1 . Trademark
1.1. Sources of law
Taiwan is a jurisdiction governed by the statutory law. The Trademark Act is the dominant source of law relating to trademarks from obtaining through to maintenance of rights, as well as violation of the trademark right.
Due to the unique political situation, Taiwan is not a signatory of most international conventions or treaties, including the Paris Convention for the Protection of Industrial Property and the Berne Convention. But, by means of joining the World Trade Organization (WTO) in 2002, Taiwan is obligated to observe the TRIPS Agreement for the protection and enforcement of intellectual property rights. Court decisions, though highly valued, do not have binding effects on subsequent cases with different facts.
The Trademark Act adopts the principle of first-to-file. A mark need not actually be in use before it is eligible for registration. A person who wishes to obtain the trademark right must apply for registration for protection. Mere use of a mark without registration will not establish a trademark right, although the Fair Trade Act protects a non-registered sign, symbol or name if it is proven to be well-known enough to identify the source of goods or services.
1.2. Substantive law
Although there is no classification based on the degree of distinctiveness of a well-known trademark in the Trademark Act, the case law tends to grant a different scope of protection based on different degrees of distinctiveness of a well-known trademark.
Any unauthorized use of a trademark which is identical or similar to a well-known trademark will be deemed as trademark infringement if such use may cause confusion or dilution of distinctiveness or reputation of said well-known trademark (Articles 70.2 of the Trademark Act). When two trademarks are identical or similar, likelihood of confusion usually occurs when both parties’ designated goods and services are also identical or similar. However, when both parties’ goods or services are very different, there may not be any likelihood of confusion among the relevant consumers. Under such circumstances, the court tends to request the trademark owner to prove that the trademark has become well-known to general consumers. In view of the high degree of fame, even goods and services of the accused trademark are not similar to those of the well-known trademark, likelihood of dilution on the distinctiveness or reputation of the well-known trademark may occur (IP Court Judgment No. 107-Ming-Shang-Sue-43).
Except for the protection on the well-known trademark above, there is no specific rule for luxury brands. Notwithstanding the foregoing, the “aura of luxury” surrounding them might, to some extent, facilitate the establishment of their well-known status.
A trademark may be entitled to a broader protection when there is sufficient evidence to support the degree of fame for a trademark. There is no formality requirement on the exhibits represented in the court. Oral testimony, affidavit and expert evidence are all admissible exhibits. The court will decide whether to adopt the exhibits by discretion.
As a specific protection for well-known trademarks, a well-known trademark can be enforced against any unauthorized use of said trademark as the name of a company, a business, or a group, a domain name or any other name that identifies a business entity if there is likelihood of confusion by relevant consumers, or likelihood of dilution on the distinctiveness or reputation of the well-known trademark (Articles 70.2 of the Trademark Act).
Any trademark that has not reached a well-known status may also be enforced against unauthorized use on a domain name or distinctive signs as long as said unauthorized use is considered as “use of a trademark…in the course of trade where such trademark is capable of being recognized by relevant consumers as a trademark” (Article 5 of the Trademark Act).
To enforce a non-well-known trademark against an unauthorized use as a metatag or a trade name may involve the Fair Trade Act and the Company Act since such use might not be perceived as use of a trademark.
A trademark can be enforced against any unauthorized use in social media when:
- such use is considered as a use of trademark; and
- there is likelihood of causing confusion to relevant consumers.
A trademark can be enforced against its unauthorized use in comparative advertising when the unauthorized use does not constitute a nominative fair use “in accordance with honest practices in industrial or commercial matters” (Article 36 of the Trademark Act).
A trademark can be enforced against its unauthorized use in parody if such use is considered as a use of trademark and there exists likelihood of confusion (IP Court Judgment No. 108-Ming-Shang-Shang-5).
Article 22.2 of the Fair Trade Act stipulating infringement of a well-known symbol of goods expressively excludes its application on any registered trademark. A trademark right owner cannot claim both trademark infringement and unfair competition for the same set of facts concerning use of a trademark.
