KYEC Trademark

Taiwan KYEC Trademark Owner Reclaims His Rights From Bad Faith Trademark Squatter

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What is the worst nightmare if you are a trademark owner? When you suddenly wake up in the morning and realised that your customers have now turned into your adverse competitor, using and registering your trademark as their own!

That’s unfortunately what happened to Kunyee Industrial Ltd. which had not any trademark registrations in Indonesia. Their long-time customer, an Indonesian Company, on the basis of bad faith registered Kunyee’s trademark in Indonesia without their authorisation and refused to give it back to them.

The ex-customer probably thinks that since Indonesia adopts a first-to-file system for registering trademarks, they could freely register anyone’s trademarks without authorisation or permission and still be protected for doing such bad faith and unethical act.

This article proves that they are wrong.

Background Story: A Simple Seller-Purchaser Relation

Kunyee Industrial Ltd. company (hereinafter Plaintiff),  was founded in 1975 in Taiwan specialising in the manufacture and sale of power rail products and systems.

For more than 30 years of experience, Plaintiff’s company has been offering a great variety of high-quality products such as hoist electrical accessories, hoist push buttons, material handling, safety power rails, cable reels, cable chains, and cable festoon systems.

Business cooperation between the trademark owner Kunyee Industrial Ltd. (Plaintiff) and PTIP (hereinafter Defendant) came in the form of a simple seller-purchaser relationship.

The Problem Arises

On June 3, 2015, Defendant filed Plaintiff’s trademark K Logo+KYECin Indonesia without Plaintiff’s authorisation.

The trademark application was filed under no. D002015023634 in class 09 for the goods electrical conductor cables, hoist driving electric cables, and electrical cable accessories, and successfully registered under Registration No. IDM000573035 on April 6, 2017.

The plaintiff who was aware of such unauthorised registration of their trademark warned Defendant to return the trademark registration to them without any conditions for compensation because Defendant hadinfringed Plaintiff’s rights by unlawfully registering their K Logo+KYEC in Indonesia without Plaintiff’s knowledge or consent.

Defendant refused to cooperate with Plaintiff to transfer amicably their trademark registration to Plaintiff or cancel their trademark registration unless Plaintiff complied with their term of payment.

Defendant argued that they had spent money for registering the mark and the additional cost was needed for the proposed transfer of rights of trademark K Logo+KYEC from Defendant to Plaintiff.

That was not acceptable to Plaintiff because in their eyes Defendant had violated their rights by illegally registering the K Logo+KYEC trademark in Indonesia, so Defendant had to return the trademark to the rightful owner without any conditions or requirement for paying any compensation.

The Cancellation Lawsuit

Failing to reach an agreement to solve the issue with Defendant, Plaintiff subsequently filed a cancellation action to the Commercial Court at the District Court against Defendant’s trademark KYEC registration on the grounds of bad faith.

On July 15, 2022, Plaintiff filed a cancellation lawsuit to the Commercial Court at Central Jakarta’s District Court under Docket No. 62/Pdt.Sus-Merek/2022/PN.Niaga.Jkt.Pst against trademark K Logo+KYEC registration no. IDM000573035 dated June 3, 2015, for the goods in class 09: electrical conductor cables, hoist driving electric cables, and electrical cable accessories.

The grounds for filing the cancellation lawsuit are based on Article 76 paragraph (1) jo paragraph (2) and Article 77 of Law No. 20/2016 on Trademarks and Geographical Indications, which gives the opportunity for any interested parties and trademark owners (including the owners of trademarks which have not been registered in Indonesia or the owners of famous marks) to file a cancellation lawsuit against a trademark registration. 

Plaintiff does not have any K Logo+KYEC trademark registration in Indonesia and in other countries except Taiwan. However, it does not prevent them from filing a cancellation lawsuit so long as the trademark owners have good faith and/or a famous trademark.

Since trademark K Logo+KYEC registration no. IDM000573035 has been registered on April 6, 2017, the last opportunity to file a cancellation lawsuit is 5 (five) years from the registration date, which is due on April 6, 2022 (Article 77 paragraph (1)).

On the other hand, Article 77 paragraph (2) also provides that a cancellation lawsuit can still be filed without a time limit if the registered mark can be found to be filed in bad faith and contravening the state ideology, laws and regulations, morality and religion.

