Article 70, Paragraph 1 of the Trademark Law provides that knowingly using a trademark which is identical or similar to another person's well-known registered trademark without the consent of the proprietor of a registered trademark to the extent that the distinctiveness or reputation of such trademark is likely to be diluted shall be deemed infringement of the right of such trademark. According to the 102-Min-Shang-Su-32 Civil Decision of May 21, 2014 (hereinafter, the "Decision") rendered by the Intellectual Property Court, when a well-known trademark is continuously used by another person to the extent that the relevant consumers' perception of the association between such well-known trademark and sources of the goods or services it represents will be diluted, trademark distinctiveness will be impaired.

According to the facts underlying the Decision, Kinmen Kaoliang Liquor Inc. asserted that its Kinmen Kaoliang Liquor is the cream of the crop in the industry, that a series of trademarks such as "金門" (meaning "Kinmen") and "金門高粱酒KINMEN KAOLIANG LIQUOR" ("金門高粱酒" literally means "KINMEN KAOLIANG LIQUOR") (hereinafter, the "Trademarks at Issue") have been registered, and that the Trademarks at Issue have become quite famous. However, Kinmen Royal Liquor used a trademark similar to the Trademarks at Issue for representation in its liquor product advertisements. Therefore, Kinmen Kaoliang Liquor Inc. filed a complaint in accordance with the Trademark Law to request Kinmen Royal Liquor to desist from using trademarks identical or similar to the Trademarks at Issue for liquor products and services, product packages, billboards, webpages, advertisements or other representations.

The defendant asserted that under Article 36, Paragraph 1, Subparagraph 1 of the current Trademark Law, it indicated its registered trademarks on goods or packages and "Kinmen Royal Liquor Co., Ltd." and "Kinmen Royal Liquor" as specific portions by way of fair use. Therefore, the defendant's printing of its name on its own products should be deemed a fair and creditable method that meets commercial trading practices and should not be bound by the validity of the Trademarks at Issue. It was pointed out in the Decision that Article 36 of the Trademark Law provides for grounds of legal immunity for trademark infringing acts with Subparagraph 1 of the article illustrating examples of fair use. However, if the name of the actor is intended to be used in a highlighted fashion to the extent that the consumers will perceive it as a trademark that represents goods and thus become confused and misidentify the sources of goods indicated by the trademark or that unfair competition may potentially be resulted, such usage can hardly be regarded as an honest and creditable method that meets commercial trading practices within the meaning of fair use in this subparagraph. Therefore, if fair use under this article is asserted, the prerequisite should be "non-trademark usage." Under Article 5 of the Trademark Law, the use of a trademark means to use the trademark on goods or services or their relevant objects for the purpose of marketing or to use print images, digital audios or videos, electronic media or other media sufficient to cause relevant consumers to identify the mark as a trademark. An observation of the defendant's registered trademarks indicates that they do not contain the word "Kinmen." However, the defendant uses the word "Kinmen" in dark font as the base of its 58 Degree Kaoliang Liquor Products or Kinmen Royal Liquor on the outer packages of its products. The defendant's above indication subjectively suggests an intent to represent the sources of its goods and an objective to market goods. What is objectively indicated is sufficient to cause relevant consumers to identify the indication as a trademark. This obviously constitutes trademark use, and it can hardly be asserted that its own registered trademark is expressed by way of fair use. According to such reasons, the defendant cannot claim immunity on the ground of fair use by applying Article 36, Paragraph 1, Subparagraph 1 of the Trademark Law.

It was also held in the Decision that the defendant uses the word "Kinmen" on its products while the Trademarks at Issue are well-known trademarks. Since the word is similar to the Trademarks at Issue, the defendant engaged in acts that infringe or are deemed to infringe the Trademarks at Issue under Subparagraph 3 of Article 68 and Paragraph 1 of Article 70 of the Trademark Law. As previously stated, under the present commercial trend of goods and service convergence, "liquor products" and "liquor services" should be deemed similar in order to meet the current commercial operation realities. Therefore, the plaintiff's request that the defendant should not use anything identical or similar to the Trademarks at Issue (bearing "Kinmen") on liquor goods and liquor services should be well-grounded.