The Relationship Between Competition Law, Protection of Intellectual Property and Cases Involving Counterfeiting of Foreign Entities

Abstract:

1. Main topics of the research:

Counterfeiting of foreign properties involves infringement on intellectual property rights through the borrowing, plagiarizing, or reproduction of the trademarks, patents or copyrighted materials of foreign countries. Current Chinese Taipei’s laws and regulations governing these issues include the Trademark Law, the Patent Law, the Copyright Law and the Fair Trade Law.

The stated goal of the Trademark Law is to “guarantee the right to exclusive use of trademarks and the interests of the consumer, in order to facilitate the normal development of commerce.” (Trademark Law, article 1.) In addition to stipulating that Chinese Taipei’s trademark system is based on registration, the Trademark Law provides for exclusive trademark rights, their valid term of exclusive use and conditions under which marks are unregistrable, and protects trademarks through civil remedies for trademark infringement, which include elimination of infringing activity, payment of damages, and civil liability.

The Patent Law is intended to “encourage, protect, and utilize inventions and innovations in order to facilitate the development of commerce.” (Patent Law, article 1.) The Patent Law clearly provides rights based on the first-to-file rule, and distinguishes between invention patents, new utility model patents and new design patents; it also provides for conditions for approval, the validity and term of patent rights and protection of patents through civil remedies for patent infringement, which include elimination of infringing activity, payment of damages and civil responsibility.

The Copyright Law is intended to “protect the rights of the copyright holder and harmonize social and public interests [with the rights of authors and copyright owners] in order to promote cultural development.” (Copyright Law, article 1.) The copyright law adopts the principle of original authorship, and outlines the scope of rights, extension of copyright terms and their limitation, and copyright protection, carried out through elimination of infringing activity, payment of damages and civil responsibility.

The intent of the Fair Trade Law is to “protect the trading order and the rights of the consumer; ensure fair competition; and facilitate economic stability and prosperity.” (Fair Trade Law, article 1.) Article 20 deals with counterfeiting; paragraph 1, subparagraph 1 outlines prohibitions on counterfeiting of trademarks, product containers, packaging, external appearance and other product characteristics known to the relevant consumer group (defined in the amendment to the Fair Trade Law effective 5 February 1999 as characteristics commonly known to relevant enterprises or consumers); subparagraph 2 defines prohibitions on the counterfeiting of service marks or other symbols of business operations of other persons; subparagraph 3 defines prohibitions on the counterfeiting of well-known foreign marks. Article 24 contains general provisions relating to deceptive or obviously unfair practices sufficient to disrupt the trading order.

The similarity of the above laws in their provisions for regulation and protection, their interrelation in practical terms, and the nature of international provisions for protection of intellectual property and their applicability to conditions in Chinese Taipei are all subject to further clarification and study. This study intends to explore in depth the topic of the Fair Trade Law and its harmonization with other related laws, as well as the essentials of similar laws in other countries as they relate to the overall economic interests of Chinese Taipei and the competitiveness of Chinese Taipei industry.

2. Methodology

(1) Literature review

a. Compilation of writings discussing counterfeiting and application of the concept in relevant laws in Chinese Taipei and abroad.

b. Extraction and analysis of relevant portions of these writings

(2) Compilation of information on actual domestic and foreign regulations and cases.

a. Compilation of relevant domestic and foreign regulatory provisions dealing with counterfeiting.

b. Compilation of domestic and foreign cases dealing with counterfeiting and competition law.

(3) Synthesis and analysis of data

a. Typological study of regulations and related analyses

b. Analysis of actual domestic and foreign cases

3. Main findings and conclusions

The chief aim of competition law is to maintain the freedom and the competitive functions of the market, allowing competition to bring about the most appropriate allocation of economic resources; whereas the aim of intellectual property protection is to encourage invention and original creation, and through the intervention of law, to guarantee the rights-holder a specific period of exclusive rights. On the surface, competition law and intellectual property law would seem to be in conflict, however, the functions of both have to do with providing extra protection from the standpoint of maintaining market mechanisms. Thus, when competition laws and trademark laws, patent laws, and copyright laws overlap in terms of protection, there is no question of mutual exclusion, but only one of mutual delineation of respective regulatory objectives and their scope of applicability within the system. From a broad perspective, protection of intellectual property functions to regulate competition, and intellectual property laws are a special aspect of competition law. More narrowly, competition laws are a supplement to intellectual property laws, intended to cover loopholes in the aforesaid law; further, they uphold the functions of competition and use it to achieve the goal of furthering technical innovation. Thus the relationship between the two is a complementary one.

Internationally, enhancing the protection of intellectual property rights has become a powerful trend. Whether in terms of global trade liberalization or Chinese Taipei’s participation in the international trading and economic order, or even its establishment of an Asia-Pacific operations center, protection of intellectual property is no longer merely a matter of guarantees for the individual, but is an important link in overall economic growth and the upgrading of national industry. The goal of protection of intellectual property can be achieved through appropriate utilization of both competition laws and intellectual property laws.

4. Suggestions

(1) With regard to the protection of foreign entities in cases of counterfeiting of foreign assets, the primary factors determining intervention by the Fair Trade Commission should be the “public interest” (the competitive order) and “reciprocity.”

(2) In circumstances where there is overlap between competition laws and intellectual property laws in counterfeiting cases, while the problem may be resolved through the principles that “specific laws take precedence over general laws” and “the more severe take precedence over the less severe,” the precondition for protection of foreign entities under the Fair Trade Law is the presence of a material influence on the competitive order of the domestic market resulting from the case.

(3) With regard to protection of unregistered, well-known foreign marks under article 20-1-3 of the Fair Trade Law, trademarks - whether registered or unregistered, foreign or domestic - are already covered within the concept of “symbol” in article 20-1-1 of the same law. Furthermore, concepts such as “the relevant industry or consumer group” and the degree to which a mark is “well known” are difficult to determine. Because the Law provides no distinguishing criteria, subparagraph three should be deleted, leaving subparagraphs one and two to govern these issues.

(4) With regard to protection of well-known trademarks, consideration should be given to adopting the American system, which clearly defines standards for determining the prominence of a mark and conditions for rejection of reasonable use.

　

Written by

Pai Yu-chuang, Tu Hsing-feng, Chang Hung-tse (Third Department)