I. Preamble
One of the main purposes of obtaining a trademark right through registration is to prevent third parties from using a registered mark as well as being able to claim either civil remedies or criminal penalties for infringement when a registered mark is used without the proprietor’s consent.
However, there are still situations in which a registered mark may be lawfully used by others. In order to avoid over-protection of the trademark right, and taking consumers’ interest and fair market competition into account, the Trademark Act introduces the concept of “fair use,” which means that use of a mark under certain conditions will not infringe upon others’ trademark rights[1].
Furthermore, claiming fair use is a common defense in trademark infringement litigations. This defense involves whether the owner may seek remedies and, on the other hand, whether the user is liable to trademark infringement, which significantly affects the rights of both parties. Therefore, how the criteria of fair use are applied and understanding the local practices regarding the concept of “fair use” are of particular importance. This article briefly introduces the concept of “descriptive fair use” by presenting and analyzing recent court judgments in Taiwan.
II. Regulation of the Trademark Act
Article 36-I-1 of the Trademark Act stipulates,
“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 industrial or commercial matters and not using it as a trademark.”
In other words, if the use of a registered mark by a third party does not indicate the origin of the goods/services but is merely a description of goods/services, such use is not likely to cause confusion among consumers and therefore is permitted.
III. Judgments
1. Judgment of the Intellectual Property Court 2019 Min Shang Shang Zi No. 11 (Judgment 1)
Background
The Appellant displayed the registered mark “老天祿” (Lautianlu) owned by the Appellee on signboards and billboards to sell braised food. Furthermore, the Appellant used “上海老天祿第二代自創品牌” (“self-created brand of second generation of Shanghai Lautianlu”) on multiple online platforms. The issue in this case was whether displaying the referenced mark “老天祿” (Lautianlu) constituted descriptive fair use.
Court’s opinion
The referenced mark “老天祿” (Lautianlu) is widely known by relevant consumers and enterprises, and it has even become synonymous with braised food. Although “老天祿” (Lautianlu) is composed of simple Chinese characters, it is not a common wording and has no particular meaning, therefore the referenced mark is a fanciful mark which has strong distinctiveness. The Appellant used the mark on braised food, which may confuse or mislead relevant consumers to believe that the goods originated from the Appellee. Also, since the referenced mark is a well-known and fanciful mark, the Appellant was taking advantage of the well-known status and good reputation of the mark. The Appellant’s use did not meet the criteria of “honest practices in industrial or commercial matters.” Therefore, the Appellant’s action could not be considered as descriptive fair use[2].
2. Judgment of the Intellectual Property and Commercial Court 2020 Min Shang Shang Zi No. 23 (Judgment 2)
Background
Appellee: OTTO ADVERTISING CO., LTD
Referenced registered mark: 
The Appellee used “OTTO,” i.e., the wording of the referenced mark, not only in pre-movie commercials, but also on their official website and signboards. The issue in this case was whether using the referenced wording “OTTO” constituted descriptive fair use.
Court’s opinion
The Appellee, OTTO ADVERTISING CO., LTD, has been using “OTTO” as the transliteration of the company’s name since 1998, and multiple other companies have also adopted “OTTO” as their company name.
The overall design of the pre-movie commercials did not simply display “OTTO” but also included the term “ADVERTISING.” This combination did not particularly present “OTTO” and thus is sufficient for relevant consumers to understand that said wording merely indicates the English name of the Appellee. Although the referenced wording “OTTO” was shown on the Appellee’s website and signboards, the English name of the Appellee is indeed “OTTO ADVERTISING CO., LTD.” According to common commercial practices, the wording “OTTO” is meant to describe the foreign name of the Appellee. With that in mind, consumers will not mistake it as a trademark. It was clear that the Appellee had no intention to take advantage of the referenced mark and therefore, the Appellee’s act was deemed to constitute descriptive fair use[3].
3. Judgment of New Taipei District Court 2021 Zhi Yi Zi No. 8 (Judgment 3)
Background
YUSKIN PHARMACEUTICAL CO., LTD (YUSKIN), a Japanese company, exclusively licensed the Complainant to use the referenced registered mark “悠斯晶” (YUSKIN in Chinese). Without consent from YUSKIN and the Complainant, the Defendant displayed and sold goods bearing “悠斯晶” (YUSKIN in Chinese) on online shopping platforms. The issue in the case was whether the action of Defendant constituted descriptive fair use.