Current issues the luxury brands face are that more and more copycats plagiarize the appearance or shape of the luxury products. However, it is difficult for luxury brands to obtain three-dimensional trademarks for their products, since the degree of distinctiveness required for three-dimensional trademarks is much higher than general trademarks. If registration of a three-dimensional trademark cannot be obtained, the luxury brands can only pursue remedies under the Fair Trade Act and the Copyright Act.
2 . Copyright
2.1. Sources of law
In Taiwan, the Copyright Act is the exclusive source of law relating to copyrights. Court decisions, although highly valued, do not have binding effects on subsequent cases with different facts.
2.2. Substantive law
The Copyright Act provides protection for any creation in the field of literary, scientific, artistic, or other intellectual domain. Article 5 of the Copyright Act provides an open list of copyrightable works, which includes oral and literary works, musical works, dramatic and so on.
Objects of industrial, fashion or accessory design are not treated separately and they are copyrightable if they can satisfy the general requirements for copyright protection, namely, the creation must be:
- an expression of an ideal but not an ideal itself;
- original and creative;
- the work of mind; and
- in the field of literary, scientific, artistic, or other intellectual domain.
Copyright covers the moral rights and economic rights subsisting in a completed work. Economic rights include the author’s exclusive right to reproduce, distribute and display the work and so on. An author can enjoy the following moral rights under the Copyright Act:
- right of attribution: the author has the right to be identified as the author of the work;
- right of disclosure: the author has the right to disclose the work to the public and decide the conditions of said disclosure; and
- right of integrity: the author has the right to prohibit others from distorting, mutilating, modifying, or otherwise changing the content, form, or name of the work, thereby damaging the author's reputation.
A legal entity can be the initial author of a work-made-for-hire created by its employees in the absence of agreement to the contrary. A legal entity can be the initial owner of the work made by its consultant, director, shareholder or supplier if the work is made under a commission agreement which expressively attributes the ownership of copyright to said legal entity.
A legal entity can become the assignee of the economic rights of the work through an assignment agreement.
It is notable that the scope of a copyright assignment or license shall be as clear as possible since any right not stipulated in the agreement will be presumed to have not been assigned or licensed (Articles 36.3 and 37.1 of the Copyright Act).
Moral rights cannot be transferred or waived. However, it is common in practice to ask the author not to enforce the moral rights against the licensee or assignee of the economic rights. Such covenant not to sue is deemed valid since it is not a waiver of the moral right.
The duration of the economic right is in principle the life of the author and fifty years after the author's death (Article 30.1 of the Copyright Act). The duration of the moral right is during the lifetime of the author and the lifetime of the person designated by the author or the author’s legal successor (Articles 18 and 86 of the Copyright Act).
In Taiwan a work is protected by copyright upon its creation. Absence of a copyright registration, a deposit or a notice will not impede the enforceability of copyright in any aspect.
Industrial designs belong to the work of applied art and can be protected by copyright if they are not purely practical or functional.
In a copyright infringement lawsuit, the plaintiff has to prove that the defendant has access to the plaintiff’s work. A substantial similarity between works of both parties will be assessed to establish infringement. It is not necessary for an actual copying.
Copyright can be enforced against a trademark when the device of a trademark is considered as a copyrighted work (IP Court Judgment No. 103-Ming-Shang-Sue-24).
Since copyright protection may not extend to technical features of a work, it is not likely to enforce copyright against an invention or a utility model patent.
Copyright can be enforced against a design patent and other IP rights, such as a trade dress protected under the Fair Trade Act, or a design of the integrated circuit layouts regulated by the Integrated Circuits Layout Protection Act.
However, in principle a slogan, common symbol or term is not copyrightable. Copyright cannot be enforced against a domain name, a trade name or a pseudonym if the subject pursuing copyright protection does not satisfy the creativity requirement for copyright protection.
