The marketing behavior among the same group of companies cannot be deemed as trademark use

The Decision

The IP Court issued a decision holding that the product manufacturing behavior based on the division of labor within the same group of companies does not market goods bearing the trademark so that relevant consumers would not recognize the products that come from the trademark owner. Therefore, the procurement behavior among affiliated companies is difficult to be recognized as trademark use. The proposed mark should be revoked due to non-use.

This holding was also confirmed by the Supreme Administrative Court in this case in 2022(110 shang 491).

The comment of Ching-I Lu

Nowadays, many enterprises may split different businesses and set up multiple subsidiaries. Then the subsidiaries will divide the work and cooperate to complete the goods or services.

If the goods or services are never noticed by consumers outside the group, but only purchased by each other for the division of labor, according to the opinion of the Supreme Administrative Court in this case, it will be considered not to be a trademark use. Thus, the trademark right may be revoked accordingly. Enterprises should pay high attention to this situation.