To strengthen the protection of well-known trademarks, the 2003 amendment of the Trademark Act incorporated the “trademark dilution theory” into its text. Initially, Article 30, Paragraph 1, Subparagraph 11 of the Trademark Act (hereinafter “Subparagraph 11”) only referred to “being identical with or similar to another person’s well-known trademark or mark, and hence there exists a likelihood of confusion on the relevant public” (“forepart”) as the grounds for trademark refusal. After the 2003 amendment, “or a likelihood of dilution of the distinctiveness or reputation of the said well-known trademark or mark,…” (“latter part”) was also incorporated into Subparagraph 11.

However, courts have held differing opinions on whether the interpretation of the term “well-known trademark” should be different when referenced in the forepart versus the latter part of Subparagraph 11. In certain judgments, judges have defined the term “well-known” consistently in both parts of Subparagraph 11; namely, as “commonly known or recognized by relevant enterprises or consumers.” In other judgments – which follow the Supreme Administrative Court’s Resolution of the Presiding Judge’s Committee in 2016 – judges have defined “well-known” differently in the two parts of Subparagraph 11. In these cases, judges have raised the bar for what is considered “well-known” in the latter part, requiring that the term be defined as “commonly known or recognized by the general public” instead of just being known by “relevant consumers.”

On 17 March 2023, the Grand Chamber issued its ruling on the Supreme Administrative Court (Grand Chamber) No. 111-Da-1 case, clarifying that the term “well-known trademark” referred to in the latter part of Subparagraph 11 should be interpreted as “a trademark that is commonly known or recognized by relevant enterprises or consumers,” rather than as one that requires general recognition by the public.

Below is the background and summary of the ruling:

Background of the case submitted to the Ruling Request Panel

In 2019, Valentino S.p.A. filed an opposition action with the TIPO against the “GIOVANNI VALENTINO” mark. Valentino S.p.A. used Article 30, Paragraph 1, Subparagraph 10 and 11 of the Trademark Act as its legal basis, claiming that the registration of “GIOVANNI VALENTINO ITALY” should be refused, because the grounds of refusal are satisfied. Valentino S.p.A.’s claims rest on the disputed mark’s similarity to Valentino S.p.A.’s well-known trademark “VALENTINO”, which has a likelihood of causing confusion to relevant consumers as well as diluting the distinctiveness or reputation of the “VALENTINO” trademark. After reviewing the case, the TIPO rejected this opposition. In response, Valentino S.p.A. filed an administrative appeal; however, the appeal was later dismissed.

In 2020, Valentino S.p.A. responded to the dismissal by filing an administrative litigation (Decision No. 109- Shing-Shang-Su-55) against the TIPO. The Intellectual Property Court dismissed this case. The court held the view that the conditions for a mark to qualify as “well-known” should be interpreted differently in the forepart versus the latter part of Subparagraph 11, in alignment with the original legislative intent behind the text. So, in this case, even though the “VALENTINO” trademark was considered “well-known” by relevant enterprises or consumers, it was not yet considered “well-known” by the general public, which prevents the mark from qualifying as a diluted mark. In addition, the court affirmed that the distinctive element in the disputed mark is “GIOVANNI”, which can be distinguished from the referenced “VALENTINO” mark. Thus, there is no likelihood that the registration of the disputed mark will cause confusion or dilute the distinctiveness or reputation of the “VALENTINO” mark.

Valentino S.p.A. appealed this judgment to the Supreme Administrative Court (Supreme Administrative Court Judgment No. 110-Shang-138). The presiding court filed a request seeking for the Grand Chamber’s ruling due to contradicting interpretations of the term “well-known trademark” of Subparagraph 11 in precedent cases (Supreme Administrative Court No. 106-Pan-607, No. 106-Pan-608, No. 106-Pan-609, No. 107-Pan-446, No. 109-Shang-982). On 17 March 2023, the Grand Chamber issued its final ruling on this matter, which will be elaborated on below.

