A complaint is filed against US company AKT Inc., and US company Applied Material Co., for indiscriminately issuing warning letters, a suspicious violation of the Fair Trade Law

Chinese Taipei

Case:

A complaint is filed against US company AKT Inc., and US company Applied Material Co., for indiscriminately issuing warning letters, a suspicious violation of the Fair Trade Law

Key Words:

liquid crystal display, warning letter, patent right, deceptive or obviously unfair

Reference:

Fair Trade Commission Decision of April 14, 2005 (the 701st Commissioners' Meeting)

Industry:

Electronic and Semiconductors Production Equipment Manufacturing and Repairing (2548)

Relevant Laws:

Article 19 (i), Article 22, and Article 24 of the Fair Trade Law

Summary:

1. The Fair Trade Commission received a complaint filed by British Cayman Island company Joosung Technology Inc., Taiwan branch (hereinafter referred to as Joosung Company), stating that in October 2003, the President of US company AKT Inc., (hereinafter referred to as US company AKT), Wendell T. Blonigan has sent letters to the clients of the complainant in Chinese Taipei indicating that its Company will take actions to protect its intellectual property rights so as to safeguard the clients’ and its own interests. The letters also indicated that the US Company AKT has been awarded ROC Patent No. 152996. US Company AKT believes the aforementioned patent has included the main technology features of the production of next generation liquid crystal display. Moreover, after sending out the aforementioned letters, the US Company AKT has again called up the major clients of the complainants and unilaterally told them that the complainant and the affiliated company of the complainant – Korean Joosung Engineering Company have infringed its patent to produce “plasma enhanced chemical vapor deposition for liquid crystal display; PECVD for LCD in short” (hereinafter referred to as the product at issue), a motion for judicial decision of civil preliminary injunction was filed with the court of Chinese Taipei and even hinted the panel producers of Chinese Taipei that their orders of the product at issue may not be delivered to Chinese Taipei. However, the investigation found that the US Company AKT, at the time sending out the letters, has not yet received either the judgment of first instance from the court ascertaining the infringement of its patent right or the appraisal report. Also, the letters did not explicitly describe the clear content and scope of the patent right as well as any concrete evidences of infringement, causing the receivers of letters refer to such statements in making rational decisions. Such conducts have caused damages to the complainant’s goodwill, a suspicious violation of Article 19 (i), Article 22, and Article 24 of the Fair Trade Law.
   
2. The investigation found that the US Company AKT’ has stated facts, related to the patent, product information or notified messages related to said judicial litigation, in the letters sent out and in the subsequent contacts with the relevant panel producers, without mentioning any specific entity as having infringed its patent; also, the US Company AKT did not have any intent or indication to request the letter receivers to discontinue their purchases with the complainant or Korean Joosung Engineering Company. In addition to this, the US Company AKT told Chi Mei Electronics that its company also could take over the follow-up maintenance services; hence, giving Chi Mei Electronics an opportunity of choosing trading partner. Such conduct is different from the conduct that an improper means is used to make the trading counterpart of the competitor to trade with one instead. Furthermore, the relevant facilities procurement between Korean Joosung Engineering Company and Chi Mei Electronics as well as the delivery date can be retrieved from the website of Korean Joosung Engineering Company, this information is accessible by the public and thus does not have confidentiality. Therefore, there is no concrete evidence sufficient to reveal that the US Company AKT has violated the provision of Article 19 of the Fair Trade Law. Also, the US Company AKT simply stated the achievement of technology research and development and facts related to patent rights information in the letter at issue. Due to the fact that the US Company Applied Material Company, the patentee, was going to file a motion for preliminary injunction against the complainant and Korean Joosung Engineering Company, the US Company AKT contacted the panel producers later to give them messages relevant to this judicial litigations, there is no act of making or disseminating false statements. Therefore, there is no concrete evidence sufficient to indicate that the US Company AKT has violated the provision of Article 22 of the Fair Trade Law.
   
3. Finally, according to the provision of Article 24 of the Fair Trade Law, “In addition to what is provided for in this Law, no enterprise shall otherwise have any deceptive or obviously unfair conduct that is able to affect trading order.” The “deceptive” as used in this Article refers to acts of engaging in trade with trading counterparts by misleading them through active deception or through passive concealment of material trading information; the “obviously unfair” as used in this Article refers to engaging in competition or commercial transactions by obviously unfair means. In addition, when determining “sufficient to affect trading order”, consideration should be given to whether it is sufficient to affect the overall trading order or whether the case would affect a majority of future potential victims. It is found that the contacts made by the US Company AKT after sending out the letters are notifications of messages relevant to this judicial litigation. Moreover, Chi Mei Electronics indicated that unless there is a final court judgment ascertaining the patent infringement, its company would not make any changes to its relevant facilities procurement because of patent dispute between the facility providers. Therefore, there is no concrete evidence sufficient to indicate that the US Company AKT has any deceptive or obviously unfair conduct that is able to affect trading order.
   
4. With regard to the part that the US Company Applied Materials Company has filed a motion for preliminary injunction with Taiwan Taoyuan District Court and that the said Court has issued a civil ruling for the said motion for preliminary injunction, as well as the Taiwan High Court has lifted the Taiwan Taoyuan District Court’s civil ruling at issue and overruled the motion for preliminary injunction at issue, the motion at issue is within the jurisdiction of judicial investigation and not related to the Fair Trade Law.

Summarized by Chen, Shu-Hua;
Supervised by Liou, Chi-Jung

Appendix: Nil