【Trademarks】Analysis and Comparison of Taiwan and China Trademark Act Systems (I)
I. Introduction
“First-to-file” and “First-to-use” are the two major methods to obtain trademark rights. Currently, the former is adopted by both Taiwan and China on principle. That is, a trademark applicant can file a trademark registration with the competent authorities without actually using the target trademark. Hence, apart from acquiring the trademark rights first, the first to file a trademark registration can also claim trademark right infringement against others using same or similar trademarks. The USA is the best example for acquiring trademark rights with the “First-to-use” method. As what suggests the phrase, the actual trademark use is the legal basis for acquiring trademark rights. With respect to the US Trademark Act, any individual or legal entity may file a registration for a trademark already in use (“Use in commerce”) or based on the intention to use of such a trademark ("Intent to use”). Regardless of the filing basis of the application, the prerequisite remains the same: the actual use of a trademark being the prerequisite for obtaining a trademark registration. However, either “First-to-file” or “First-to-use”, both methods seem to be complementary to each other in the acquisition of trademark rights. This article aims at introducing the differences in the trademark act systems between Taiwan and China. The US trademark act system will be discussed in a separate article in the future.
Getting back to the topic, although both Taiwan and China adopt the “First-to-file” method, it is used in combination with the “First-to-use” method in reality as mentioned above. That is, the incorrect use of a registered trademark will lead to the revocation or cancellation of the trademark rights that are difficult to obtain. Nevertheless, while they are two different legal concepts, this article will briefly review the reasons for choosing the “First-to-file” method and how the “First-to-use” complements the former in terms of the ratio legis (reasons for the law) of both countries and the differences between both countries upon the same basis.
II. Ratio Legis and Combined Practice of the Trademark Acts of Both Countries
“First-to-file” and “First-to-use” are the two major methods to obtain trademark rights. Currently, the former is adopted by both Taiwan and China on principle. That is, a trademark applicant can file a trademark registration with the competent authorities without actually using the target trademark. Hence, apart from acquiring the trademark rights first, the first to file a trademark registration can also claim trademark right infringement against others using same or similar trademarks. The USA is the best example for acquiring trademark rights with the “First-to-use” method. As what suggests the phrase, the actual trademark use is the legal basis for acquiring trademark rights. With respect to the US Trademark Act, any individual or legal entity may file a registration for a trademark already in use (“Use in commerce”) or based on the intention to use of such a trademark ("Intent to use”). Regardless of the filing basis of the application, the prerequisite remains the same: the actual use of a trademark being the prerequisite for obtaining a trademark registration. However, either “First-to-file” or “First-to-use”, both methods seem to be complementary to each other in the acquisition of trademark rights. This article aims at introducing the differences in the trademark act systems between Taiwan and China. The US trademark act system will be discussed in a separate article in the future.
Getting back to the topic, although both Taiwan and China adopt the “First-to-file” method, it is used in combination with the “First-to-use” method in reality as mentioned above. That is, the incorrect use of a registered trademark will lead to the revocation or cancellation of the trademark rights that are difficult to obtain. Nevertheless, while they are two different legal concepts, this article will briefly review the reasons for choosing the “First-to-file” method and how the “First-to-use” complements the former in terms of the ratio legis (reasons for the law) of both countries and the differences between both countries upon the same basis.
II. Ratio Legis and Combined Practice of the Trademark Acts of Both Countries
- Ratio legis of the trademark acts of China and Taiwan
Article 1 of China’s Trademark Act stipulates: “This Law is enacted for the purpose of improving the administration of trademarks, protecting the exclusive right to the use of a trademark, and encouraging producers and dealers to guarantee the quality of their goods and services and preserve the credibility of trademarks, so as to protect the interests of consumers, producers and business operators and promote the development of the socialist market economy.” Article 1 has clearly stated the six major legislative purposes of the Act, which are: (1) improve the administration of trademarks; (2) protect the exclusive right to the use of a trademark; (3) encourage producers and dealers to guarantee the quality of their goods and services; (4) preserve the credibility of trademarks; (5) protect the interests of consumers, producers and business operators; and (6) promote the development of the socialist market economy. Article 1 of Taiwan’s Trademark Act specifies: “This Act is enacted for protection of the rights of trademark, certification mark, collective membership mark, collective trademark and the interests of consumers, maintenance of fair competition, and promotion of development of the industry and commerce.” Article 1 states that (1) protection of the rights of various types of trademarks; (2) protection of the interests of consumers; (3) maintenance of fair competition; and (4) promotion of development of the industry and commerce are the legislative purpose of the Act. In general, after years of amendments, the trademark laws of both countries aim at protecting the exclusive right to trademark use of holders and maintain the interests of consumers at the same time so as to provide a mark for consumers to identify and select goods or services and promote the normal development of the industry and commerce. - Combined use of “First-to-file” and “First-to-use”
As the trademark law of both countries aim at protecting trademark rights as mentioned above, the “First-to-file” method is adopted. However, why is it necessary to support this method with the “First-to-use” method to a certain extent? In accordance with Article 49, paragraph 2, of China’s Trademark Act, “Where a registered trademark has become the generic name of the goods for which its use is approved or a registered trademark has not been put in use for three consecutive years without a justifiable reason, any entity or individual may apply to the Trademark Office for revocation of the registered trademark.” This paragraph in China’s Trademark Act provides a defined basis for supporting “First-to-file” with “First-to-use”. With respect to Article 63, paragraph 1, subparagraph 2 of Taiwan’s Trademark Act, “The Registrar Office shall, ex officio or upon an application, revoke the registration of a trademark if such trademark is in any of the following: (2) where the trademark has not yet been put to use or such use has been suspended for a continuous period of not less than three years without proper reasons for non-use, unless the trademark has been put to use by a licensee.” This subparagraph of Taiwan’s Trademark Act also provides a defined basis for supporting “First-to-file” with “First-to-use”. From the provisions of the trademark act of China and Taiwan, there is no mandatory requirement for both countries to obtain trademark registration before engaging in commercial activities. However, if one wishes to exercise their trademark rights, whether it be for self-protection or to exclude infringement from others, it is necessary to register a trademark in order to legally protect their rights.
