A trademark infringement claim can still be sought based on unjust enrichment after the statute of limitations has expired

  【QUESTION】

After the two-year statute of limitations for trademark infringement claims has expired, can the trademark owner still seek compensation based on unjust enrichment?

  【The Decision】

In this case, the appellee, Yung-Yao Company, used the trademark "果酸一點靈" to sell the disputed products from January 1, 2018, to March 5, 2020, without the appellant's consent or authorization, thereby infringing the appellant's trademark rights. Although the appellant's right to claim damages for the infringement has expired after two years, it may still request the return of the profits Yung-Yao Company earned as a result, in accordance with the provisions on unjust enrichment.

The doctrine of unjust enrichment does not seek to compensate for damages but rather to recover benefits that were improperly obtained based on the allocation of rights. Therefore, the scope of a claim for restitution under the unjust enrichment doctrine should be determined by the benefits received by the recipient, not by the amount of damage suffered by the claimant.

  【Ching-I Lu’s comment】

1. Trademark infringement often persists over an extended period. From the discovery of the infringement to initiating legal action, trademark owners—especially large companies—typically require time to deliberate. Strategic planning is frequently necessary to protect intellectual property rights. In focusing on immediate tasks, the statute of limitations for trademark infringement claims is often overlooked.

2. The plaintiff in this case had previously filed an opposition to the defendant's registered trademark. Ultimately, the court determined that the plaintiff was aware of the defendant's infringing act during the opposition stage, and that the statute of limitations for claiming damages for trademark infringement should have commenced at that time. Therefore, the court ruled that the plaintiff's right to claim damages for trademark infringement was time-barred.

3. In addition to the separate trademark opposition case between the two parties, it is common in practice for a separate criminal complaint to arise. When should the statute of limitations begin to run? Is it when the police or customs notify the trademark owners to authenticate the item? Or when the counterfeit product authentication report is submitted? Or when the case is prosecuted by the prosecutor? This issue often becomes a point of contention in litigation. Sometimes, the trademark owner prefers to wait for the outcome of the criminal case before deciding whether to pursue civil compensation. However, the progress of the district prosecutor's office and the criminal court is difficult to control, and the two-year statute of limitations often expires quickly. Furthermore, if the parties negotiate a settlement multiple times during the litigation process, does the infringer’s "admission" interrupt the statute of limitations? This makes the starting point of the statute of limitations even more unpredictable. Previously, the Intellectual Property Court’s Civil Judgment 108 minshan su No. 25 ruled that if a settlement was negotiated before the statute of limitations expired, the statute of limitations could be interrupted due to the infringer’s "admission," and the two-year statute of limitations should be recalculated.

4. If a court determines that a trademark infringement claim has expired, can a claim for damages based on unjust enrichment still be made? There have been several past cases where such claims were granted—for example, the Intellectual Property Court's Civil Judgment 104 minshan shan and Civil Judgment 111 minshan shan gunyi 5. In this case, the plaintiff did not initially raise the basis of unjust enrichment in the first instance but added it during the second instance. Fortunately, the appellate court ultimately allowed this addition and granted the claim for unjust enrichment.

5. Trademark owners must be aware that any public action taken during the rights protection process may trigger the statute of limitations for trademark infringement claims. In addition to trademark oppositions and criminal complaints, the timing of sending a cease-and-desist (C&D) letter is often cited by defendants as a defense. Since an ancillary civil suit can be filed following a criminal prosecution, it is advisable to carefully consider whether to pursue an ancillary civil suit or initiate a separate civil action at this stage. In practice, there are instances where the two-year statute of limitations has expired by the time of criminal prosecution; in such cases, a claim based on unjust enrichment may be applicable.