In support of the cancellation lawsuit, on July 5, 2022, Plaintiff also filed new Indonesian trademark K Logo+KYEC and K Logo+KYEC+Chinese Characters applications for the goods and services in classes 07, 09, 35 and 37 respectively under nos. DID2022047526 and DID2022047548.

Previously, European Union trademark applications nos. 018702667 and 018702668 of the same  K Logo+KYEC and K Logo+KYEC+Chinese Characters marks have also been filed on May 13, 2022.

Taiwanese K Logo+KYEC+Chinese Characters trademark registration no. 00560208/080051272 had also been provided as evidence of Plaintiff’s ownership of the mark.

The cancellation lawsuit was filed against PTIP as the Defendant and Directorate General for Intellectual Property Rights (DGIPR) Office as the Co-Defendant.

As mentioned earlier, Plaintiff based the cancellation lawsuit on the fact that trademark K Logo+KYEC Registration No. IDM000573035 had been filed in bad faith on the part of Defendant.

Proving the Bad Faith

To prove the bad faith argument, Plaintiff stresses on the following:

Plaintiff is the Rightful Owner of the Trademark K Logo+KYEC and Defendant was only a Customer

Plaintiff’s company, KUNYEE  INDUSTRIAL LTD. of Taiwan, has been known for decades as the manufacturer of high-quality products such as hoist electrical accessories, hoist push buttons, material handling, safety power rails, cable reels, cable chains, and cable festoon systems. Plaintiff has registered Trademark K Logo+KYEC in Taiwan and has been exporting their products using the mark.

Plaintiff’s customers are from all parts of the world including Indonesia. One of which is Defendant who had started buying products from Plaintiff since 2006.

It is understandable therefore that Defendant was already familiar with or at least aware of Plaintiff’s trademark reputation in the market and seemingly they became greedy and wanted to gain financial benefits by registering Plaintiff’s trademark without authorisation. Because of this, Plaintiff stopped exporting their products to Defendant and subsequently sought to reclaim their mark from Defendant in Indonesia.

Plaintiff Points Out the Similarity in Whole Between Defendant’s Mark and Plaintiff’s Mark

Plaintiff prove that Defendant’s trademark K Logo+KYEC registration no. IDM000573035 has similarities visually, phonetically and in terms of the coverage of goods which are of the same kind. 

The similarities are so obvious that those who look at the mark can easily tell that K Logo+KYEC registration no. IDM000573035 has been filed in bad faith by Defendant which can confuse the general public regarding the origin of the trademark and the products.

Article 21 paragraph (3) of Law No.20/2016 on Trademarks and Geographical Indication provides that “an application shall be rejected if it is filed by an applicant with bad faith.”

The explanation of the above article reads that “what it is meant by ‘applicant with bad faith’ is an applicant who allegedly files a trademark application with the intention to imitate, to copy, or to follow other party’s trademark for the benefits of his/her own business, the act of which creates unfair competition, confusion, and misleads the consumers.

For example, a trademark application of words, devices, logos, or composition of colours which are the same as those of the other party, or a trademark that has been known by the general public for years, being copied in such a way that it will look similar in essence or in whole with the already known mark. From the aforesaid example, a bad faith intention has been established on the part of the applicant because the intentional copying of a known mark has at least been determined.”

By registering Plaintiff’s trademark K Logo+KYEC which has been widely known in the market, Defendant clearly wants quick money by simply hitchhiking the reputation and goodwill of Plaintiff’s trademark.

Defendant Has Been Dishonest When Filing A Trademark Application

Defendant has also been found to be dishonest when submitting a declaration of ownership of the trademark they intend to register or use. They have provided the DGIPR Office with a false declaration of ownership claiming trademark K Logo+KYEC as their own trademark which is not true.

Such dishonesty also proves that Defendant as the applicant filed trademark K Logo+KYEC with bad faith by providing the Registrar with false information regarding the true ownership of the mark.

With all the above Plaintiff’s argumentation as stated in the case docket, Plaintiff petitioned the court to grant all the plaintiff’s claims, to declare the Plaintiff as the rightful owner of trademark K Logo+KYEC, to declare that Defendant’s trademark K Logo+KYEC has similarities in whole with that of Plaintiff’s, to declare Defendant as an applicant with bad faith, to cancel Defendant’s trademark K Logo+KYEC registration in Indonesia, to order Co-Defendant to obey court’s decision by deleting Defendant trademark K Logo+KYEC registration from the general register of trademarks and announce the same in the official trademark gazettes, to have Defendant pay all the incurred fees related to the court case.

