09/17/2018

Compensation for Non-pecuniary Damage of Trademark Infringement in Taiwan


Compensation for Non-pecuniary Damage of Trademark Infringement in Taiwan

Judge Jr-Da Fan

Trademark refers to the texts or signs that specific enterprises use to distinguish their products or services from those of other enterprises. For example, the name “Windows” indicates the computer operating systems developed by Microsoft, and “McDonald’s” refers to the hamburgers and other fast food produced by a specific restaurant brand. For a trademark to distinguish the products or services of one enterprise from those of others, the brand trademark established by that enterprise must not be imitated by others. For example, if other companies are allowed to sell fast food under the name McDonald’s, this damages the food-selling interests of the original company. Moreover, if the goods or services labeled under specific trademarks do not maintain their favorable quality, then consumers do not associate their past positive experiences with present purchase perceptions, thereby lowering their intention to purchase the goods or services of the original brands at higher prices. Therefore, when enterprises establish a valuable trademark and cultivate associations of goodwill with it, they must not lower the quality of their goods or services, to protect their investment in the trademark. Therefore, in trademark infringement litigation, if trademark infringement is proven or if the trademark used by the defendant has a likelihood of being confused with that of the plaintiff, irreparable damage to the goodwill associated with the plaintiff’s trademark can often be accounted, because trademark infringement is a type of continuous infringement with an irreparable nature.

Trademark owners not only lose sales interest to trademark infringement, but their goodwill can be damaged if the goods of the defendant are of inferior quality. Because the damage incurred by trademark infringement is irreparable, the loss cannot be estimated accurately. In the previous amendment of Taiwan’s Trademark Act, which was announced on June 29, 2011 and enforced on July 1, 2012, the following articles were included. Paragraph 3, Article 63 stipulates that “Trademark owners may require a reasonable amount of compensation for the damage incurred to the owner’s business reputation by trademark infringement,” and Article 64 stipulates, “Trademark owners may require the infringer to publish all or part of the verdict in newspapers regarding the state of trademark infringement at the expense of the infringer.” However, in the currently enforced Trademark Act, these two articles and paragraphs were eliminated. Consequently, in trademark infringement litigation, whether the trademark owner can demand compensation for the nonpecuniary goodwill damage according to the Civil Code or other acts, particularly whether the trademark owner may receive a reasonable amount of compensation for his or her irreparable loss in goodwill, becomes problematic. By comparison, in Taiwan’s court practices, the money paid as compensation for the nonpecuniary damage to personality rights, which is an amount considered reasonable for the damage caused by irreparable damage or severe damage that is clearly difficult to repair, is typically regarded as a consolation payment. Yet legal entities besides natural persons are ineligible for consolation payments on the reasoning that they cannot experience psychological pain that requires consoling. Protection measures stemming from this interpretation are therefore not comprehensive enough for safeguarding the goodwill of such legal entities. Furthermore, equating compensation for nonpecuniary damage to consolation payments overly narrows the scope of such compensation and contradicts the institution of nonpecuniary damage compensation. Given that the irreparable loss of goodwill suffered by a trademark owner due to trademark infringement is nonpecuniary, the state and amount of the loss are difficult to gauge. Placing the burden of proof solely on the trademark owner is obviously unfair. This study seeks to provide a comprehensive discussion of the criteria for requesting nonpecuniary damage compensation and the related burden of proof in trademark infringement in Taiwan. The attempt is to realize the goodwill-protecting function in trademark infringement cases.

100 J. Pat. & Trademark Off. Soc’y 49(2018)

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