Violation of Article 24 of the Fair Trade Law by Antreas Enterprise Co., Ltd. for Misusing the Company Name of Ann Treas Enterprise Co., Ltd.
Chinese Taipei
Case:
Violation of Article 24 of the Fair Trade Law by Antreas Enterprise Co., Ltd. for Misusing the Company Name of Ann Treas Enterprise Co., Ltd.
Key words:
deliberate first filing of registration, English company name, torts, exclusive distributorship, unauthorized distribution, representation of distributorship, illegal disposition
Reference:
Taiwan High Court Civil Judgment (84) Nien Shang Keng Tzu No. 203
Industry:
Photographing and Video Taping Equipment Manufacturing Industry (3313)
Relevant Laws:
Articles 1, 20(1)(ii), 24 of the Fair Trade Law; Article 18 of the Company Law; Articles 19, 118, 148(1), 184, 213(1) of the Civil Code; Article 4 of the Regulations Governing Registration of Exporters and Importers
Summary:
Ann Treas Enterprise Co., Ltd. (the plaintiff and the appellant) filed the following complaint:
Yang Wei Min (Yang) was the former chairman of the plaintiff. Yang was fully aware that “Ann Treas Enterprise Co., Ltd.” was the plaintiff's English company name. Yang knowingly used “Antreas Enterprise Co., Ltd.” as the English company name of his own company (Wechen, transliterated from Chinese, the defendant and the appellee). The defendant (the appellee) was in the business of selling photographing equipment and was founded by Yang after he withdrew his equity shares from the plaintiff. Yang also registered the above English name with the Board of Foreign Trade (BOFT), thereby causing confusion to the plaintiff's customers.
Based on the principle of good faith, the principle of prohibiting unfair competition, a person's right to its name, and provisions regulating torts done intentionally in a manner contrary to the rules of good morals, the plaintiff pleaded that the defendant and its responsible person, Yang, be enjoined from using the English company name at dispute. The plaintiff also pleaded that the defendant and Yang be ordered to cancel their registration of the English company name with the BOFT.
The defendant (the appellee) answered by contending the following:
The defendant was the first to file and obtain BOFT registration for the English company name at dispute. Also, the plaintiff had already sold its exclusive distributorship to Yang. The defendant has the legitimate right to use the English company name concerned. Furthermore, the plaintiff had already filed another registration with BOFT using the English name "Antreas Enterprise Co., Ltd.", which it used to have its contract signed again with the Italian company, POLI. Even though the plaintiff had used the English company name at dispute, the plaintiff failed to meet the requirements for the protection of its rights by switching to another English company name in its transactions.
There are two issues in this matter. The first one is whether or not the defendant has justifiable reasons to use the English company name (leading to the conclusion that if its deliberate act of filing first to register the English company name at dispute was intended as an act of unfair competition with the plaintiff). The other issue is whether the plaintiff can have the defendant enjoined from using the English company name at dispute.
It is confirmed that the plaintiff was the original party who entered into the contract with POLI. Yang defended himself by saying that he held through assignment the authorized distributorship for a partial area. However, Yang, at most, could only ask for POLI's approval in his capacity as an assignee of the distributorship. Yang cannot extend his limited authority to allege that he was one of the parties signing the original contract. On the other hand, Yang actually expedited the filing to register the English company name similar to the one the plaintiff used to sign the contract. Yang went even further by sending a letter to POLI alleging the defendant is the company that entered into the distributorship contract. Yang's intention was to replace the plaintiff in the distributorship. Such conduct cannot be justified as act out of necessity and propriety.
The Fair Trade Law was enacted for the purpose of protecting fair trade order and consumers' interests so as to secure fair competition whereby stability and prosperity of the economy can be promoted. It is obvious that the provisions of the Law relating to the prohibition/restriction of monopolizing acts, combinations, concerted acts and unfair competition acts, are enacted for the "protection of others". Article 184(2) of the Civil Code provides that a person who infringes a statutory provision enacted for the protection of others is presumed to be negligent.
The plaintiff claimed that Yang, as the defendant's responsible person, was fully aware of the fact that the English company name at dispute had been used by the plaintiff, who entered into the distributorship contract with POLI in the same name. After withdrawing his shares from the plaintiff, Yang changed the English name of his own company to the English company name at dispute. Furthermore, Yang contacted the plaintiff's customers using the same name and even allegedly informed POLI that the defendant was the party that had signed the distributorship. These facts have been admitted by the defendant, with photocopies of letters the defendant sent to POLI as evidence. The defendant's acts were intended to cause confusion to the plaintiff's customers regarding their trading counterparts and to replace the plaintiff in business. Yang is the responsible person of the defendant. The defendant should be fully aware of these facts. The defendant's act of using the English company name at dispute is considered a deceptive act that can adversely affect the order of trade and an act of unfair competition.
The defendant cited Article 24 of the Law to counter the plaintiff's claim. The provision stipulates: "[u]nless otherwise provided under this Law, an enterprise shall not engage in any deceptive or obviously unfair act that can adversely affect the order of trade." However, the subject of protection under the said provision is not limited to those that have become well known to the public. The defendant argues that Article 24 of the Law is not applicable in this case because the name to be protected should be well known to the relevant public, while the plaintiff's name is not. The defendant's argument is therefore considered as a misunderstanding of the Law.
Summarized by Luo, Mei Hsia
Supervised by Lu, Yu Ch'in