Sell-back Does Not Constitute Trademark Infringement?

01/01/2013

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According to the Trademark Act, without consent of the registered trademark owner in Taiwan, use of the logo, which is identical with or similar to the registered trademark, on the same or similar goods, or sale, display, possession, importation or exportation of these goods with intention for sale will constitute trademark infringement, and consequently will be subject to civil and criminal liabilities.

However, whether so-called "sell-back" would constitute trademark infringement is an unsettled issue in Taiwan. The so-called "sell-back" refers to the situation of OEM whereby the products are manufactured and/or packaged in Taiwan but will not be sold or circulated in Taiwan.

While the Trademark Act itself is silent on this issue, some court's judgments advocate that the OEM products ordered by and shipped back to the owner of a trademark registered in foreign countries without any distribution of such products in Taiwan does not constitute infringement against the prior conflicting rights in Taiwan. The interpretation made by the Intellectual Property Office (IPO, the Trademark Office in Taiwan) and the Intellectual Property Court (the specialized court in charge of trademark infringement litigations) also support this point of view. However, there are some other courts rendering the judgments to the contrary.

Manufacture and/or exportation of the OEM products is the possible exception to trademark infringement. Nonetheless, the courts have accepted such an exception so far only on the condition that the OEM products ordered by and shipped back to the owner of a trademark registered in foreign countries without shipment to other countries or areas.

Practically speaking, only the public prosecutors or the judges of the courts are entitled to determine whether or not there is trademark infringement. Accordingly, the Customs, the police or any other judicial authorities will not necessarily accept such a "sell-back" defense, and may still proceed with the criminal proceedings and/or to seize the suspected infringing products, and transfer the case to the courts for further investigation and trial.

Since any products to be exported will have to report its trademark on the exportation declaration, the Customs will still check the trademark issues. Accordingly, the risk of trademark infringement accusation will exist in any trademarks, brand name, sub-brand, flavor name or tagline once any of types appears to be confusingly similar to the registered trademarks of others in Taiwan.