Civil
judgment concerning a request for damages by Sanrio Co., Ltd.
Chinese
Taipei
Case:
Civil judgment concerning a request for damages by Sanrio Co., Ltd.
Key Words:
Hello Kitty, right of exclusive use of trademark, damages
Reference:
High Court Civil Judgment (88) Su Tzu No. 10
Industry:
Books and Stationary Retail (5411)
Relevant
Laws:
Articles 20
(1)(i) and Article 32(1)
of the Fair Trade Law
Summary:
- The plaintiff Sanrio is a world-famous
stationary and general merchandise maker. It has been enjoying a worldwide
reputation for its finely designed character-products, which were beloved
by consumers around the globe. The "Hello Kitty & Device" trademark,
one that Sanrio designed, has been awarded the trademark registration certificate
No. 586573 from the National Bureau of Standards. The plaintiff has the right
of exclusive use of this trademark under the law, and no other person may
manufacture or sell relevant products (in the classes for which the trademark
is designated) bearing a similar trademark without the plaintiff's permission.
The plaintiff's products are of excellent quality, and are extremely popular
among consumers. Having been repeatedly reported by major newspapers, the
plaintiff's trademarks have become well-known trademarks. Anyone could easily
associate the products bearing the plaintiff's trademarks with the products
that were manufactured by the plaintiff with just one simple glance.
Despite knowing that the plaintiff owned the right of exclusive use of the
above trademark, defendant Lin Cheng-pin (the responsible person of Hung Sheng
Fashion Company ("Hung Sheng") nevertheless engaged in the act of
counterfeiting those trademarks to gain unlawful windfalls by taking advantage
of the outstanding quality of Sanrio products and their popularity among consumers.
He placed an order with the Chin Hao Garment Factory for production of casual
wear bearing counterfeited "Hello Kitty & Device" trademarks,
and had the product delivered to Hung Ch'ang Pressing and Packaging Plant
to press, package, and hold as warehoused inventory. Defendant Hung Sheng
then produced a product catalog for the counterfeited goods to promote them.
Clearly, the defendants intended to confuse consumers and cause them to mistake
the products -sold at much lower low prices ranging from NT$180 to NT$290
per piece (in contrast to the NT$2,000 price of the genuine articles) -for
those of the plaintiff, and to encroach on the plaintiff's marketing network
to reap unlawful profits. Their actions severely infringed on the rights and
interests of the plaintiff, and caused irreparable injury to the general consumers.
The plaintiff filed a criminal complaint for violations of the Trademark Law
and, as a result, the defendant was sentenced by final judgment to six months'
imprisonment. That the defendant's acts infringed on the rights of the plaintiff
is undisputed. Pursuant to the proviso of Article 66(1)(iii) of the Trademark
Law, the injury to the defendant is calculated as the retail price (NT$290)
times the number of counterfeit products discovered (2,475), or a total of
NT$717,750. Article 32(1) of the Fair Trade Law further provides that a treble
damage awards may be sought if the defendant committed the offense on purpose.
Accordingly, the plaintiff was entitled to seek a damage award in the amount
of NT$2,153,250, three times the established damage caused by the injury.
Also, according to Article 68 of the Trademark Law, the plaintiff may demand
the violator to bear the expense of publishing in a newspaper the contents
of the judgment holding the infringement of the plaintiff's trademarks.
- The discovered clothes that bear the similar trademark design to the plaintiff's
were purchased by the defendant from a third party, not counterfeited by the
defendant. After repackaging the clothes, the defendant sold part of them
to a middleman and kept the rest to himself for resale. The clothes were discovered
before they are sold out. It is beyond the defendant's financial capability
to pay the damages sought by the plaintiff.
- (1)The plaintiff alleges that the defendant, the responsible person of
Hung Sheng, knew that the plaintiff owned the exclusive use rights to the
"Hello Kitty & Device" trademark, yet intentionally violated
the law by producing related products - casual wear - bearing a counterfeited
"Hello Kitty & Device" trademark and selling them for profit.
