The Limited Legal Weight of Brand Protection Labels

A recent decision of the Intellectual Property and Commercial Court in Taiwan demonstrates that the absence of an anticounterfeiting label on a product may not, on its own, prove that the seller of the product ‘knew’ it was fake.

Under Taiwan’s Trademark Act, criminal liability requires direct intent – actual awareness that a product bears counterfeit trademarks. It is not enough that the goods are counterfeit. It is not enough that they were sold cheaply. It is not even enough that obvious security features were missing. The prosecution must prove subjective ‘knowledge’.

In the case in question, an amusement arcade operator had purchased toy cars bearing counterfeit trademarks from an unidentified supplier and displayed them as prizes in a claw machine. The goods lacked an anticounterfeiting label and were sold at prices significantly lower than genuine products.

Yet the operator was acquitted of charges relating to criminal intent. He was not a toy retailer, there was no evidence that the trademark was widely recognised, and there was no proof that he was aware of the brand’s authentication features. Low prices and missing labels were treated as suspicious circumstances – but not as proof of criminal intent.

The Taiwan decision demonstrates that brand-owner labels function primarily as authentication tools rather than evidentiary mechanisms. They help identify genuine goods, but they do not automatically establish the mental state required for criminal liability.

If brand owners wish their security features to carry greater legal weight, they must build an evidentiary ecosystem around them. That may involve consistent deployment across all legitimate products, documented communication with distributors, written compliance obligations, and formal warnings to high-risk sellers.

In other words, authentication technology must be integrated with enforcement strategy.

A difficult question

The Taiwan case ultimately forces a more uncomfortable question.

Are brand-owner anticounterfeiting labels primarily enforcement tools – or are they, in practice, reassurance devices?

They certainly have value. They can deter opportunistic counterfeiters. They assist customs authorities and support civil litigation. They contribute to brand perception and consumer confidence. Increasingly, they form part of broader phygital verification systems.

But when tested against the high evidentiary threshold of criminal law – where proof of ‘knowledge’ is decisive – their impact may be limited unless supported by documentation, consistency and prior notice.

Contrast with tax stamps

The contrast with tax stamps is instructive. A tax stamp is compliance infrastructure embedded in law. Its absence automatically signals illegality. A brand-owner label is authentication infrastructure embedded in brand strategy. Its absence raises suspicion – but suspicion is not the same as proof.

For brand owners investing heavily in security features, the lesson is not that authentication is futile. It is that technical design alone does not guarantee legal leverage. If enforcement outcomes are the objective, evidentiary architecture must be designed alongside the technology.

Otherwise, anticounterfeiting labels risk serving primarily as visible signals of diligence – impressive in engineering terms, reassuring to consumers, but legally fragile when the court’s central question is not whether a product is fake, but whether the seller knew it.