III. Effects of “First-to-file” Vs. “First-to-use”
After reviewing the ratio legis of both countries and how “first-to-file” and “first-to-use” are internalized in legislation, it’s time to discuss the potential effects of adopting “first-to-file” and “first-to-use”.
After reviewing the ratio legis of both countries and how “first-to-file” and “first-to-use” are internalized in legislation, it’s time to discuss the potential effects of adopting “first-to-file” and “first-to-use”.
- Adoption of “First-to-file”
When adopting “first-to-file”, trademark squatting may inherit in the establishment of a trademark publication system to enhance trademark credibility. Hence, registrants are generally required to use the trademark in accordance with the relevant regulations in the trademark law. As mentioned above, the trademark law of both countries stipulates that trademark rights may extinguish when the corresponding trademark is not used or not used within a specific time. Getting to the bottom of the subject matter, a trademark aims at indicating or identifying the source. Hence, apart from the uselessness of trademark rights to the trademark holder, an idle registered trademark cannot facilitate consumers to identify the corresponding brand. In other words, the de facto rights of a registered trademark can easily be disassociated from the actual situation in the commercial market. Apart from disfavoring the demonstration of trademark functions, this will also lead to trademark hoarding and a waste of resource. - Adopt of “First-to-use”
Increasing the difficulty and cost of trademark use for businesses is the biggest problem of “first-to-use”, because it is difficult to correctly inquire and even know if the selected trademark has been used by a third party before, and the state rights may be instable even after successfully obtaining the trademark rights. This can be the result of the other’s bona fide trademark use which invalidates the trademark rights of the latter users. Hence, this will be difficult to prove when a dispute over rights arises. For these reasons, trademark rights holders cannot ensure the possession of full trademark rights, hindering them from making bold decisions for business investments and marketing deployment.
As neither “first-to-file” nor “first-to-use” alone is perfect, a gradually developed approach to balance efficiency and fairness is to utilize regulations to accommodate both the “use” and “registration” of trademark rights. Specifically, in terms of “first-to-use”, “use” is emphasized as the basis of acquiring trademark rights, while “registration” is added to strengthen the reliability of trademark rights. In terms of “first-to-file”, registration is the prime basis for acquiring trademark rights, and certain protection is given to unregistered trademarks, and the obligation for trademark use of trademark holders is enhanced to a certain extent.
IV. Conclusion
Whether it is a legal entity or an individual who wants to conduct commercial activities to build their own brand, under the trademark act of both countries, it is recommended to file a registration for their brand logo in advance and use this brand logo in accordance with the relevant regulations to maximize the brand effectiveness and obtain trademark rights for legal protection. Although it is not mandated to register a trademark before using it for business and marketing activities so far, as “First-to-file” is the common method to obtain trademark rights in both countries, before obtaining trademark rights, there is still uncertainty about the unintended infringement of other’s trademark rights or business damage caused by the imitation of others. Hence, the best way is to obtain trademark registration.
IV. Conclusion
Whether it is a legal entity or an individual who wants to conduct commercial activities to build their own brand, under the trademark act of both countries, it is recommended to file a registration for their brand logo in advance and use this brand logo in accordance with the relevant regulations to maximize the brand effectiveness and obtain trademark rights for legal protection. Although it is not mandated to register a trademark before using it for business and marketing activities so far, as “First-to-file” is the common method to obtain trademark rights in both countries, before obtaining trademark rights, there is still uncertainty about the unintended infringement of other’s trademark rights or business damage caused by the imitation of others. Hence, the best way is to obtain trademark registration.
