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Determination of the Subjective Element of "Knowledge" in Trademark Infringement Involving the Sale of Counterfeits
I. Relevant Regulations on the Sale of Counterfeits made by "others"
Paragraph 1, Article 97 of the Trademark Act provides: "Anyone who knowingly sells goods referred to in the preceding two articles made by another person, or who, with intent to sell, possesses, displays, exports, or imports such goods, shall be sentenced to imprisonment for not more than one year, short-term imprisonment, or a fine of not more than NT$50,000, or both." The criminal conduct stipulated in this provision penalizes acts of knowingly selling, possessing with intent to sell, displaying, exporting, or importing counterfeits made by "others," rather than acts of using self-made counterfeits.
It is noteworthy that the subjective element in Paragraph 1, Article 97 of the Trademark Act requires the offender to have the criminal intent of "knowledge." The Supreme Court's Criminal Judgment 91-Tai-Shang-Zi No. 2680 held that "knowledge" refers to "direct intent." If the intent is indirect or the lack of knowledge is due to negligence, it is difficult to hold the offender criminally liable under this provision. In practice, courts determine whether the offender had the requisite "knowledge" based on the specific facts of each case, such as the duration of the sales activity, the market reputation of the trademark on the goods sold, the sales price, the source of the goods, the relationship with the victim (e.g., whether there was any OEM relationship), and the labeling of the trademark on the goods (see Article-by-Article Interpretation on the Trademark Act).
The Intellectual Property and Commercial Court's Criminal Judgment 114-Shing-Zhi-Shang-Yi-Zi No. 18 dated November 20, 2025, specifically determined whether the defendant had the subjective element of "knowledge" under Paragraph 1, Article 97 of the Trademark Act.
II. Facts of the Case
The defendant, an operator of claw machine arcades, purchased toy cars bearing counterfeit trademarks (hereinafter "the goods at issue") from an unidentified seller and publicly displayed the goods at issue in claw machines. After the police purchased the goods at issue and submitted them for authentication, it was confirmed that the goods were counterfeits, constituting a violation of the forepart of Paragraph 1, Article 97 of the Trademark Act.
III. The Grounds for Judgement
The judgment cited the Supreme Court's Criminal Judgment 91-Tai-Shang-Zi No. 2680, stating that the "knowledge" referred to in Paragraph 1, Article 97 of the Trademark Act means that the offender is aware of and intends to sell goods bearing another's counterfeit trademark. If the offender only foresees, passively allows, or tolerates the occurrence of the criminal act, this constitutes indirect intent or negligence, which is not subject to punishment under this provision.
The court found that the defendant did not subjectively "know" that the goods at issue were counterfeits for the following reasons, and therefore overruled the appeal, upholding the original not-guilty judgment of the Taiwan Tainan District Court's 113-Zhi-Yi-Zi No. 11:
1. No relevant evidence was submitted to prove that the registered trademark of the trademark owner was generally recognized by relevant consumers, making it difficult to determine that the trademark was a well-known trademark in the toy industry.
2. Although the defendant operated claw machines, he was not a toy retailer, making it difficult to determine that he subjectively "knew" the goods at issue were infringing goods.
3. The purchase price of the goods at issue was significantly lower than that of genuine goods, and the outer packaging lacked features such as a laser anti-counterfeit label. However, the court held that, considering that online shopping platforms or private sellers often have clearance sales and price competition, and that online stores or individual sellers, due to the lack of physical stores and lower personnel costs, often sell goods at prices lower than physical stores, the defendant could not determine whether the goods were counterfeits based solely on the purchase price. Furthermore, there was doubt as to whether the defendant was aware that the trademark at issue was a registered trademark. Therefore, the defendant's failure to pay special attention to the details of the authorized genuine trademark goods does not constitute subjective "knowledge."