Hermès bags record infringement compensation

Hermès International has been awarded a record amount of damages for trademark infringement.

Ms Li, a former saleswoman of Hermès Asia Pacific Limited, Taiwan branch, sold four counterfeit Hermès Birkin and Haut à Courroies bags for NT$230,000, NT$220,000, NT$800,000 and NT$800,000, respectively. Hermès International filed criminal complaints based on its trademarks HERMES (Registration 136375) and HERMES AND CARRIAGE (Registration 500616). Li was indicted by the public prosecutor and on April 21 2008 the district court sentenced her to six months' imprisonment with probation for three years. The infringing bags were confiscated.

Dissatisfied with the court's judgment, the public prosecutor and the defendant both filed appeals with the IP Court. On October 27 2008 the IP Court cancelled the original judgment on the grounds of the improper application of the laws and instead sentenced Li to three months' imprisonment with probation for three years (Criminal Judgment 97-Xing-Zhi-Shang-Yi 00003). The infringing bags remained confiscated. No further appeal was available, thus the IP Court's decision is final.
Subsequently, on March 26 2009 the IP Court rendered a civil judgment (97-Zhong-Fu-Ming 1) in favour of Hermès International, requesting that Li pay Hermès International NT$256.3 million (approximately $7.77 million) in damages. The court also held that she should pay to publish the civil judgment in two local newspapers. According to the Trademark Act, a trademark owner can claim for damages based on several methods of calculation, including an amount of 500 to 1,500 times the unit retail price of the infringing goods. In this case, the issue of how to define the unit retail price of the infringing goods was critical. Although Hermès International initially claimed for damages in the amount of NT$1,025 million (the total price of the infringing bags, NT$2.05 million, multiplied by the minimum number of times, 500), the court ruled that the unit retail price should be defined as the average price of the four bags, namely NT$512,500. Having considered the whole situation, the court ruled that the damages should be NT$256.3 million (ie, NT$512,500 multiplied by 500). 

This was a record amount of damages since the establishment of the IP Court in 2008. However, there is still an option to appeal the civil judgment.
Joseph S Yang, Lee and Li Attorneys at Law, Taipei

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