Taiwan: Court issues two different declaratory judgments

November 23, 2018

Declaratory judgment (DJ) actions, used by alleged infringers as pre-emptive measures to solve trade mark disputes, are still in the development stage in Taiwan. According to our research, up to the end of September 2018, trade mark infringement disputes have generated less than 20 DJs by the Taiwan IP Court since its inception in July 2008. It is against this background that the two trade mark DJs the IP Court recently rendered, both of landmark importance, attracted widespread attention from the local IP community. In the Bullsone decision, the IP Court delineated a two-pronged test for determining whether a prerequisite for filing a trade mark DJ action is met. The Vitalon decision, on the other hand, marks the first win of alleged infringers in DJ actions on the basis of trade mark dissimilarity, and the issue of trade mark owners' burden of proof in DJ actions was also brought to the foreground.

The Bullsone decision was rendered in early August 2018. Bullsone, a Seoul-based auto care products brand, filed the DJ action against the energy drink giant Red Bull, requesting that the IP Court declare that Red Bull's twin-bull mark cannot exclude Bullsone's use of a mark comprising a single-bull device plus the wording Bullsone and its Sinicized form. However, whether the parties really had a genuine dispute over Bullsone's three-part mark turned out to be a problem. While Red Bull did send a cease-and-desist letter to Bullsone's Taiwan distributor, threatening an infringement action, the letter did not target Bullsone's three-part mark (which was actually created months later) but rather its former version i.e. the single-bull device mark. Bullsone's theory was that, as Red Bull's letter demanded cease of use of "any mark containing the single-bull device or its combination with other elements," the three-part mark would necessarily (and retroactively) fall within the firing range of Red Bull's letter, given the exclusive nature of trade mark rights. However, the Court rejected this theory and held that Bullsone failed to meet a pre-requisite for filing a DJ action which requires "immediate legal interests" of the plaintiff. According to the decision, to satisfy this pre-requisite, the plaintiff must have at least invested some tangible resources in preparation for use of the accused mark and received an infringement claim from the right-holder against that same mark. As both requirements were lacking, the judge dismissed the lawsuit, holding that it was filed merely to seek the court's advisory opinion on a speculative dispute.

The Vitalon decision, rendered in September 2018, is in favour of the plaintiff/alleged infringer. Vitalon, one of the best known iced tea brands in Taiwan, filed a DJ against a tea culture expert in 2016. The threshold of "immediate legal interests" was passed without dispute. The parties' marks were both in real use: the defendant's registered mark Fiber Green (our translation) is designated on tea powder while Vitalon's doubled-lined DAILY HEALTH Two-Fiber Green Tea (also our translation) mark is used on tea drinks. After the defendant accused Vitalon of trade mark infringement in a demand letter and Vitalon replied with a denial and counter-demand letter, a genuine dispute was formed. After two years of hard-fought battle, Vitalon, through our firm's representation, successfully convinced the IP Court's second instance panel that, not least due to the fame of the Vitalon's flagship trade mark DAILY HEALTH, the two marks in dispute are dissimilar and their coexistence will not trigger any likelihood of confusion. In addition, the IP Court pointed out that the defendant failed to meet the burden of proof regarding the assertions that Vitalon infringes the mark and that consumer confusion is likely to arise.

As the two decisions reveal, a general demand needs to be condensed into a specific claim in order to satisfy the pre-requisite for filing a DJ action of non-infringement, and, to avoid misunderstanding in future, the alleged infringer may reply with a tactfully worded letter demanding an answer and clarification from the right-holder. Secondly, while it is recommended that the plaintiff of a trade mark DJ action submit a significant amount of evidence in its favour, it has every right to request the trade mark owner meet its burden to prove that the asserted infringement has indeed occurred.