Traditionally, the concept of confusion under the Taiwanese trademark law was limited to ‘point-of-sale confusion’, which requires that the confusion must occur at the moment when the purchasing consumer acquires a product bearing a mark identical or similar to a trademark. This means that the confused entity must be the purchasing consumer at the point-of-sale.

However, in LVMH v Peggy Beauty (2018), the IP Court held that trademark infringement also exists if confusion occurs to other potential consumers who are not purchasers. This suggests that even if the confused entity is not the purchasing consumer at the point-of-sale, it could still be the ‘potential consumers’ after sale; and that such confusion should still be deemed as a kind of ‘likelihood of confusion’ under the Trademark Act. This is probably the leading case expressively recognising the theory of post-sale confusion in Taiwan.

Global interpretations of ‘post-sale confusion’

Post-sale confusion, which originated in US trademark law, means the confusion of a non-purchasing consumer who observes the accused infringing product used by a purchaser, falsely believing that the said product originated from the trademark owner. Two of the major differences between the theories of ‘point-of-sale confusion’ and ‘post-sale confusion’ are (i) the confused entities (purchasing consumer, compared to, non-purchasing consumer), and (ii) the time of confusion caused (during sale, compared to, after sale).

US case law
According to various US case law, post-sale confusion is sufficient to establish the ‘likelihood of confusion’ required under the Lanham Act when enforcing a trademark right against the alleged trademark infringer.

For example, in K-Swiss Inc v USA Aisiqi Shoes Inc, the US District Court for the Central District of California held that there is still a likelihood of confusion since “post-purchaser confusion is likely to occur in this case despite the fact that the price ranges and types of stores that sell the shoes are dissimilar.”

The jurisprudence for recognising the post-sale confusion as the required ‘likelihood of confusion’ was well-elaborated by the US Sixth Circuit Court of Appeals in General Motors Corp v Keystone Auto Indus Inc as follows: “Even without point-of-sale confusion, knockoffs can harm the public and the original manufacturer in a number of ways, including:

  • The viewing public, as well as subsequent purchasers, may be deceived if expertise is required to distinguish the original from the counterfeit;
  • The purchaser of an original may be harmed if the widespread existence of knockoffs decreases the original’s value by making the previously scarce commonplace;
  • Consumers desiring high quality products may be harmed if the original manufacturer decreases its investment in quality in order to compete more economically with less expensive knockoffs,
  • The original manufacturer’s reputation for quality may be damaged if individuals mistake an inferior counterfeit for the original;
  • The original manufacturer’s reputation for rarity may be harmed by the influx of knockoffs onto the market; and
  • The original manufacturer may be harmed if sales decline due to the public’s fear that what they are purchasing may not be the original.”

European case law
Post-sale confusion is also recognised in some cases in the Court of Justice of the European Union (CJEU). For example, in Arsenal Football Club Plc v Reed, the plaintiff, Arsenal FC, had the words ‘Arsenal’ and ‘Arsenal Gunners’ registered as trademarks for a class of goods comprising articles of outer clothing, articles of sports clothing and footwear. Arsenal FC designs and supplies its own products or has them made and supplied by its network of approved resellers.

The defendant, Matthew Reed, sold and offered for sale from his stall, scarves marked in large lettering with signs referring to Arsenal FC without Arsenal FC’s authorisation. However, Reed set a large sign on his stall with the following text: “The word or logo(s) on the goods offered for sale, are used solely to adorn the product and does not imply or indicate any affiliation or relationship with the manufacturers or distributors of any other product, only goods with official Arsenal merchandise tags are official Arsenal merchandise.”

It is obvious that after seeing such a sign, the purchasing consumers of Reed’s products were not likely to confuse his products with the official Arsenal products at the point-of-sale. However, the CJEU confirmed there was likelihood of confusion by holding that: “there is a clear possibility in the present case that some consumers, in particular if they come across the goods after they have been sold by Mr. Reed and taken away from the stall where the notice appears, may interpret the sign as designating Arsenal FC as the undertaking of origin of the goods.” It is obvious that the confused consumers indicated by the CJEU in this paragraph are not the purchasing consumers at the point-of-sale, but the non-purchasing consumers observing the accused infringing product after sale.

In another case, Anheuser-Busch Inc v Budějovicky Budvar, the CJEU held that “where the use of that sign allegedly made by the third party is such as to create the impression that there is a material link in trade between the third party’s goods and the undertaking from which those goods originate. It must be established whether the consumers targeted, including those who are confronted with the goods after they have left the third party’s point-of-sale, are likely to interpret the sign, as it is used by the third party, as designating or tending to designate the undertaking from which the third party’s goods originate.”

Although the term of ‘post-sale confusion’ was not addressed in the above Arsenal and Anheuser-Busch cases, it is fair to say that the concept of post-sale confusion could have become one of the considerations when the CJEU evaluates whether there is a likelihood of confusion.

Taiwanese case law on ‘post-sale confusion’

In Taiwan, if the mark used by the alleged infringer is identical to a registered trademark and is used on identical goods, a likelihood of confusion is not required for establishing trademark infringement pursuant to Article 68.1 of the Trademark Act.

However, when: (i) the alleged infringing mark is identical to the registered trademark and is used on similar goods, or (ii) the alleged infringing mark is similar to the registered trademark and used on goods identical or similar to those of the registered trademark, a ‘likelihood of confusion on relevant consumers’ is required for establishing trademark infringement under Articles 68.2 and 68.3 of the Trademark Act.

