Selling counterfeits via live broadcasts can result in significant prison sentences

The Taiwan IP Court has handed down its judgment on a live broadcaster’s sale of counterfeit goods on the grounds of aggravated fraud (109 shin jishon su 29). While the court reduced the lengthy period of imprisonment for the offence, the case highlights how selling products via live broadcasts is affecting court decisions on matters involving counterfeit goods.

Selling counterfeits is regarded as a minor crime, for which the maximum punishment is a maximum of one year in prison, according to Taiwan’s Trademark Act. In criminal trademark cases, most defendants are given prison terms of up to four months and only repeat offenders are given longer. In most situations, the punishment is commuted to a fine at the daily rate of NT$1,000, NT$2,000 or NT$3,000. However, in recent years, some IP court judgments have sentenced defendants found guilty of selling counterfeit goods that they had falsely indicated to be genuine to sentences of over a year. This is because the court considers these to be acts of fraud. In 2014, an update to Taiwan’s Criminal Code saw the addition of Article 339-4, which details the crime of aggravated fraud as follows:

A person who commits the offence of fraud under Article 339 and with which any of the following circumstances exist shall be sentenced to imprisonment for no less than one year and no more than seven years; in addition thereto, a fine of no more than one million yuan may be imposed:
1. Offence in the name of a government agency or public official without authorisation.
2. Offence committed by three or more persons.
3. Offence by dissemination of false information to the general public through broadcasting TV, electronic communication, the Internet, or other media.

In 2020, the Taiwan Supreme Court held that even where the buyer recognises that the products are counterfeits, if the defendant indicates falsely that they are real, they have still attempted to commit aggravated fraud (109 TAI SHON 1527). Of course, not all sales activities conducted via live broadcasts constitute this. If the live broadcaster does not indicate that the products are genuine, they may be deemed as only having committed the crime of selling counterfeit goods in violation of the Trademark Act.

However, if a live broadcaster falsely states that its products are genuine when selling these through live broadcast or over the Internet, they will be deemed to have committed the crime of aggravated fraud as per the Criminal Code. The prison terms for such an offence is “no less than one year and no more than seven years”, which is substantially longer than under the Trademark Act, and imprisonment cannot be commuted to a fine.  However, most live broadcasters are very young, and some judges have expressed that they are uncomfortable with sentencing these young people to such heavy punishments.

The decision

In this recent judgment, the court reduced the normal legal period of imprisonment. While the judge found that the live broadcaster had committed aggravated fraud, he was sentenced to six months of imprisonment only. It appears that the judge tried to overcome the unreasonable sanction by applying the rarely used Article 59 of the Criminal Code to shorten the legal period of punishment – this stipulates that “a punishment may be reduced at the discretion of the judge if the circumstances of the commission of the offence are so pitiful that even the minimum punishment is considered too severe”.