The trademark use as defined in the Trademark Act refers to use of trademarks for marketing purpose. As the Trademark Act is a domestic law and adopts the territorial principle, the marketing under the Trademark Act is limited to that conducted in the Republic of China (Taiwan). Under such definition, whether contract manufacturing involves trademark use under the Trademark Act is rather controversial.

According to the Interpretation of the Trademark Act published by the Intellectual Property Office (IPO) in May 2005, a contract manufacturer is not a user of the trademark concerned as it completes the manufacturing of products bearing the trademark according to the consignor's instructions and that it delivers them to the consignor with no intention to sell the products on the market. In principle, contract manufacturing is still deemed use of the trademark concerned, but the user thereof is the trademark owner who commissions such manufacturing, instead of the contract manufacturer. If a contract manufacturer manufactures more products than the agreed quantity and intends to sell them on the market, such act will no longer be contract manufacturing, but marketing, which constitutes trademark use and thus is prohibited unless the trademark owner's consent is obtained.

It is particularly noteworthy that, in deciding whether contract manufacturing involving "sell-back" is deemed trademark use, different points of view are adopted for determination of the use of a registered trademark and for assessment of trademark infringement.

As illustrated in the Tips on Use of Registered Trademarks published by the IPO on 10 July 2008, the IPO does not think that the marketing has to be done in the territory of Taiwan to constitute trademark use under the Trademark Act. The IPO holds that "for marketing purpose" specified under the Trademark Act refers to an act of free sale to non-specific persons and that the territory of marketing includes the local market and the markets to which relevant products are exported. The term "exportation" means export of the products from the territory of Taiwan. Although the business acts following exportation include the marketing of relevant products in foreign markets, the Trademark Act specifies that the labeling of a registered trademark on products to be exported or on relevant articles thereof should be deemed use of the registered trademark. Therefore, if the foreign owner of a trademark which has been registered in Taiwan commissions a local contract manufacturer to manufacture any trademarked products for delivery to the owner's native country or any third country, this is deemed an act of OEM or ODM. Even though such products are not directly sold on the local market, they are indeed manufactured locally. This type of trademark use also complies with the practice of local companies in conducting international trade. Therefore, an act of "sell-back" by a trademark owner can be deemed use of the registered trademark.

In assessment of trademark infringement, though, most courts do not think that "sell-back" by a foreign trademark owner or local contract manufacturer is trademark use. According to the Trademark Act, use of a trademark in Taiwan without consent of the trademark owner should, in principle, constitute trademark infringement. However, when a trademark that has been registered in Taiwan is owned by another trademark owner in a foreign country, currently most courts consider such act not trademark use since the local contract manufacturer does not sell these products on the local market. In other words, manufacturing of any products under a trademark registered in Taiwan without prior consent of the local trademark owner, such act does not infringe the trademark rights of the local trademark owner.