Despite having been properly summoned by the court, Defendant or his/her proxy did not appear before the court to exercise his/her rights to respond to the cancellation lawsuit filed by Plaintiff.

The Exception and Plaintiff’s Evidence

The Co-Defendant (DGIPR Office) in their exception to Plaintiff’s claims, provides the following argumentation for their decision to register the trademark K Logo+KYEC in the name of Defendant and to reject Plaintiff’s claims.

The Co-Defendant argues that the trademarkK Logo+KYEC application filed by the Defendant had been through a proper substantive examination stage that concluded that (at the time of substantive examination) there were no other existing trademark applications or registrations which were similar to the Defendant’s trademark K Logo+KYEC. Accordingly, there were no reasons for the DGIPR Office to determine bad faith intention on the part of Defendant when filing their trademark application and to reject Defendant’s trademark application.

Co-Defendant also pointed out that based on Article 77 paragraph (1) of Law No. 20/2016 on Trademarks and Geographical Indication, the cancellation lawsuit can only be filed within 5 (five) years from the registration date which was due on April 6, 2022. By filing the cancellation lawsuit on July 15, 2022, the deadline for filing the same should have expired, and therefore, should have been rejected by the court.

Co-Defendant pointed out that Indonesia had adopted the first-to-file principle in determining the rights for registering a trademark in Indonesia, so the Co-Defendant has properly decided on the registration of Defendant’s trademark K Logo+KYEC.

In support of their claims, Plaintiff had provided the court with a number of evidence in the form of original registration and renewal certificates, trademark application receipts with accompanying sworn translations, official extracts, copies of advertisements, export-import documents, copies of Defendant’s claim as Plaintiff Sole Agent, copies of invoices and payment slips, and other relevant documentation.

The Legal Considerations and Court’s Decisions

In its legal considerations, the court agrees with Plaintiff’s claims regarding the similarities between Defendant’s trademark registered under no. IDM000573035 and the Plaintiff’s trademark, and that Defendant’s trademark registration no. IDM000573035 should be cancelled from the General Register of Trademarks.

Regarding the 5 years expiration period for filing a cancellation lawsuit, the court views that the same Article 77 paragraph (2) of Law No. 20/2016 on Trademarks and Geographical Indication also provides the opportunity for filing a cancellation lawsuit without a time limit on the ground of bad faith.

Concerning the first-to-file principle, the court views that its implementation is not an absolute one. As long as the cancellation lawsuit is in compliance with the provisions of Law No. 20/2016 on Trademarks and Geographical Indication, there is still an opportunity for the rightful owner of trademarks to reclaim their rights.

In its decision on the case, the court decides the following:

In the exception:

  • Rejecting the Co-Defendant’s exception

In the subject case matter:

  • Accepting and granting all of Plaintiff’s claims;
  • Declaring Plaintiff as the Rightful Owner of trademark K Logo+KYEC in Indonesia
  • Declaring Defendant’s trademark K Logo+KYEC registration no. IDM000573035 as having similarity in whole with the Plaintiff’s trademark K Logo+KYEC
  • Declaring that Defendant’s act of copying and registering trademark K Logo+KYEC registration no. IDM000573035 constitutes an act based on bad faith
  • Declaring the cancellation of Defendant’s trademark K Logo+KYECregistration no. IDM000573035 from the General Register of Trademarks
  • Ordering Co-Defendant to delete Defendant’s trademark K Logo+KYECregistration no. IDM000573035 from the General Register of Trademarks and to announce the same in the Official Trademark Gazette
  • Punishing Defendant by paying the incurred case fees in the total amount of IDR 3,640,000.-

The decision was made by the assembly of judges on October 25, 2022, and later notified to the Defendant on 17 November 2022 and to the Co-Defendant on 16 November 2022. Therefore, the said decision has retained the force of res judicata (inkracht). 

Takeaways

The first-to-file principle in filing trademark registration should not be taken for granted and or be taken advantage of to register a trademark that does not belong to you. When there is an indication that a trademark has been filed and registered in bad faith, any true owners of trademarks have the opportunity to challenge DGIPR’s decision at the commercial court and file a cancellation lawsuit against the registered trademarks to reclaim their rights.

Although there is a five-year deadline to file a cancellation lawsuit, the Trademark Law still provides the opportunity for the true and rightful owner of a trademark to reclaim their rights by filing a cancellation lawsuit on the ground of bad faith and other reasons provided by the law.

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