Newsletter
Calculation of Damages for Trademark Infringement
Regarding the calculation of damages suffered by the trademark owner as a result of any trademark infringement, the Intellectual Property and Commercial Court recently issued a judgment (Ref. No. 109-Min-Shang-Shang-Geng-1-2) that can serve as a reference. The key points are as follows:
- When claiming damages for trademark infringement, the damages suffered by the trademark owner can be calculated based on the profits derived from the infringement of the trademark right. If the infringer fails to provide evidence of their costs or necessary expenses, the total income from the sale of the infringing goods can be considered as the profit obtained. (Article 71, Paragraph 1, Subparagraphs 2 of the Trademark Act)
- Using the total sales amount as the profit gained by the infringer is a provision that shifts the burden of proof to alleviate the trademark owner's difficulty in ascertaining the extent of the infringer's profit from the infringement. The deduction of costs and necessary expenses incurred by the infringer due to the infringement can only be made if the infringer provides evidence of such costs and expenses. Therefore, the burden of proof lies with the infringer regarding the costs and necessary expenses incurred as a result of the infringement. If they fail to provide such evidence, the total income from the sale of the infringing goods should be awarded to the trademark owner as compensation.
- The term "costs and necessary expenses" in Article 71, Paragraph 1, Subparagraph 2 of the Trademark Act refer only to the direct costs or necessary expenses incurred in the production or sale of the infringing goods and does not include indirect costs. Expenses such as salaries, research fees, rent, travel expenses, shipping fees, repair costs, insurance fees, depreciation, stationery, postage and telecommunications fees, advertising expenses, water/electricity/gas bill, commission expenses, training fees, and other expenses are considered fixed costs incurred in the company's operations and cannot be regarded as costs or necessary expenses directly incurred as a result of the trademark infringement.
- Considering the contribution of the trademark is not necessary in this case. The court determined that the consumers experienced online educational services, rather than the receipt of physical goods or other services. Therefore, the promotion of the "brand" and "trademark" becomes more important. As the trial listening service and refund mechanism for online courses are no different from the trial period or return mechanism for general goods, Article 71, Paragraph 1, Subparagraph 2 of the Trademark Act states that damages for trademark infringement can be calculated based on the profit obtained from the infringement of the trademark right. If the infringer fails to provide evidence of their costs or necessary expenses, the total income from the sale of the infringing goods or services should be considered as the profit gained and shall be awarded to the trademark owner. It is difficult to objectively and reasonably determine the appropriate proportion between the profits from the sale of the infringing goods or services attributable to the trademark and those attributable to the value of the goods themselves.
- In lawsuits involving the infringement of another party's trademark rights without the consent of the trademark owner, the amount of damages awarded should be greater than the amount of reasonable royalties that would have been agreed upon through legitimate negotiations. Otherwise, it would effectively encourage infringers to disregard the need for prior consent or authorization from the trademark owner and thus encourage others to engage in infringing trademarks, with the consequence of only having to compensate for an amount equal to or lower than the agreed royalty in legitimate negotiations when faced with a lawsuit. Such a situation would encourage infringement and clearly be unfair to the trademark owner.