In the 1990s, Taiwan incorporated a customs border protection regime into its IP laws as part of its efforts to join the WTO and comply with the TRIPS Agreement. Over the past three decades, this regime has evolved into a multidimensional anti-counterfeiting framework that integrates the efforts of Customs authorities, prosecutors, courts, and professional firms.
Taking trademark rights as an example, counterfeit goods infringing a trademark right registered with Customs may be intercepted at the border upon import or export, with immediate notification sent to the trademark owner or their agent. The ensuing enforcement mechanism includes streamlined procedures that facilitate both civil and criminal actions against importers and other involved parties.
Moreover, Customs is also empowered to impose administrative penalties on its own initiative. Article 39-1 of the Customs Anti-Smuggling Act stipulates:
“Where import or export goods, other than genuine parallel imports, have been declared to Customs and infringe on a patent right, trademark right or copyright, the actor shall be subject to a fine up to three times the value of the said goods, and the goods shall be confiscated, except as otherwise provided in other laws or regulations.” (Emphasis added.)
Under prevailing interpretations of both the Customs Office and courts, the term “actor” refers to the consignee, holder of delivery order or cargo holder; for convenience, we will collectively refer to them as “buyer.” Importantly, unlike the Trademark Act and Copyright Act, which require intent or willfulness to establish criminal liability, the Customs penalty can be imposed on the basis of negligence alone. As a result, a buyer who escapes criminal liability may still face administrative penalties under Article 39-1, as shown by the case discussed in the following report.
This raises an important question: under the standard of negligence, to what extent is a buyer required to verify the authenticity of imported goods?
At the end of 2024, the Supreme Administrative Court (SAC)—the court of final appeal for Customs penalty cases—rendered a decision addressing this issue. By revoking the decision of the lower Intellectual Property and Commercial Court (IPC Court), the SAC upheld the Customs Office's imposition of a penalty and affirmed a heightened standard of care for import buyers. Customs Administration v. Hsieh, 112 Shang 663, Supreme Administrative Court (December 2024).
Factual Background
The case arose when a buyer engaged a Taiwanese freight forwarder to declare the importation of seven batches of express cargo from Mainland China in December 2018. The shipment was declared as “meters, et al.,” with each batch reportedly containing 70 pieces. Upon inspection, however, Customs discovered that the actual contents were watches bearing the “Casio G-Shock” trademark, totaling 700 pieces. Casio's trademark agent was notified and subsequently confirmed that the goods were counterfeit.
As the buyer failed to produce any evidence of non-infringement, Customs referred the case to the Prosecutors' Office. The buyer was later indicted, and in February 2022, the district court confirmed that the goods were counterfeit and ordered their confiscation. However, the buyer was acquitted due to the absence of intent. In March 2022, Customs imposed a fine of approximately TWD 350,000 under Article 39-1 of the Customs Anti-Smuggling Act.
Dissatisfied with the Customs’ penalty ruling, the buyer appealed to the IPC Court, which revoked the Customs’ decision on the grounds that the defendant’s negligence had not been established. The IPC Court’s reasoning was primarily based on the following two points:
- The buyer submitted a purchase order, which he claimed was issued by the Mainland Chinese seller and which explicitly stated “no logo.” Based on this, he asserted that he had instructed the seller to supply non-branded goods at the time of ordering, and only discovered that the goods bore the “Casio” mark after Customs seized them.
- Moreover, the watches were seized by Customs during the declaration process before the defendant had an opportunity to inspect them.
SAC's Findings
The SAC raised doubts on the buyer's claims and supporting evidence. To begin with, the court noted that the seller was an e-commerce store based in Mainland China. As is widely known, documents related to cross-border e-commerce transactions are typically highly digitized and even system generated. However, the purchase order submitted by the buyer was a handwritten hard copy that lacked essential details such as the seller's name, telephone number, and address.
Moreover, the buyer failed to provide any corroborating evidence of having placed the order to the seller, such as conversation records or screenshots, which is highly unusual given the substantial quantity of the goods involved. His explanation that the seller later blocked him, resulting in the deletion of all chat records, was cited by the SAC as further undermining the credibility of the paper order. The court thus questioned whether the handwritten “no logo” notation was truly made by the seller.
With respect to the IPC Court's conclusion that the buyer had no opportunity to examine the goods before Customs seized them, the SAC disagreed. The SAC emphasized that, as the party responsible for customs obligations, the buyer was expected to “fulfill the duty of care prior to declaring the goods for importation. Whether the buyer later verified the condition of the goods after the declaration was irrelevant to the already-established violation.” (Emphasis added.)
The SAC also found that the buyer had, in fact, had an opportunity to verify the authenticity of the goods earlier in the transaction. According to his own testimony, he had seen logo-free watches that “resembled” Casio's products on Alibaba and then contacted the Mainland Chinese seller to place the order. Although he stressed that the goods must have “no logo,” he neither confirmed whether the actual goods to be shipped would be logo-free nor requested any photographs for verification.
Regardless of the credibility of these assertions, the SAC found that they reflected the buyer's awareness of the risk of trademark infringement and showed that he had a realistic opportunity to confirm that the goods were non-infringing prior to declaring them.
With the SAC judgment rendered, the case has been remanded to the IPC Court and is now undergoing retrial proceedings.
Other Observations
This case gives rise to several takeaways:
- The SAC's ruling offers greater clarity on buyer's duty of verification when purchasing goods online, especially from foreign sellers. Unusual or reckless conduct during the transaction, such as failing to request photos of the goods or samples, may be considered when assessing whether the buyer fulfilled this duty.
- It remains to be seen whether this negligence standard will be adopted in other related proceedings that also rely on a negligence-based standard, such as civil claims for trademark or copyright infringement arising from the importation of counterfeit goods, or administrative penalties under the Trade Law for false origin labeling.
- Cross-border e-commerce and small-parcel express shipments have long posed challenges in anti-counterfeiting enforcement. This case showcases Taiwan Customs' vigilance to identify and detain counterfeit imports at the border, demonstrating operational effectiveness.
- This case also highlights the importance of recording trademarks with Customs. Because the trademark owner had recorded its rights in advance, Customs could notify them promptly, facilitating swift legal action.