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TRADEMARK USE BY UNREGISTERED LICENSEE IS EQUIVALENT TO USE BY OWNER
Article 57 Paragraph 1 Subparagraph 2 of the Trademark Act provides that after a trademark is registered, if without legitimate grounds the mark remains unused, or has ceased to be used, for a continuous period of three years, the Trademark Authority should cancel the registration, either ex officio or on complaint. But if the mark is used by a licensee during such a period, the lack of use by the trademark owner does not constitute grounds for cancellation. There has been much disagreement in practice over whether a licensee as referred to above is limited to a registered licensee.
Meanwhile Article 33 Paragraph 2 of the Trademark Act provides that an unregistered trademark licensing arrangement may not be asserted against a third party.
In a 2006 judgment in a case arising out of an administrative appeal, the Taipei High Administrative Court held that the Trademark Act makes the enforceability of a trademark licensing agreement against third parties conditional upon registration; that is to say, after there has been an expression of mutual assent between the parties to a licensing agreement, the agreement becomes binding on the parties, but if the arrangement has not been registered with the Patent Authority, it is ineffective merely against third parties. However, the determination of whether or not a trademark has been used is a question of fact. Accordingly, if the mark is used by the licensee and evidence of such use is produced, then according to the legislative intent of Article 57 of the Trademark Act, such use can be deemed equivalent to use by the trademark owner.