Copyright can be enforced against its unauthorized use in social media when said use constitutes unauthorized reproduction or public transmission of a work.
Copyright can be enforced against an unauthorized use in comparative advertising or in parody, unless such use is considered as a fair use of the work for comments or other legitimate purposes.
Fair use is an available defense to an alleged infringer. There are various categories of fair use in the Copyright Act. For example, within a reasonable scope, a person can quote a published work for reporting, commenting, teaching, research and other legitimate purpose (Article 52 of the Copyright Act). According to Article 65 of the Copyright Act, the following four factors will be considered when determining whether a fair use defense is established:
- the purposes and nature of the exploitation, including whether such exploitation is of a commercial nature or is for non-profit educational purposes;
- the nature of the work;
- the amount and substantiality of the portion exploited in relation to the work as a whole; and
- the effect of the exploitation on the work's current and potential market value.
According to Article 148 of the Civil Act, a right cannot be exercised for the purpose of violating public interests or damaging the others. Therefore, theoretically, copyright can be deemed unenforceable owing to an abusive use of copyright by a copyright holder. However, in practice, so far, the Taiwanese court has not recognized any defense of abuse of copyright.
The statute of limitation for claiming damages for copyright infringement is within two (2) years from the time the copyright holder learns of its right to claim damages and knows the identity of the obligor, or within ten (10) years of the occurrence of infringement, which occurs earlier.
One of the issues that luxury brands face in expanding and protecting their rights in copyright is that the Taiwanese courts have a vague standard of “creativity” when determining whether the products of luxury brands can be protected by copyright. Therefore, luxury brands should not merely rely on the copyright protection at enforcement, but should also take into account other possible rights. It is recommended to simultaneously claim unfair competition based on Articles 22 (infringement of a well-known trade dress) and 25 (substantial plagiarism and free riding upon others’ goodwill) of the Fair Trade Act in addition to copyright infringement claims.
3 . Design
3.1. Sources of law
In Taiwan, the Patent Act is the exclusive source of law for the protection of designs. Substantive examination is required for a design to be granted and protected as a design patent. Court decisions, though are highly valued, do not have binding effects on subsequent cases with different facts.
3.2. Substantive law
Any creation made in respect of the shape, pattern, color, or any combination thereof, of an article as a whole or in part by visual appeal, as well as computer generated icons and graphic user interface applied to an article can be protected by a registered design patent (Article 121 of the Patent Act). According to the Patent Examination Guidelines amended in 2020, the “article” referred to can be also intangible. That is, an image presentable from a computer program product can be protected as a design patent. Besides, the exterior appearance of a building and interior spaces are also becoming eligible for design patents.
The shape of an article solely dictated by its function, fine arts, the layout of integrated circuits and electronic circuits and an article contrary to public order or morality are excluded from design patent protection. The requirements for a design patent include creativity, novelty and industrial applicability (Articles 122 and 123 of the Patent Act).
If a design is made by an employee of a legal entity in the course of performing the duties, the right to apply for a patent and the patent right thereof shall be vested in said legal entity in the absence of an agreement to the contrary and the legal entity shall pay the employee reasonable remuneration (Article 7.1 of the Patent Act). It is notable that the payment of reasonable remuneration is not a prerequisite to acquire the rights (IP Court Judgment No. 100-Ming-Zhuan-Sue-89).
If a design is made by an employee of a legal entity outside the course of duties, the right to apply for a patent and the patent right for such design shall be vested in the employee. However, if such design is made through the utilization of the legal entity's resources or experiences, said legal entity may, after paying the employee a reasonable remuneration, exploit the design concerned in the enterprise (Article 8.1 of the Patent Act).
A legal entity can acquire the ownership of a design patent developed by its consultants, shareholders, directors and suppliers when the development of said design is funded by said legal entity through an agreement which expressively grant the ownership of the patent to said legal entity (Article 7.3 of the Patent Act).