Although there is no clear definition of who would constitute the ‘confused relevant consumers’ in the Trademark Act, the court’s traditional concept of the ‘confused relevant consumers’ is limited to purchasers at the point of sale. The question is whether the confusion of non-purchasing consumers after the sale could be recognised as a part of ‘relevant consumers’ being confused.

LVMH v Peggy Beauty
This case was probably the first time for the court to discuss and recognise the post-sale confusion in the judgment. The defendant used a lock as an accessory of a handbag, which is deemed almost identical to the plaintiff’s trademark used as a lock for a handbag. Both parties’ designated goods – the handbags – are identical. The defendant argued that there is no likelihood of confusion on relevant consumers since the defendant used its own trademark on the handbag and the lock was used merely as an accessory of the handbag, not a trademark. The defendant also emphasised that the company has clearly conveyed the story of branding when marketing the handbags which were manufactured by the defendant. As such, there is not any likelihood of causing confusion to relevant consumers.

The IP Court held that “the trademark at issue and the lock of the handbag at issue are almost identical. Further, they are used on the same kind of products, likelihood of confusion is not required to establish trademark infringement pursuant to Article 68.1 of the Trademark Act. The jurisprudence behind this statute should be that: trademark infringement is established not only when there is confusion at purchases, but also when there is initial interest of confusion before the purchase as well as the confusion after the purchase.”

The court added “the trademark’s function of source-indication has a meaning of quality assurance. Even if relevant consumers know that the products are not originated from a specific trademark owner when they make purchases because of some specific factors (such as price difference or use of another mark as in the present case), other potential relevant consumers might be confused because they could not tell the difference without considering said specific factors which could be considered at purchase. In such a situation, the trademark owner’s efforts for connecting and channeling a brand with quality assurance will be broken.”

“A typical example is that counterfeits of luxury products are sold at cheap prices. Almost all relevant consumers know what they are going to purchase are counterfeits and there is no confusion issue. However, when the marketplace is flooded with counterfeits, the rarity of the genuine products will be impacted and the value of the brand will be diminished. If we do not recognise post-sale confusion as the legal basis of trademark infringement, it will be difficult to explain why we should still consider the sale of such counterfeits as one of the types of trademark infringement when relevant consumers are not confused at making purchases.” The same legal reasoning is acknowledged in the judgment of the second instance of the IP Court.

Jian Yi-Yin v Jammy Global
In Jian Yi-Yin v Jammy Global (2019), the IP Court held that “when a third party, without the approval of the trademark owner, uses a mark identical to the registered trademark on the same goods or service, such use has infringed the core value of the registered trademark owned by the trademark owner. Initial interest confusion and post-sale confusion should be deemed legally existent under the law.”

The court was trying to explain that, for an identical trademark infringement, what matters are not causing likelihood of confusion on relevant consumers but the initial and after sale confusion for potential purchasers.

Practical application

In the above two judgments of the Taiwan IP Court, post-sale confusion theory was referred to as the possible legal rational behind Article 68.1 of the Trademark Act to evaluate infringing acts where the alleged products are identical to the right owner’s and the alleged bears an identical mark. The court directly pointed out the post-sale confusion theory, the connotation of which has expanded the concept of ‘relevant consumers’ to include ‘non-purchasing consumers’. This suggests that post-sale confusion could and should also be assessed and considered in trademark infringement cases.

Recognition of post-sale confusion may reduce the burden of proof borne by trademark owners. For example, it might not be necessary for an owner of a luxury brand trying hard to persuade the court as to the purchasing consumers’ likelihood of being confused when the alleged infringing product is sold in a different platform at the price only 10% (or even less) of genuine product.

Brand owners would definitely like to see the legal development and further recognition of post-sale confusion by courts. It is worth monitoring the development of the case law and judicial opinions in this regard.



Crystal J Chen

Tsai Lee & Chen
Tel: +886 2 2564 2565

Crystal J Chen is a partner at Tsai Lee & Chen. Her practice of more than 20 years covers all areas of IP law. She counsels on IP prosecution and enforcement, and frequently advises clients across both China and Taiwan. Crystal deals with infringement litigations related to patent, copyright, design, trademark, and unfair competition for a wide spectrum of industries. She was the chair of delegates for the Independent Members of the International Association for the Protection of Intellectual Property (AIPPI), and has participated in the leadership of AIPPI study questions. She is a member of the American Intellectual Property Law Association (AIPLA), the American Bar Association (ABA), the IP Owners Association (IPO) and the International Trademark Association (INTA).

Crystal received her LLM degree from the University of New Hampshire Franklin Pierce School of Law. She is admitted to the National Bar of China and the New York state. She is the editor-in-chief for the firm’s quarterly publication, and has also actively contributed to a series of IP conferences as a speaker or moderator.

Nick J C Lan

Tsai Lee & Chen
Tel: +886 2 2564 2565

Nick J C Lan is an associate attorney at Tsai Lee & Chen. He has been practicing in the field of IP laws for more than 10 years. Nick particularly specialises in legal enforcement and provides infringement consultation related to copyright, patent, trademark and design, as well as unfair competition law. He frequently undertakes various contract reviews, and is familiar with copyright applications and registration. He constantly contributes his expertise and insights in the preparation of all kinds of agreements, memos and briefs.

Nick received a LLM degree in IP law from the University of Washington and a LLM degree from National Cheng Kung University. He is admitted to the bar in New York and is a member of New York Bar Association.