Summary of the ruling—Supreme Administrative Court (Grand Chamber) No. 111-Da-1

The Grand Chamber’s opinion is summarized as follows:

According to Article 31 of the Enforcement Rules of the Trademark Act, the definition of “well-known” as prescribed in the Act refers to “the circumstance where there is objective proof of a sign capable of being commonly recognized by the relevant enterprises or consumers.” No distinction is made between the forepart and the latter part of Subparagraph 11. Moreover, the Examination Guidelines for the Protection of Well-known Trademarks under Subparagraph 11 of Paragraph 1 of Article 30 of the Trademark Act (the “Guidelines”) does not require that in order to qualify as being “well-known” in the latter part of Subparagraph 11, a mark must be “known or recognized by the general public.” Furthermore, if we employ a textualist interpretation of the Executive Yuan’s Proposed Amendment of the Trademark Act in 2003, the text suggests that both the forepart and the latter part of Subparagraph 11 refer to the same “well-known trademark or mark.” Since the same term is used in both parts, the same standard should apply to defining whether a mark is “well-known”; namely, whether it is “commonly known or recognized by relevant enterprises or consumers”.

Another provision that concerns the “well-known trademarks” referred to in the Trademark Act, is Subparagraph 2 of Article 70, which provides that “Any of the following acts, without consent of the proprietor of a registered trademark, shall be deemed infringement of the right of such trademark: (2) knowingly using words contained in another person’s well-known registered trademark as the name of a company, business, group or domain or any other name that identifies a business entity, and hence there exists a likelihood of confusion on relevant consumers or a likelihood of dilution of the distinctiveness or reputation of the said well-known trademark.”

The text above demonstrates that the legislative intent behind Subparagraph 11 of the Act is not to use different definitions of “well-known” by examining different audiences, but rather to uniformly interpret the term based on whether the mark is “commonly known or recognized by relevant enterprises or consumers.” For the Act to be coherent, Article 30, Paragraph 1, Subparagraph 11 of the Act should be interpreted consistently and in alignment with other relevant articles in the Act based on the legal principle that the same expression has the same meaning.

When it comes to assessing a mark’s level of fame in Subparagraph 11, the Guidelines specify that “the latter part of Subparagraph 11 shall be subject to a higher standard of scrutiny than the forepart,” since the dilution protection extends the scope of rights of well-known trademarks and, therefore, can have a significant impact on free competition, resulting in the monopolization of particular words, symbols, or a combination of both. In previous cases, the different levels of scrutiny applied to a mark’s “level of fame” in the forepart and latter part of Subparagraph 11 are based on the distinction between its recognition by the public vs. relevant consumers. In this ruling, the fame of well-known marks was not assessed based exclusively on this distinction. The level of fame for a well-known trademark (i.e., whether the well-known trademark is recognized by relevant or general consumers) is only one factor taken under consideration in the assessment of a likelihood of dilution.

Conclusion: The effectiveness of the Grand Chamber Ruling

In summary, the ruling in Supreme Administrative Court (Grand Chamber) No. 111-Da-1 overturned the legal opinions previously held in the Resolution of the Supreme Administrative Court’s Presiding Judge’s Committee on the Nov. 2016 Meeting, which is the most cited legal reference of the term “well-known” under Subparagraph 11 of Paragraph 1 of Article 30. It is now established that the term “well-known” only requires that the trademark in question be “commonly known or recognized by relevant enterprises or consumers based on objective proof,” rather than being generally recognized by the public. According to Article 51-10 of the Court Organization Act and Article 15-10 of the Administrative Court Organization Act, this Grand Chamber’s ruling only has a binding effect on the case originally submitted to the Ruling Request Panel. That is to say, the Ruling Request Panel must issue a final judgment on the VALENTINO case based on the legal opinions expressed in this Grand Chamber’s ruling.

However, it should be noted that since one of the objectives of the Grand Chamber system is to “unify legal opinions,” and because of the regulations set out in Article 51-2 of the Administrative Court Organization Act, the final judgment in Supreme Administrative Court Judgement No. 110-Shang-138 was characterized as the Supreme Administrative Court’s “former adjudication” and reflects the Grand Chamber’s legal opinion. In principle, courts should adhere to horizontal stare decisis, to ensure consistency between legal opinions made by different adjudication divisions of the Supreme Administrative Court. In addition, vertical stare decisis should also be upheld through the appeals system, where the lower courts follow precedent and apply a consistent set of unified legal opinions to their decisions.

In the future, if any adjudication division wishes to express new legal opinions that differ from the final judgment in Supreme Administrative Court Judgement No. 110-Shang-138, it must restart the inquiry and ruling request process in the Grand Chamber.

This is a translation of the original article in Chinese, which can be found here.

If you would like to know more about trademark regulations, please feel free to contact Gary Kuo at gkuo@winklerpartners.com.

Written March 31, 2023 by Gary Kuo, May Lu.
Translated on April 25, 2023 by Emma Chiu