Court’s opinion
In this case, there were clearly placed photos of the product on the website, including photos of the outer packaging and the Chinese labels of the products. Based on overall observations, compared to the Chinese part “悠斯晶” (YUSKIN in Chinese), the photos of the product and relevant introductions should be more eye-catching to consumers. If the Defendant intended to use “悠斯晶” (YUSKIN in Chinese) as a trademark, they would have placed the mark at a more obvious position. However, the Defendant did not emphasize the wording of the mark “悠斯晶” (YUSKIN in Chinese) and even clearly indicated that the goods were parallel imported from Japan. The Defendant was merely using “悠斯晶” (YUSKIN in Chinese) as a description to convey the goods they were selling are the same as the goods sold by the Complainant, not to indicate the source of the goods. Such action is in line with the principle of honest practices in industrial or commercial matters and therefore was deemed descriptive fair use[4].
4. Judgment of the Intellectual Property and Commercial Court 2021 Min Shang Shang Zi No. 3 (Judgment 4)
Background
The referenced registered marks “
” (Cheng Feng & Design) and “正豐-正豐冬” (Cheng Feng - Cheng Feng Dong) used on designated goods such pesticides, herbicides and pesticide for agricultural use. The Appellee (company name:正豐公司) used the referenced wording “正豐” (Cheng Feng) on the outer packaging and cardboards for pesticides. The issue in this case was whether the use of “正豐” (Cheng Feng) constituted descriptive fair use.
Court’s opinion
Based on the Agro-pesticides Management Act and Regulations for Agro-pesticides Labeling Management, the Appellee was obligated to label the common name of pesticides and the name of the manufacturer on the packages, which is also common practice for pesticide manufacturers. The name of the manufacturer is an important information for relevant consumers to distinguish and identify the ingredients and purpose of pesticides. The Appellee used the referenced wording “正豐” (Cheng Feng) to fulfill the obligation imposed by the aforementioned regulations and to describe the nature of the goods, which meets the criteria of honest practices in industrial or commercial matters. Therefore, the Appellee’s action constituted descriptive fair use [5].
5. Judgment of the Intellectual Property and Commercial Court 2021 Min Shang Su Zi No. 54 (Judgment 5)
Background
“1028我型我塑” (1028 “styling myself” in Chinese) is a registered trademark owned by the Plaintiff. The Defendant used “我型我塑光感氣墊粉餅” (“styling myself foundation cushion compact” in Chinese) and other phrases including “我型我塑” (“styling myself” in Chinese) for marketing purposes. The issue in the case was whether the Defendant’s actions constituted descriptive fair use.
Court’s opinion
Although the Defendant used the wording “我型我塑” (“styling myself” in Chinese) in Facebook posts, all of the posts repeatedly showed “蘭芝” (“LANEIGE” in Chinese) (Licensed mark 1) in bold and enlarged font size. Whenever “我型我塑” (“styling myself” in Chinese) was used on webpages, social media, online shopping platforms or the packaging of the goods, it was always paired with the licensed marks “蘭芝” (“LANEIGE” in Chinese) and “LANEIGE” (Licensed mark 2). Accordingly, the Defendant did not proactively indicate only the referenced mark “我型我塑” (“styling myself” in Chinese). Such approach is sufficient for consumers to recognize that “我型我塑” (“styling myself” in Chinese) is a description to the goods and not an indication of the origin. Therefore, the Defendant’s action constituted descriptive fair use[6].
IV. Analysis
From the judgments cited above, it is clear that descriptive fair use must meet the criterion of “honest practices in industrial or commercial matters.” The three key points for identifying said criterion are listed below[7][8]:
1. A registered mark is used fairly and in good faith by a third party, and there is no intention of free-riding.
Whether a user acts in good faith requires a deduction from objective facts. Taking Judgment 1 for instance, the cited mark “老天祿” (Lautianlu) was deemed as a well-known mark. When a mark is widely known by relevant consumers and enterprises, the room for third parties to claim fair use becomes much smaller since, objectively speaking, it is difficult to establish that the user had no intentions of taking advantage of the mark’s reputation.
Another important factor is the distinctiveness of the registered mark. As one of the purposes of a trademark is to indicate the origin of goods/services, the stronger the distinctiveness of a mark, the more likely it is that unauthorized use by a third party will cause confusion among relevant consumers; and it is also less necessary for competitors to use the mark without consent. With that in mind, any third parties still using said mark are likely to be deemed free riders.
