Tsai Wen-pin, Cheng Sheng-fu and others' violation of the Fair Trade Law
Chinese Taipei
Case:
Tsai Wen-pin, Cheng Sheng-fu and others' violation of the Fair Trade Law
Key Words:
counterfeit, commonly known to the relevant public, trademark, parallel import
Reference:
Hight Court Judgment Ref. (85) Shang Yi Tzu No. 5023
Industry:
Import Trading Industry (5601)
Relevant Laws:
Summary:
Defendant Cheng Sheng-fu (Defendant Cheng) was the responsible person of Li Kuo Co., Ltd. (Li Kuo), which imported the “LEX” photocopier sensitizer and toner cartridges. Defendant Tsai Wen-pin (Defendant Tsai) was a shareholder in Li Kuo and operated Pai Yang Company Limited (Pai Yang), which was located at the same premise as Li Kuo, to distribute the products that it imported. Chang Tun-hung (Defendant Chang) was a former employee of Li Kuo and currently works for Pai Yang. All of them were aware that the MITA trademark was used on the class of goods including photocopier sensitizers and commonly known to the relevant public, belonged to the Japanese company, Mita Industrial Corp. (Mita), which was granted in Chinese Tapei a trademark registration number 207663 for exclusive use on goods covering photographic chemicals, photocopier sensitizers and developers. The registratation was valid from 1 April 1983 through 31 March 1992, and further extended through 31 March 2003. Nonetheless, Defendant Cheng, Defendant Tsai and Defendant Chang acting jointly with a shared intent, in March 1994, they let defendand Chang ask an unidentified printing firm to make the packaging cases that were completely identical with those of the MITA cartridges model Nos. 27002112 and 37002312 produced by Mita. These packaging cases, which also featured the MITA trademark, were then used for packaging the cartridges that the defendants imported through parallel imports and bore no Mita mark. Simultaneously, Defendant Tsai was successively selling the counterfeit products to Hsin Fu Enterprise Company Ltd. (Hsin Fu) under Pai Yang's name. A delivery of 10-20 units was dispatched once a month at the price of NT$200-$500 per unit. The continuous unauthorized use of the MITA trademark by the defendants resulted in confusion of the two products (legal and counterfeit) and resulted in unfair competition with Sing Harvest Enterprises Co., Ltd. (Sing Harvest), Mita's general distributor in Chinese Taipei.
According to Defendant Cheng, he used to import MITA cartridges before 1988, but had since then only been an agent for the “LEX” cartridges that he sold to Pai Yang. He denied selling the alleged counterfeit products. According to Defendant Tsai, he had taken over Pai Yang in October 1994 from Cheng Yi-sheng, who had taken it over from Chang Feng-ming. According to Tsai, his company distributed only the “LEX” cartridges imported by Li Kuo. He had previously imported MITA cartridges from the agent of Christian H.K. in Chinese Taipei, but had not sold them to Hsin Fu or any other companies. He had no idea from where the seized imitation packaging cases had come. He then discovered they had been ordered by Defendant Chang, his employee, on behalf of an unidentified customer and then had been discarded in the warehouse for use as recycled paper. Defendant Tsai contended that he had not used them to package the cartridges he imported. Mita provided very detailed evidence to support its allegation. The relevant evidence included the seized packaging cases, which were proven to be counterfeit based on the two samples Mita presented (one of which was an authorized product), the report on the "analysis of products made by molding in Chinese Taipei" as presented by Mita, the statement by the complainant's (i.e. Mita's) attorney, and the testimony of witness Chen Shang-li given during the investigation for the court of first instance. Regarding Pai Yang, witness Chang Feng-ming confirmed during police questioning that Cheng Yi-sheng had indeed taken over Pai Yang from him. However, Cheng Yi-sheng was the responsible person, only in name. Defendant Tsai was actually in charge of the business. This fact was proven by relevant evidence. In addition, Defendant Tsai was a shareholder of Li Kuo, and Pai Yang and Li Kuo had the same address, the premises of which was rented by Defendant Cheng, who subleased space to Pai Yang. The imitation packaging cases were uncovered in the warehouse and office space shared by the two companies. The transcript of the police seizure and eight photos taken on the site may serve as evidence. Furthermore, the testimony given by witness Chiang Yue-sheng confirmed the cooperative relation between Li Kuo and Pai Yang. According to Chiang Min-k'ang, the responsible person of Hsin Fu, Hsin Fu had since March 1994 purchased the “LEX” and MITA cartridges from Pai Yang and Li Kuo, respectively. Sharing the same criminal intent, Defendants Cheng and Tsai had contact regarding selling the imitated MITA products. Defendant Chang admitted that he worked for Pai Yang in March 1994, during which time he had asked a printing firm to make the imitated packaging cases at the request of a customer who claimed that using the MITA trademark would bring better sales. Being a sales representative of Pai Yang, Defendant Chang would not have ordered the imitated packaging cases without Defendant Tsai's authorization. As mentioned above, witness Chiang Min-k'ang testified that Defendant Chang had sold the counterfeit MITA products to Hsin Fu. Therefore, Defendant Chang had obviously sold the imitated packaging cases that had been made for Pai Yang. According to witness Lu Li-chieh, he had imported MITA cartridges from Japan, which he then had sold to Pai Yang in 1994. However, those cartridges did not use the MITA trademark. In addition, his company was not an authorized distributor. It became clear that the defendants had the imitated packaging cases made by themselves to merit sales of unauthorized MITA cartridges and cartridges with unknown brand names. Therefore, the defendants' arguments were rejected. The evidence was so clear and substantial that the defendant’s violation were found.
For jointly and successively violating the Fair Trade Law (FTL) provision that prohibits an enterprise's identical use of another person's trademark commonly known to the relevant public so as to cause confusion with another person's products, both Defendants Cheng and Tsai were sentenced to five months' imprisonment and a fine of NT$300,000. The prison sentence is commutable to a fine calculated at the rate of NT$900 per day of imprisonment. The fine is commutable to six months of labor. All of the counterfeit products were confiscated.
Summarized by Chen Hwei-pin
Appendix:
Li Kuo Co., Ltd.’s Uniform Invoice No.: 21262649
Pai Yang Company Limited’s Uniform Invoice No.: 86719059
Sing Harvest Enterprises Co., Ltd.’s Uniform Invoice No.:
05083802
Hsin Fu Enterprise Company Ltd.’s Uniform Invoice No.:
86094701