Disposition against Wang Hsin-mou of the Lao Pai Wang Fishng Bait Company for inappropriately sending warning letters
Key Words:
trademark rights; warning letters
Reference:
Fair Trade Commission Decision of September 8, 1999 (the 409th Commissioner's Meeting); Disposition (88) Kung Ch'u Tzu No. 118
Industry:
Animal Feed Industry (5291)
Relevant Laws:
Article 24 of the Fair Trade Law
Summary:
1. The rights of a trademark rights owner are protected by the Trademark Law.
Upon discovering trademark infringements or a likelihood thereof, the owner
has the right to request the removal or prevention of such infringement in accordance
with law. If the owner chooses to send out of letters of warning to remove such
infringement, the Fair Trade Law ("the Law") does not prohibit such
action as long as it remains within the scope of the proper exercising of such
rights by proper procedure. However, sending warning letters to intimidate trading
counterparts and discourage them from trading with competitors results in unfair
competition and is an improper exercise of trademark rights. To determine whether
the sending of warning letters by an enterprise is within the confines of the
proper exercise of trademark rights, the 288th FTC Commissioners' Meeting formulated
guidelines to determine the appropriateness of warning letters. Sending warning
letters to trading counterparts of competitors or potential competitors is a
proper exercise of trademark rights only if one of the following procedures
has already been completed:
(1) the trademark infringement has been confirmed by a decision of a court of
first instance;
(2) a report verifying trademark infringement has been obtained from a fair
and objective institution, and, prior to the sending of the warning letter,
notice has been given to possible infringers such as manufacturers, importers,
or distributors to remove the infringement;
(3) in cases where the two aforementioned measures have not been taken, the
warning letter must clearly specify the content and scope of the right and the
concrete facts of the infringement, so as to enable the recipient to make reasonable
judgments on the basis of the letter; the letter moreover must not violate any
provisions of Articles 19, 21, 22, or 24 of the Law, and, prior to sending the
letter, notice must be given to possible offenders such as manufacturers, importers,
or distributors to remove such infringement.
2. In the case in question, the complainant owns the right of exclusive use
of the "Hsiang Hsiang" design on animal feed, while the respondent
owns the right of exclusive use of the "Hsiang Hsiang" design on fishing
bait. However, both parties claimed to have the right to use the "Hsiang
Hsiang" trademark on consumable, edible fishing bait. The respondent sent
warning letters to the complainant and its distributors claiming trademark infringement
and demanded that the distributors discontinue purchases from the complainant.
Although it could not be determined for certain that the warning letters were
intended to injure the complainant, and the warning letters did contain a clear
description of the scope of the trademark rights and facts relating to the infringement,
the respondent failed to inform the complainant of its trademark claim beforehand.
The complainant was therefore unable to respond to the allegations in the warning
letter in a timely manner, and the distributors were unable to make informed
judgments based on the claims of both the respondent and the complainant. The
warning letters sent by the respondent thus created the likelihood that the
recipients would discontinue trade with the complainant out of a lack of understanding
of the nature of the trademark dispute and fear of litigation. Furthermore,
some recipients did subsequently suspend or decrease their purchases from the
complainant. So, the letters inappropriately obstructed the complainant's distribution
channels and resulted in unfair competition.
3. In summary, the FTC held that regardless of whether the complainant infringed
upon the trademark of the accused party, sending warning letters in the above
manner was in itself blameworthy because it adversely affected market competition,
was sufficient to disrupt trading order, and was obviously unfair to the competitor,
and was thus a violation of Article 24 of the Law.
Summarized by Lin Hsing-wen
Supervised by Lin You-ch'ing
Appendix:
Lao Pai Wang Fishing Bait Company's Uniform Invoice Number: 87709311