry Design), had infringed on its trademark rights and thus sought injunctive relief and damages.[3] The court emphasized that familiarity is a requisite element for a trademark holder to enforce against another person’s use of its registered trademark as a company name. Regrettably, although the plaintiff claimed that the disputed trademark was “famous”, it failed to provide sufficient evidence to support this assertion. As a result, the court concluded that the disputed trademark did not meet the criteria for being well-known. Regardless of this finding, the court continued with its evaluation of the infringement claim.

  Despite the lack of familiarity, the IPC Court ruled that the defendant’s company name constituted trademark infringement. Both parties operated in the jewelry industry and were direct competitors. The defendant’s company name differed from the disputed trademark by only one character, “敲”, while the remaining characters were identical. The court found that the names were virtually indistinguishable in terms of appearance, meaning and pronunciation. Furthermore, both parties sold closely related goods under similar commercial conditions. More pertinently, there was also evidence that consumers had mistakenly brought the defendant’s products to the plaintiff’s store for repairs, demonstrating the actual confusion around the product source. To this end, the plaintiff’s counsel served a notice to the defendant advising the facts of actual confusion. Additionally, the defendant had previously applied for a mark (See Fig.2) similar to the disputed trademark. Despite the defendant’s mark being rejected by the Taiwan Intellectual Property Office (“TIPO”), the defendant nevertheless adopted the disputed trademark’s text as its company name. The plaintiff also sent a cease-and-desist notice. These facts show that, by ignoring the plaintiff’s warnings and the permission requirement, the defendant knowingly disregarded the plaintiff’s trademark.

  The defendant argued that it had used the name “敲金工” in good faith prior to the plaintiff’s trademark registration and provided evidence to support this claim. It also referred to a related and parallel criminal proceeding in which no charges were filed by the public prosecutor due to the good faith conduct of the defendant at the conclusion of the investigation. The defendant emphasized that the civil matter hereby pending should be determined as non-infringement accordingly. The court rejected this argument, however, clarifying that good faith requires not only a lack of knowledge of the prior registered trademark but also an absence of awareness of its prior use by another party. The defendant’s actions, including adopting the name of the disputed trademark after becoming aware of it, violated principles of commercial integrity. The court also emphasized that the public prosecutor’s decision in the criminal case did not bind civil proceedings.

  Ultimately, the court concluded that the defendant’s use of the disputed trademark in its company name constituted infringement, applying mutatis mutandis to the dilution clause despite the fact that the disputed trademark was not deemed familiar. The defendant was ordered to cease using the name and pay damages.

  Conversely, in another case a few months after the previous case, the plaintiff failed to prove intentional infringement or actual harm caused by the defendant, resulting in an opposite verdict. Hsin Ya International Hotels owns the trademarks “亞太” and “ASIA PACIFIC HOTEL” (See Fig.3), registered for Class 42 services, including restaurants and hotels. The plaintiff alleged that “亞太鹿港渡假村” (Asia Pacific Resort Lukang) had infringed its rights and damaged its goodwill by using identical texts in their company names for the same services.[4]

  The defendant argued that “亞太” and “ASIA PACIFIC” are generic terms commonly used across industries; it asserted that these terms describe the Asia-Pacific region and therefore lack distinctiveness as trademarks. The court acknowledged the descriptive nature of the terms but noted that trademarks could acquire distinctiveness through long-term use. The court found that, through the plaintiff’s consistent use of them over nearly 30 years, these trademarks had been established as identifiers of its services. However, the plaintiff failed to prove that their trademarks were well-known. Evidence such as screenshots of the Asia Pacific Hotel website and promotional materials did not demonstrate significant consumer recognition.

  The court’s further factual analysis revealed that the defendants’ use of “亞太” and “ASIA PACIFIC” did not constitute trademark use but was primarily a reflection of their geographical location and business identity. Moreover, the court found no indication of bad faith, since the defendant had changed its company name in compliance with government regulations for operations in Lukang. Additionally, the plaintiff had failed to demonstrate sufficient evidence of consumer confusion. The court noted that the distinct locations and separate markets in which the plaintiff and defendant operated further reduced the likelihood of confusion.

  In conclusion, the court recognized the distinctiveness of the plaintiff’s trademarks, but ruled that the defendants’ use of similar terms in company names did not constitute trademark infringement. The decision was based on a lack of evidence of consumer confusion, bad faith and market overlap. This case underscores the need for plaintiffs to demonstrate the existence of both intent and consumer confusion when asserting trademark infringement, particularly for unfamiliar trademarks.

  These two cases underline the challenges trademark owners face in asserting their rights when their trademarks are not well-known. In the Choccy Metal case, the plaintiff successfully provided clear evidence of actual consumer confusion, competitive overlap and bad faith on the part of the defendant, leading to a ruling in its favor. In contrast, Hsin Ya International Hotels failed to establish sufficient evidence of intentional infringement or actual harm, resulting in a finding of non-infringement.

  Even if a trademark is not well-known, the unfair use of such a trademark as part of another’s business name may constitute infringement under the dilution clause if done knowingly without permission to cause actual confusion. However, the Supreme Court appears to have taken a different view in a recent judgment.[5] The Supreme Court held that the appellate court had not erred in clarifying that the dilution clause is applicable only when the trademark is proven to be well-known.[6] In the opinion of the appellate court, if a disputed trademark is not well-known, the dilution clause cannot be applied. It is hoped that future judicial rulings will provide more guidance on this issue.

Fig.1: Taiwan Trademark Application No.02157959, No.02159719, No.02159482.

Fig.2: Taiwan Trademark Refusal No. T0418478.

Fig.3: Taiwan Trademark Application No. 00101668, No. 00101210.