It is notable that if a design assignment is not recorded with the Taiwan Intellectual Property Office (TIPO), such assignment shall have no locus standi against a third party (Article 62.1 of the Patent Act).
When drafting a design related assignment agreement with employees, consultants, shareholders, directors and suppliers, there are some precautions to be considered:
- If a design is made outside the scope of employment duties, any agreement precluding the employee from enjoying the rights and interests of the design shall be void (Article 9 of the Patent Act).
- Waiver or assignment of moral rights of a designer in an agreement is a void provision.
The duration of protection for a design patent is within fifteen years from the filing date (Article 135 of the Patent Act).
When assessing design patent infringement, the court will evaluate whether the overall visual appearance of the assessed product and that of the design patent is substantially identical or similar in the perspective of a general consumer, who is a fictional person familiar with similar prior art.
A design can be enforced against a trademark attached to an article embodied by that design patent by means of a civil action and against a registered design patent through an invalidation proceeding. It is not likely to be enforced against an invention patent or utility model patent since a design patent shall not be functional or technical. It is also not likely to be enforced against a domain name, trade name, any unauthorized use in social media or comparative advertising, since there is not any article to which a design can be embodied.
A design might be enforced against its unauthorized use in parody since parody is not a defense recognized in the Patent Act.
An alleged infringer might raise a “functional” defense arguing that the design is a functional and practical shape. There is not a repair clause under the current Patent Act and “repair part” defense has not yet been recognized as an exemption for infringement by the court (IP Court Judgment No. 106-Ming-Zuang-Sue-34).
Although by law the abuse of right can be a defense against a patent infringement claim, so far there is not any case law directly recognizing or confirming such a defense.
The patentee is entitled to file an action claiming damages against the accused infringer within two (2) years from when the patentee became aware of the infringement activities and the accused infringer, or ten (10) years since the infringement occurs. Upon expiration of the periods, an accused infringer may raise statute of limitation defense to avoid liabilities for damages.
In civil actions, a design holder can simultaneously claim design patent infringement, copyright infringement and unfair competition for the same set of facts.
As designs are protected as patents, novelty is a threshold to obtain a design patent. In order not to lose novelty, luxury brands should file for their novel creation in Taiwan within one year from the earliest filing date in one of member states of the WTO.
4 . Right of privacy, publicity and personal endorsement
4.1. Sources of law
The law of Taiwan recognizes the right of an individual to control any use of his or her image and likeness as a “portraiture right.” Whereas the law also recognizes the right of an individual to control any use of his or her name as the “right of personal name.” Although there is not a specific legal concept identical to the right of publicity, the combination of the portraiture right and right of personal name may encompass a similar scope.
Right of publicity can be protected as a right of personality. The context of right of personality includes the right of privacy, freedom, reputation, personal name and portrait and so on. Article 18 of the Civil Act stipulates that an individual has the right to prevent and exclude any infringement of his or her personality. When an individual’s right of personality is infringed, he or she is entitled to claim damages (Articles 184 and 195.1 of the Civil Act).
4.2. Substantive law
Right of personality (including the right of publicity) can be enjoyed by any individual without any condition. As a general principle, any right of personality shall expire upon death of an individual, and it cannot be waived, assigned or inherited. However, since the commercial value of personality rights becomes more and more important, the Supreme Court held that inheritance of the economic interest of personality rights is not inadmissible, and the successor of such personality right shall be entitled to exclude any unauthorized use by a third party (Supreme Court Civil Judgment No. 104-Tai-Shang-1407). Accordingly, right of publicity may be inherited and the successor can exclude any unauthorized use by a third party. However, the case law is silent on the duration of the successor’s right to exclude unauthorized use.
In practice, right of publicity cannot be assigned by an assignment. However, it is common and valid for an individual to license the right of publicity in an exclusive or non-exclusive way. In addition to general rules for a contract, the law or court opinion does not appear to indicate any special requirement for licensing the right of publicity with respect to the validity, withdrawal or termination of a license. As such, the withdrawal or termination clause should be stipulated in the license agreement.
