A local company should pay damages to Crocodile International over infringement upon the Crocodile mark

Singapore-based Crocodile International Pte Ltd. (“Crocodile International”) sued Ya E International Co., Ltd. (transliteration of the Chinese company name: 亞鱷國際股份有限公司; “Ya E”) for granting sublicense to other local OEM clothing manufacturers to use Crocodile International’s licensed marks after termination of both sides’ trademark licensing agreement so as to make garments of poor quality and sell them under Crocodile International’s licensed marks at low prices.  The Taiwan IP Court heard this lawsuit and determined that Ya E breached the trademark licensing agreement signed with Crocodile International and also infringed upon Crocodile International’s trademark right, and therefore, Ya E and its responsible person should jointly and severally pay TWD2.29 million in damages to Crocodile International. 

Crocodile International alleged that they have created and used the crocodile device and Crocodile mark since1947 to represent their men and women garments, accessories, shoes, and bedding products, and other daily necessaries.  In addition, they have successfully registered the crocodile device and Crocodile mark as trademarks in many countries around the world and also in Taiwan since 1963, and the two marks have become well-known ones.  In June 1998, Crocodile International entered into a trademark licensing agreement with Ya E to grant license to Ya E to make and sell garments under the Crocodile mark in Taiwan.  After July 1999 when the trademark licensing agreement expired, Ya E unexpectedly feigned that they were still under licensing relationship with Crocodile International for seeking other local OEM clothing manufacturers to make garments bearing the Crocodile mark for sale in Taiwan, which matter came to Crocodile International’s knowledge in 2009 and the poor-quality garments bearing Crocodile mark in large quantity were found commercial available on Taiwan market.  To protect business reputation and the legitimate rights of their duly-authorized distributors in Taiwan, Crocodile International filed a lawsuit alleging breach of contract and trademark infringement against Ya E.

Confronting the lawsuit, Ya E contended that these garments bearing the Crocodile mark were those of the inventory remaining after expiration of the trademark licensing agreement in 1999, for which they had obtained Crocodile International’s approval of selling them out, and that these garments are not of poor quality because Crocodile International had conducted quality inspection on them.  Ya E had already sold these garments out before the end of March of 2000, but Crocodile International had not filed a complaint against Ya E until 2014.  That is to say, the prescription of Crocodile International’s right to claim damages against Ya E has passed for two years, and thus Ya E has the basis to refuse to pay the damages claimed. 

The IP Court examined this case and determined that Ya E and responsible person thereof shall jointly and severally pay TWD2.29 million to Crocodile International in damages on the ground that Ya E breached the No Sublicense clause of the trademark licensing agreement by granting sublicense of the crocodile device and Crocodile mark to other local OEM manufacturers and also infringed upon Crocodile International’s trademark right by going beyond the scope of license granted by Crocodile International.  This case is appealable.  (November 2015) 
/CCS