Tsai-Yi-Ta
There are two types trademarks- normal one or well-known one. Among well-known trademarks, there are two prongs of fame- fame in a specific group which the good or service is designed to, or national-wide fame. According to the Taiwan Trademark Act §30I⑪, an application of registration of a mark will be denied if: the mark applied is identical with (or similar to) another’s well-known trademark, and there is a likelihood of confusion on the relevant public, or there is a likelihood of dilution of the distinctiveness or reputation of the well-known trademark. The question is, how famous a mark shall be to claim the dilution protection?
In Nov. 2016, a conference held by judges in the Supreme Administrative Court determined that a trademark must be a household name to claim the dilution protection, which is also called a “general public theory.” The rationale for the general public theory is that: protection against confusion is to protect consumers, while protection against dilution is to protect the uniqueness of a trademark itself. Thus, any anti-dilution legislation should be carefully and narrowly crafted. Dilution should be used as an extraordinary remedy, which requires a significant showing of fame. Therefore, niche-fame trademarks are excluded from the dilution protection.
However, the Supreme Administrative Court overruled the abovementioned determination by a decision made in 2022, in which a niche market theory is applied. The rationale for the decision is as follows: based on the “same term, same definition” principle, the definitions of “well-known trademark” in §30I⑪ should be consistent. It is unreasonable that the first paragraph of §30I⑪ (protection from likelihood of confusion) includes niche-fame trademarks and the second paragraph (protection from dilution) excludes niche-fame trademarks, while both use the same word “well-known trademark”.
In the US, there were once disagreements among federal courts for thus issue before TDRA was enacted in 2006, which expressly excludes niche-fame trademarks from dilution protection. The U.S. Court of Appeals for the Federal Circuit (C.A.F.C.) had debated the general public theory and niche-fame theory for a decade. However, even the court which accepted the niche-fame theory noticed and emphasized the danger and concerns of that theory.
In Times Mirror Magazines, Inc. v. LasVegas Sports News, LLC, the 3th Cir. expressed its concern ”[I]t is possible to find virtually any mark to be ‘famous’ within some market, depending on how narrowly that market is defined…If marks can be ‘famous’ within some market, depending on how narrowly that market is defined, then the FTDA (the previous version of TDRA) will surely devour (traditional trademark) infringement law.” Thus, the 3th Cir examined the evidence of fame in a rigorous way to narrow and abate the effect of the niche-fame theory.
In Syndicate Sales, Inc. v. Hampshire Paper Corp., the 7th Cir. indicated that the niche-fame theory is the likelihood of confusion in disguise. The Court said “[A]t an initial glance, there appears to be a wide variation of authority on this issue. Some cases apparently hold that fame in a niche market is insufficient for a federal dilution claim, while some hold that such fame is sufficient. However, a closer look indicates that the different lines of authority are addressing two different contexts. Cases holding that niche-market fame is insufficient generally address the context in which the plaintiff and defendant are using the mark in separate markets. On the other hand, cases stating that niche-market renown is a factor indicating fame address a context like the one here, in which the plaintiff and defendant are using the mark in the same or related markets.” In short, C.A.F.C. applied the niche-fame theory only when the parties’ marks were designated to the goods or services of the same or similar category. In the Times Mirror case, both parties used their marks in newspapers and magazines; in the Syndicate Sales case, both parties used their marks in basket. In Nabisco, Inc. v. PF Brands, Inc. case which the 2th Cir. also applied the niche-fame theory, both parties used their marks in cookies.
In conclusion, most of the decisions that adopted the niche-fame theory were not dealing with typical trademark dilution cases. These decisions only added a cause of action on the layer of the cause of action based on confusion arrived from traditional trademark law.
On the other hand, the rationale to support the general public theory is strong under the prevention of unjust competition theory. Traditional trademark infringement law is a part of the broader law of unfair competition that has its sources in English common law, and was largely codified in the Trademark Act. When drawing the line of protection of trademarks, we must always take a delicate balance among the consumers’ interests, fair competition of the market, and the property right of the trademark owner. The most powerful criticism of the niche-fame theory is that the scope of injunction will, under the theory, reaches the markets which its fame or goodwill can never reach.
Suppose that EXTREMECLEAN is a well-known trademark in the field of clean room ventilation system, and such equipment is only used in semiconductor industry. And suppose that someone uses EXTREMECLEAN on bathroom cleaners. General consumers, who are not familiar with clean room ventilation equipment, will not recognize the fame and reputation of EXTREMECLEAN when purchasing bathroom cleaners. However, the procurement staffs in semiconductor industry will notice and recognize the EXTREMECLEAN trademark as famous, and link the trademark with images of bathroom cleaners, such as dirty, unclean environment of a toilet. Consequently, the owner of EXTREMECLEAN will allege that the reputation of his trademark is diluted by tarishment, and therefore an order of injunction should be issued.
The more specialized the field the goods or services is focused on, the higher the sensitivity of relevant consumers will be. Relevant consumers of a specific field will easily associate a famous trademark in the field with other similar marks, thereby creating a possibility of dilution. Theoretically, EXTREMECLEAN may claim remedy for injunctions in any market that the procurement staffs in semiconductor industry may reach. If so, the balance is substantially tilted toward the property right of the owner because the disturbance to the public interests (such as prevention from unfair competition or misleading of consumer.) is rather small, resulting in over-protection.
The Supreme Administrative Court’s 2022 Dazi No. 1 Decision is noticeable as well as controversial. Although the Taiwan legislators expressly stated that the article of dilution protection in Taiwan Trademark Act was borrowed from the Lanham Act §43, the outcome is completely different under the Supreme Administrative Court’s decision. FTDA in 1995 (the previous version of TDRA) did not exclude niche-fame trademarks from dilution protection, but it requires a showing of “actual dilution.” Mere “likelihood of dilution” is insufficient. TDRA in 2006 specifically excluded niche-fame trademarks by stipulating that the dilution theory only protects the trademarks which is widely recognized by the general consuming public of the United States. In the meanwhile, it only requires a showing of likelihood of dilution, not actual dilution. On one hand, TDRA lessens the burden of proof of fame. On the other hand, it narrows the scope of protection.
Taiwan Trademark Act, however, borrowed half of TDRA and half of FTDA. It requires a showing of likelihood of dilution, and protects not only household names, but also niche-fame trademarks. It lessens the burden of proof of fame and simultaneously widen the scope of protection. It is strange because even the Taiwan legislators recognized that the dilution theory is an exception of the trademark law and should be used carefully as an extraordinary remedy, not as an alternative of traditional infringement theory, i.e., likelihood of confusion. But the law itself seems failing to square what the legislators intended.
In conclusion, the Supreme Administrative Court once tried to limited the scope of protection of dilution theory, and the 2022 Dazi No. 1 Decision overruled this effort. The consequence and effects of this decision, and the Intellectual Property Court’s opinion on this decision, are a matter worth of concern in the future.