The defendant denies these allegations, and argues that he did not produce
the counterfeited products himself but rather purchased them from a third
party, and after repackaging them, sold part of the products to a middleman
and kept the rest to himself for resale. The clothes were discovered before
they were sold out. But the investigation revealed that the defendant was
in possession of 2,475 pieces of counterfeited clothing bearing trademarks
similar to the plaintiff's, which could be evidenced by the search and seizure
report, and the photographs of the scene and the clothing and were on record
in the related criminal case heard by this court (ref. [87] Shang Su Tzu No.
4794). Further, the trademark design had been registered with the National
Bureau of Standards (NBS) and was protected by the right of exclusive use
with respect to clothes, undergarments, and rainwear. The right of exclusive
use was still valid, and a photocopy of the NBS registration certificate is
on record in the case file.
The trademark design on the clothes sold by the defendant was obviously similar
to the protected design: viewed at separate times in separate places, the
designs would likely be confused by consumers. Furthermore, the plaintiff
had been promoting its registered trademark with extensive advertisement since
1981, and had on numerous occasions published advertisements warning other
persons not to use similar trademarks. Photocopies of the said advertisement
and the receipts of the advertisement fee were submitted by the plaintiff
to support its allegation in the criminal trial. Given the extensive media
coverage, advertising, and the time the products bearing the plaintiff's trademark
has been promoted in the market, the products were obviously well-known to
the general consumers in Chinese Taipei. Being in the clothing business, the
defendant should have been well acquainted with products in the clothing market,
and obviously would have known at the time that the products bore a counterfeit
trademark. The plaintiff, however, was unable to prove that the clothes were
produced by the defendant. The criminal judgment likewise found that the plaintiff's
crime was the sale of counterfeited products. So the plaintiff's assertion
that the defendant produced the clothes was unfounded.
(2) The plaintiff asserted that under Article 32(1) of the Fair Trade Law,
it was entitled to seek treble damage awards in the amount of NT$2,153,250.
In cases involving deliberate acts by enterprises, the court has discretion
under Article 32(1) of the Fair Trade Law to set the damages higher than the
amount of the actual injury based on the degree of the violation, provided
that the damages may not exceed three times the injury. In light of the following
circumstances (confirmed by a reading of the criminal case file), however,
this court determined it was unnecessary to set the damages higher than the
injury: (i) the defendant had already paid a considerable price to purchase
the 2,475 articles of clothes from another person, and the clothes were seized
before the defendant could sell them for profits; (ii) the defendant had been
sentenced by final judgment to six months' imprisonment; (iii) the injury
to the plaintiff was not severe. In the court's opinion, the circumstances
merited damages of only NT$581, 625, plus interest calculated at an annual
rate of 5% for the period from the date following service of the complaint
(19 December 1998) to the date the damages are paid up.
- Article 68 of the Trademark Law provides that the trademark owner may demand
the violator to bear the expenses of publishing in a newspaper, in whole or
part, the contents of a judicial judgment holding the infringement of the
right to exclusive use of trademarks in accordance with the provisions of
Chapter Five of the same law. In the aforementioned criminal judgment, the
defendant was found guilty of the crimes in Article 20(1)(i) of the Fair Trade
Law and Article 63 of the Trademark Law, and sentenced under the former, which
carries the heavier penalty, to six months' imprisonment. It was therefore
appropriate and permissible for the plaintiff to demand that the content of
the judgment be published in full in five-point font on page 17 of the China
Times for one day at the defendant's expense. The judgment in the supplementary
civil case, however, was not made on the basis of Chapter Five of the Trademark
Law; therefore, the request by the plaintiff to publish the judgment in a
newspaper should be denied. The plaintiff also requested that the judgment
be published in full in a half-page advertisement on page 17 of the Economic
Daily News. However, that was deemed unnecessary since the criminal judgment
had already been published in the national edition of the China Times, a well-known
newspaper with a huge domestic circulation, at a cost of NT$340,000, which
should be sufficient to make its content known to the general public.
- The plaintiff had declared its willingness to post a security to institute
the preliminary execution process for the damage payments. The request was
deemed reasonable, and was permitted with respect to that portion of the requested
damages approved by the court.
Summarized by Ch'iu Shu-fen
Supervised by Hsu Chao-ying
＊＊:
For information of translation, click here