Formosa Transnational - Taiwan
February 2020 marked the first time that the Taiwan Supreme Court has remanded an IP Court decision in a trademark case. In Taiwan, trademark infringement is a criminal offence, for which the most severe sanction is up to three years’ imprisonment. Article 376-1 of the Criminal Procedure Act establishes, where the offence is imprisonment, detention or a fine, the case cannot be appealed to the third-instance court after a second-instance judgment has been issued. In the past, trademark infringement cases were tried at two instances only – the first by district court and the second by the IP Court, the judgment of which could not be appealed to the Supreme Court.
However, some defendants were found not guilty at the first-instance trial, but guilty at the second instance. The Grand Justices Interpretation No 752 stated that the inability to appeal the IP Court’s judgment was in violation of the Constitution of Taiwan. In 2017 Article 376 of the Criminal Procedure Act was amended accordingly.
The updated Article 376-1 provides that “the defendant, or the person making an appeal on behalf of the defendant, may file an appeal in cases where the judgment of the first instance court was not-guilty, exempt-from-prosecution, dismissal-from-prosecution, or jurisdictional error, and such judgment is subsequently revoked by the second instance court and a guilty ruling is pronounced”. However, one appeal is permitted only. Thus, as per Article 376-2 “a case which was appealed in accordance with the provisions of the provisos of the preceding paragraph, shall not be appealed to the third instance court after a revocation judgment is issued by the third-instance court and the case is remanded to the first instance court for further proceedings”.
From 2017 to the present, there have been two trademark infringement cases appealed to the Supreme Court that follow the abovementioned pattern. The first was in 2018, and the Supreme Court rejected the third-instance appeal. The second took place in February 2020. In the latter case, the plaintiff had four trademarks – ‘823 金門高粱酒’, ‘金門KIN-MEN’, ‘金門’ and ‘金門高粱酒KINMEN KAOLIANG LIQUOR’. They had disclaimed the exclusive right to use the ‘823’ and ‘高粱酒’ portions of the ‘823 金門高粱酒’ mark (‘高粱酒’ means Sorghum liquor and the ‘高粱酒’ and KAOLIANG LIQUOR sections of the ‘金門高粱酒KINMEN KAOLIANG LIQUOR’ mark. ‘金門’ (Kin-Men) is a historical, famous region of Taiwan. The defendant’s company, Da Shun Wine Factory, is located there. The plaintiff claimed that the defendant had used the word ‘金門’ on the labels for its wine products, which infringed the plaintiff’s four famous registered marks.
At the first instance, the Kin-Men District Court issued a judgment of not guilty in favour of the defendant and held that the defendant merely used the word ‘金門’ to indicate its company’s location. At the second-instance trial, the IP Court ruled that the defendant used the word ‘金門’ in a prominent manner, which was deemed to be trademark use and found the defendant to be guilty of infringement. On appeal, the Supreme Court remanded the IP Court’s decision and indicated that as the plaintiff had disclaimed the exclusive right to use ‘823’, ‘高粱酒’ (Sorghum liquor) and KAOLIANG LIQUOR, the IP Court had not investigated how these disclaimed portions affected the analysis of similarity of the relevant marks and thus the IP Court’s judgment contravened the law.
This is the first time that the Supreme Court has remanded an IP Court judgment in a criminal trademark infringement case. It is rare for the Supreme Court to rule an error with the similarity of trademarks in a lower court judgment, even in administrative or civil cases. Trademark practitioners are now monitoring the case to see how it will shape the practice of trademark enforcement and defence in Taiwan.