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Calculation of damages for trademark infringement – the number of "seized infringing goods" calculated based on the number of goods produced by the OEM
I. Overview
Article 71-1 of the Trademark Act stipulates that "damages may be calculated according to any of the following: (1) The method provided in Article 216 of the Civil Code; the proprietor is entitled to demand damages based on the amount of the balance derived by subtracting the profit earned through using the trademark after infringement from the profit normally expected through using the same trademark, if no method of proof can be furnished to prove the damage suffered; (2) The profit earned by the infringer as a result of trademark infringement; if no proof on costs or necessary expenses can be furnished by the infringer, the total amount of income from selling the infringing products shall be presumed to be the amount of profit; (3)The amount not more than 1,500 times of the unit retail price of the infringing goods; if over 1,500 pieces of infringing goods were found, the amount of damages shall be a lump sum of the market value of the infringing goods; or (4)The equivalent amount of royalty that may be collected from using the trademark under licensing." Article 71-2 of the Trademark Act provides that "a court may, reduce the amount of damages referred to in the preceding paragraph if such amount is apparently unequal at its discretion."
The concept of "statutory damages" was laid out in the Article 71-1(3) of the Trademark Act. Pursuant to the purpose of statute for the provision from the amended Trademark Act passed on 31 May 2011, the court-mandated minimum compensation multiplier of "500 times" was removed, with the damages determined at the judge's discretion based on the individual infringement case. The amendment aims to avoid the situation, where, even if the actual degree of infringement is minor, the damages still shall be calculated based on the 500 times the retail unit price. When the number of seized infringing goods over 1,500 units, the damages is still calculated based on the total price of the seized goods, in accordance with the latter part of the Article 71-1(3) of the Trademark Act, to avoid unfair judgement resulting in overly low damages for the trademark owner. In addition, based on the calculation method of "seized infringing goods," the Intellectual Property and Commercial Court 112-Min-Shang-Su-Zi-No. 27 dated 20 February 2024 and the second-instance trial of the Intellectual Property and Commercial Court 113-Min-Shang-Shang-Yi-Zi-No. 1 dated 5 March 2025 ruled that the damages should be calculated based on the actual quantity of goods produced by the OEM delegated by the offender, instead of the quantity of goods that have already been sold.
II. The fact and the grounds for judgement
The Intellectual Property and Commercial Court's Civil Judgment 112-Min-Shang-Su-Zi-No. 27 and the second-instance trial of the Intellectual Property and Commercial Court's Civil Judgment 113-Min-Shang-Shang-Yi-Zi-No. 1 both determined the same conclusion: The plaintiff company's registered trademark (hereinafter "the disputed trademark") has reached a level of fame in the snack food industry. The defendant company and its actual proprietor operate in the same food industry trade and is certainly aware of the existence of the plaintiff company's registered trademark. Further, the defendant company's registered trademark was canceled following a trademark opposition filed by the plaintiff company. The defendant company's packaging designis also similar to the disputed trademark. Therefore, it was determined to constitute trademark infringement under Article 68-3 of the Trademark Act, and was considered to be an infringement due to negligence.
The following key points of the rulings of the case and the second-instance trial are worth noting: Both rulings stated that the quantity of "seized infringing goods" as referred to in Article 71-1(3) of the Trademark Act does not necessarily require actual sales. Instead, it should be calculated based on the quantity of goods actually delegated for production by the defendant company, which in this case amounts to 21,489 boxes. Accordingly, the damages that the plaintiff company is entitled to claim should amount to NT$2,127,411 (calculated as: 21,489 boxes × NT$99 = NT$2,127,411). However, the following calculation methods were not adopted by the court.
1. The plaintiff company asserted that the calculation should be based on the marketing quantity of 30,000 boxes stated on the defendant company's Facebook page.
The court ruled that such number was only set to help consumers be aware that the goods were only available in limited quantities rather than unlimited supply. Therefore, such figure was irrelevant to the calculation of the seized trademark-infringing goods.
2. The defendant company asserted that the actual procured quantity was 20,000 boxes, 17,877 boxes of which were sold. The remaining inventory cannot be returned and had been scrapped due to expiration.
The court determined that the calculation of seized trademark-infringing goods does not necessarily include actual sales by the offender. Thus, the quantity procured by the defendant company does not equate to the number of goods that infringe on the trademark.
Additionally, the court considered that the defendant company and its owner committed the infringement negligently. Besides, not all seized trademark-infringing goods had been available in the market. Therefore, pursuant to Article 71-2 of the Trademark Act, the damages amount was appropriately reduced. The original trial court reasonably reduced the damages to NT$750,000. In the second instance, the court ruled that it partially accepted appellant's assertion, namely the plaintiff company, to increase the damages to NT$1,000,000.