2. A registered mark is merely used as a description of the goods/services of the third party
Based on the judgments above, the factors to be taken into consideration by the court are the overall design, font and size of the characters, the position as shown and trade practices etc. The courts will determine if the use gives consumers the impression of indicating the origin or simply describing the goods/services of the third party.
From Judgment 2 we can see that even though the word “OTTO” was used by a third party, considering that the overall design did not solely display said word and showing a company’s English name is a common practice, this was enough for consumers to understand the word was used for addressing the company’s name, which was applied to a descriptive fair use.
Moreover, as indicated in Judgment 3, the position where the registered mark “悠斯晶” (YUSKIN in Chinese) was placed also played a significant role in determining that it was merely used as a description. From said Judgment, since the mark was not placed at a prominent spot and was paired with photos and relevant introductions, consumers would be able to recognize the explanatory purpose.
Lastly, according to the court’s opinion in Judgment 5, apart from the wording “我型我塑,” the font and size of the other parts “蘭芝” and “LANEIGE” were in bold and enlarged, making the wording less prominent. Therefore, such use was considered as a description of the third party’s goods/services.
3. Compliance with other regulations
Another point worth noting is that regulations other than the Trademark Act will affect the determination of fair use as well. In Judgment 4, the Appellee, a pesticide manufacturer, was obligated to label “正豐” (Cheng Feng), the name of pesticides and the manufacturer in accordance with relevant regulations. Under these circumstances, the use of another’s registered mark(s) will meet the criterion of “honest practices in industrial or commercial matters.”
V. Conclusion
The concept of “Trademark Fair Use” is an important principle of maintaining fair market competition. To strike a balance between trademark rights and consumers’ interest while maintaining fair competition is a delicate matter. Since the courts operate on a case-by-case basis, the definition of fair use can be blurred. All in all, ascertaining whether an act constitutes descriptive fair use is entirely at the courts’ discretion and ultimately comes down to the criterion of “honest practices in industrial or commercial matters.” From the judgments cited above, it is evident that multiple factors, rather than any single pivotal consideration, will influence the courts’ decision.
To avoid any third party from claiming descriptive fair use of a registered trademark, the trademark owner may (1) enhance the distinctiveness of the mark at the time of filing, by either creating a coined sign which has no innate meaning or adding more elements to the overall design of the mark, or (2) build up the brand awareness and, regularly gather evidence of use, such as advertising materials from media, detailed sales statistics and evidence relating to the trademark’s market evaluation and value. The more materials can be provided, the easier it is to show that the trademark is commonly known, and thus there will be less room for third parties to claim fair use and good faith.
On the other hand, how can a third party ensure that its use of a mark constitutes fair use of a registered mark to avoid trademark infringement? Based on current practices, refraining from deliberately emphasizing the registered mark is the key issue to avoid legitimate use being deemed to infringe another party’s rights. Prominently placing a mark at an obvious spot may cause confusion among consumers and is likely deemed to exceed permissible descriptive fair use. Therefore, it is crucial for third parties to act carefully when engaging in commercial activities, and if a registered mark has to be used, it would be wise or ideal to use the mark in compliance with the practices detailed above.
References
1. “What is Trademark Fair Use?” - Trademark Lawyer Law Firm, PLLC - February 1, 2022.
2. Judgment of the Intellectual Property Court 2019 Min Shang Shang Zi No. 11 [智慧財產法院108 年度民商上字第11號判決].
3. Judgment of the Intellectual Property and Commercial Court 2020 Min Shang Shang Zi No. 23 [智慧財產及商業法院109年度民商上字第23號判決].
4. Judgment of New Taipei District Court 2021 Zhi Yi Zi No. 8 [新北地方法院110 年度智易字第8號判決].
5. Judgment of the Intellectual Property and Commercial Court 2021 Min Shang Shang Zi No. 3 [智慧財產及商業法院 110 年度民商上字第 3 號判決].
6. Judgment of the Intellectual Property and Commercial Court 2021 Min Shang Su Zi No. 54 [智慧財產及商業法院 110 年度民商訴字第 54 號判決].
7. Intellectual Property Right Journal Issue 151 – The Principles of Identifying Trademark Fair Use – De-Bo Wang - July 2011 [智慧財產權月刊151期，商標合理使用之判斷原則-王德博-民國100年7月].
8. Intellectual Property Office, MOEA, Commentaries on the Provisions of Trademark Act, Pg. 143-145 (2021) [經濟部智慧財產局，商標法逐條釋義]，pp. 143-145.
*Trademark Division at Tai E International Patent & Law Office
