Under Article 97 of the Trademark Act, maliciously selling and importing counterfeits is subject to criminal liability. However, defendants are liable only if they act with malicious intent to sell and import counterfeits – where no malicious intent is proved or where it is shown that the defendant simply acted recklessly, they will not be held liable. In other words, the fact that the defendant might have been aware that the products were counterfeit cannot serve as proof of malicious intent.
Therefore, prosecutors must submit concrete evidence to prove that the defendant had malicious intent when selling the counterfeit products.
Compared to traditional trademarks (eg, word and design marks), most people are arguably unaware that non-traditional trademarks (eg, patterns, three-dimensional figures and colours) can be protected as registered trademarks.
In a recent trademark infringement case, the Intellectual Property Court (IP Court) held that the evidentiary requirements for determining criminal liability should be stricter where the counterfeiting involves traditional trademarks than in cases involving non-traditional trademarks.
The trademarks at issue were handbag locks. Each trademarked lock had a triangular clasp, under which was a rectangular plate with two or three rounded decorative designs and four studs on each corner.
The prosecutor asserted that the handbag locks sold by the defendant were confusingly similar to a registered trademark and therefore the defendant had malicious knowledge that the products sold were counterfeits.
In response, the defendant argued that he had not known that functional objects such as handbag locks were registrable as trademarks.
The IP Court asserted that the locks in this case were functional in nature and thus were not inherently distinctive enough as trademarks.
Through the extensive use and marketing of these locks, they later became distinctive enough and were eventually granted registration under the Trademark Act. It was quite possible that the defendant had been unaware that the locks were registered when he sold the products.
As the public prosecutor could not submit concrete evidence to prove the defendant's malicious intent, the court considered the defendant to be not guilty.
For further information on this topic please contact Ruey-Sen Tsai or Celia Tao at Lee and Li Attorneys at Law by telephone (+886 2 715 3300) or email ([email protected] or [email protected]). The Lee and Li Attorneys at Law website can be accessed at www.leeandli.com.
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