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DOES OVERPRODUCTION IN-FRINGE TRADEMARKS?
Under the Trademark Act, the use of a mark identical or similar to a registered trademark on the same or similar goods or services without the consent of the trademark owner would constitute trademark infringement. But there has been much disagreement in practice as to whether a trademark is infringed if the quantity of goods manufactured under a license exceeds the quan-tity authorized by the trademark owner.
The Kaohsiung District Court, in a 1996 judg-ment, and the Taipei District Court, in a 1997 judgment, both held that if the purpose of over-production of trademarked goods is to provide a reserve to replace defective items, and the quan-tity or proportion of such overproduction is within the bounds of what is customary in the industry concerned, then such overproduction does not constitute trademark infringement. In the above two cases, one involving golfing ac-cessories and the other involving pencils and related stationery items, the courts determined that overproduction by 2–3% above the author-ized quantity was a reasonable amount, and thus did not infringe the trademarks concerned.
However, it would appear that if the overpro-duced goods are offered for sale, rather than be-ing held as a reserve for replacing defective goods, the courts are still likely to find in-fringement. To avoid possible disputes arising out of overproduction, one should address these issues thoroughly in trademark licensing agree-ments.