Alleged violation
of the Fair Trade Law by Hewlett Packard for improper sending of warning letters
regarding infringement of patent rights
Chinese Taipei
Case:
Alleged violation of the Fair Trade
Law by Hewlett Packard for improper sending of warning letters regarding infringement
of patent rights
Key Words:
warning letter, infringement of
patent rights, light emitting diode (LED), jurisdiction
Reference:
Fair Trade Commission Decision
of August 25, 1999 (the 407th Commissioners' Meeting); Letter (88) Kung Er
Tzu No. 880998-001
Industry:
Photoelectrical Materials and Components
Industry (3173)
Relevant Laws:
Articles 24
of the Fair Trade Law
Summary:
- Background:
According to the complainant: the respondent, Hewlett Packard, without obtaining
a court ruling or impartial verification as to its assertions, sent attorney
letters to the complainant, United Epitaxy Co., Ltd. (UEC), and its Chinese
Taipei and U.S. distributors, China Semiconductor Corporation ("CSC")
and Robert G. Allen Co. (RGA), respectively. The letters held that in February,
1998, UEC's light emitting diode (LED) products infringed on the Hewlett Packard
U.S. registered patent (#5008718). However, the letters failed to provide
the contents, scope, or facts of the patent rights infringement suffered.
The letters prompted companies with whom UEC had relations to demand explanations
to the extent that one such firm, Citizen, cancelled orders. In addition,
the letters were sent directly on the eve of a board of directors meeting
of the Over-the-Counter Securities Exchange (OSE), at which time UEC's application
for listing was scheduled for review. The sending of the letters postponed
the review, resulting in losses for UEC that would be difficult to calculate.
- The respondent sent two of the
warning letters at issue: one letter was sent to UEC and to Mr. Huang Kuo-hsing,
the latter of whom was the complainant's responsible person at the time; the
other letter was sent to RGA. With respect to the latter letter, based on
the principle of comity of nations, it is appropriate that the country where
the involved companies were located has jurisdiction over the dispute, since
the sender and recipient were U.S. companies, and since the acts took place
in the U.S.
- The letters were accompanied
by a 15-page attachment of documents related to the aforesaid patent (#5008718)
and the letters' recipients were owners of related patent rights and had a
definite degree of knowledge of the patent, so it would be hard to assert
that the related provisions of the Law had been violated by failure in the
letters to clearly state the content, scope, and concrete facts of the infringement
or failure to notify possibly infringing manufacturers.
- With respect to whether Hewlett
Packard's acts prompted UEC's foreign customers to cancel orders and whether
the acts delayed UEC's listing of shares on the OTC market, there was no solid
evidence to indicate a direct connection between the letters and cancellation
of orders. In addition, the OSE's decision to submit UEC's application for
further review by its listing review committee was in consideration of the
fact that both a stock rights dispute between Huang Kuo-hsin, board chairman
of UEC, and Ch'en T'ai-ch'ing, a major shareholder of UEC-invested CSC, and
the patent dispute with Hewlett Packard, were major post-factums. It would
therefore be inappropriate to solely blame Hewlett Packard's sending of the
letters at issue on the said decision.
- In summary, there is no concrete
evidence indicating that the respondent's acts of sending the letters warning
of infringement of patent rights constituted a violation of the Law. With
respect to the acts that took place in foreign countries, the Commission will
not investigate such acts further in accordance with the principle of comity.
Summarized by Ch'en Ying-ju
Supervised by Ma T'ai Ch'eng
Appendix:
United Epitaxy Co., Ltd.'s Uniform Invoice Number: 84149104
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