1.Introduction

After striving to promote a brand and acquiring recognition among consumers, a trademark owner may inevitably encounter free-riders who deliberately use or even register similar trademarks to promote their business and utilize their registrations as a defense against claims of negligent or intentional infringement. In addition, if the trademark registrant does not collect sufficient evidence before initiating legal proceedings, such proceedings may be stymied by various defenses raised by the infringer. The following is an example of a successful case of deferring distribution of counterfeit products due to thorough evidence collection by the trademark owner, and the evidence played a key role in the subsequent litigation. On the basis of the evidence collected by the trademark owner along with the sales information acquired in the search and seizure action, the trademark owner was awarded 5 million NTD in compensation and successfully deterred the circulation of counterfeit products (Criminal: 2018 Ji Yi Zi No. 12 by the Taiwan New Taipei District Court and 2019 Shin Ji Shang Yi Zi No. 77 by the Intellectual Property Court. Civil: 2018 Min Shang Su Zi No. 58 by the Intellectual Property Court and 2019 Min Shang Shang Zi No. 18 by the Intellectual Property Court).

2. Facts

The plaintiff is the registrant of the Taiwanese Trademark Registration No. 01271845 “TENDER and device” (hereinafter referred to as “Trademark”), and the defendants were importers and OEM suppliers of the product named RⅢ Sports Rainwear (Model YW-R3)" (hereinafter referred to as the “Product”) and the Product was supplied to various downstream merchants for distribution. The plaintiff collected extensive evidence and found that the overall appearance, concept and pronunciation of the infringing mark were similar with the Trademark. The plaintiff then filed a criminal complaint and a civil lawsuit on the basis of trademark infringement to claim damages.

3. Issues

(1) Whether the mark used on the Product was similar to the Trademark and may cause confusion to relevant consumers.

(2) Did the defendant Mr. Chen have knowledge of the Trademark since 1995? Did the defendant’s company infringe the Trademark intentionally or negligently?

(3) Whether the plaintiff is entitled to demand the defendant Mr. Chen and his company to pay 5 million NTD as compensation.

(4) Did the defendants Mr. Dai and Mr. Lin infringe the Trademark intentionally or negligently?

(5) Whether the plaintiff is entitled to demand the defendants Mr. Dai and Mr. Lin to pay 5 million NTD as compensation.

(6) Whether the plaintiff is entitled to demand the defendants to cease-and-desist from using marks that are identical or similar to the Trademark on identical products.

4. Summary of the judgments

(1) Criminal

a. Defendant Mr. Chen was sentenced to five months in prison by the Taiwan New Taipei District Court and the counterfeit products shall be confiscated. The defendant then filed an appeal with the Intellectual Property Court but the appeal was dismissed.

b. The Court found that the mark used on the Product was similar to the Trademark, and both were used in motorcycle rider products such as raincoats. In addition, the defendant Mr. Chen had a business relationship with the plaintiff in the past and engaged in the related business for more than ten years, so the Court found the defendant Mr. Chen was guilty of intentional trademark infringement.

(2) Civil

a. The defendant Mr. Chen and his company should jointly pay the plaintiff 5 million NTD plus interest, of which 100,000 NTD shall be jointly and severally paid by the other defendants Mr. Dai and Mr. Lin; the defendants shall not use any marks that are identical or similar to the Trademark.

b. In the first instance judgment of the civil lawsuit, the Civil Court also opined that the mark used on the Product was highly similar to the Trademark, and the mark was used on identical products. In addition, as the defendant Mr. Chen had a business relationship with the plaintiff, the court concluded that his acts shall be considered as intentional infringement. Therefore, the Court calculated the damages based on the “six statistic documents of sales and return of seized product” acquired during the criminal investigation process and the import declaration data. Since the benefits acquired from the defendant’s infringing acts exceeded the amount (5 million NTD) claimed by the plaintiff, the Court found the plaintiff’s claim was admissible.

c. As for defendants Mr. Dai and Mr. Lin, they are retailers who acquired infringing products from the defendant’s company, and Mr. Lin filed a trademark application for a similar mark (“Racing sports RV and device,” Application No. 106016774) with the Taiwan Intellectual Property Office (TIPO). However, such trademark application was rejected by the TIPO as it was confusing similar with the plaintiff’s Trademark. Therefore, Mr. Dai and Mr. Lin should have had knowledge of the Trademark since June 21, 2016 when the TIPO rejected Mr. Lin’s trademark application. However, since the plaintiff still acquired the infringing Product via the internet after the aforementioned date, the defendants were found guilty of trademark infringement in negligence and shall be liable jointly with the defendant’s company. However, since the evidence regarding Mr. Dai’s sales of Product is sufficient, the Court awarded a compensation of 100,000 NTD at its discretion.

d. The defendant Mr. Chen and his company filed an appeal against the judgment of the first instance. Although they disputed the quantity of counterfeit products and the calculation method of damages, the court held that the appellant’s (the defendant’s) claim was inadmissible and the original judgment was upheld by the Intellectual Property Court. In addition, although an appeal was filed with the Supreme Court, the appellants have withdrawn their appeal autonomously so this case has become final and binding.

Reference: Anthology for the 70th Anniversary of Tai E's Law Practice