It is notable that a licensee can exploit the right but is not in the capacity to exclude others’ unauthorized use (Taiwan Hualiang District Court Civil Judgment No. 96-Sue-200). Therefore, in the license agreement, it is important to obligate the licensor to provide necessary assistance in excluding any unauthorized use.
Following the death of the licensor, a valid license agreement will not be terminated automatically. If the license agreement is still in force, it will bind the successors of the deceased.
Meanwhile, although inheritance of right of publicity is recognized by the Supreme Court, the case law is silent regarding whether the right of publicity can be transferred mortis causa.
The right of publicity can be enforced against any use of that individual’s name, image, likeness, or other unequivocal aspects of his/her identity. It is not necessary to prove the commercial value of the right of publicity.
In practice, freedom of the press can be used as a defense against the claim based on right of publicity. If the unauthorized use is for protecting the societal right to know and does not violate the principle of proportionality, the defense of freedom of the press can be established (Taiwan High Court Judgment No. 101- Shang-1308).
The current issue celebrities and others face when exercising their right of publicity when working with luxury brands is that there is no clear rule regarding the duration of the successor’s right to exclude unauthorized use and whether the right of publicity can be transferred mortis causa.
5 . Product placement
Product placement is permitted in Taiwan.
If the product placement is put into a TV program or radio program, there are limitations on product placement in Regulations for the Distinction between Television Programs and Advertisements, Product Placement Marketing, and Sponsorships and Regulations for the Distinction between Radio Programs and Advertisements and Product Placement Marketing and Sponsorships. Said limitations are summarized as follows:
- Product placement is forbidden in news and children’s programs.
- Product placement is forbidden for the following products:
- international matchmaking;
- prescription medicine designated by central competent health authorities;
- illegal commodities and services; and
- other commodities forbidden from advertising by the law.
If the other party fails to perform the product placement agreement, the brand owner may claim damages for breach of contract. The brand owner may stop the communication if there is an agreement obligating the other party to stop communication upon breach of contract.
Luxury brands do not have unique concerns for product placement since the products of luxury brands do not fall into the scope of products forbidden for product placement in the TV or radio programs as indicated above.
6 . Protection of corporate image and reputation
Right of publicity extends to legal entities in a limited way. Right of privacy, however, is exclusive for a natural person; it does not extend to legal entities.
A legal entity can enjoy protection on its name, credit, reputation and goodwill. However, the portrait right, right of privacy and other personality rights cannot be enjoyed by legal entities.
It is generally possible to include specific clauses in agreements aimed at protecting the corporate image/reputation of one of the parties. In principle, it should be legitimate to prohibit a trading counterpart from selling the products to re-sellers whose image is below a certain defined standard for protecting the image and reputation of one of the parties. It should also be legitimate to restrict the trading counterpart from buying non-original spare parts and components for maintaining the quality and safety of the products.
However, if such clauses are imposed for restraining competition, they might be deemed imposing improper restrictions on the trading counterpart’s business activity (Article 20.5 of the Fair Trade Act).
It is notable that prohibition to sell below a certain price or to do so outside of specific time periods might constitute restriction of resale price prohibited in Article 19 of the Fair Trade Act unless there is any just cause.
Liquidated damages or stipulated fines clauses for breach of contract are permissible in Taiwan. However, if the court believes the damages or fines are too high, the court may decrease them at their discretion (Article 252 of the Civil Act).
The unique concern of luxury brands in the secondary market is that, in principle, luxury brands cannot exclude third parties from importing or reselling second-hand or parallel imported genuine products. Doctrine of international exhaustion is prescribed in both the Patent Act and the Trademark Act. Notwithstanding the foregoing, since there has not been any repair clause admitted in the Patent Act, luxury brands is recommended to apply for design patents for their spare parts and components.