Alleged violation of the Fair Trade Law by France Bed Co., Ltd. in its representation of the scope of its "Teh Tai & Design" trademark right
Case:
Alleged violation of the Fair Trade Law by France Bed Co., Ltd. in its representation of the scope of its "Teh Tai & Design" trademark right
Key Words:
Teh Tai, registered trademark, mislead, false advertising
Reference:
Fair Trade Commission Decision of August 18, 1999 (the 406th Commissioners' Meeting); Disposition (88) Kung Ch'u Tzu No. 101
Industry:
furniture and decorations manufacturing (1720)
Relevant Laws:
Articles 21 (1) of the Fair Trade Law
Summary:
On 24 December 1998, the discovery was made at the Minsheng Road outlet of the Teh Tai Spring Bed firm ("Teh Tai") in Tainan that the France Bed Co., Ltd. ("France Bed") had failed to make corrections to misleading representation of the scope of its trademark right in accordance with the intent of Fair Trade Commission (FTC) Disposition (87) Kung Ch'u Tzu No. 229 of 21 October 1998. Moreover, the 1999 calendar issued by France Bed in December 1998 was printed with the "Teh Tai & Design" trademark (the Chinese words "Teh Tai" inside a circular figure) and with the words "registered trademark" [in Chinese], which would likely cause people to mistakenly identify the spring beds sold by the company as products on which the "Teh Tai & Device" trademark is registered for use.
Article 21(2) of the Trademark Law provides that, "The right to exclusive use of a trademark is limited to the approved design and designated goods." Note that it is not unlawful for an enterprise to use a registered trademark on non-designated goods, whether directly on the goods, in connection with the advertising of such goods, or in any other way that is communicated to the public, nor unlawful to cause others to believe that the trademark represents non-designated goods. However, if the enterprise were to go a step further and print the words "registered trademark" or the symbol "O" by the trademark, it would have made a false or misleading representation regarding the scope of the trademark rights, in violation of the provisions of Article 21(1) of the Fair Trade Law.
Concerning the cloth label tags on the spring bed products: The Fair Trade Commission (FTC), in its Disposition (87) Kung Ch'u Tzu No. 229 dated 21 October 1998, ordered France Bed to correct the misleading representation regarding trademark right scope on its spring beds still being sold on the market within two months of the day following service of the disposition. The disposition was served on 26 October 1998, so France Bed should have corrected its actions by 27 December. On 2 February 1999, however, the FTC sent personnel to make inspections at two Teh Tai Spring Bed Firm business outlets in Taipei: the Chungshan branch and Hsinsheng South Road outlet. The personnel discovered that the spring bed products on display at the outlets were still affixed with the misleading cloth tags that the disposition had ordered to be corrected. France bed subsequently, on 8 February 1999, indicated in a letter to the FTC that it had already corrected its actions, and that it had switched to larger, red typeface for the wording "Teh Tai Brand Springs Inside, Registered Trademark 14701." The FTC subsequently sent personnel to check and make sample inspections of the spring beds on site at the Chunghsiao and Hsinsheng South Road branches in Taipei, and found that the company had indeed made the corrections. The fact remained, though, that France Bed had failed to correct the misleading representation within two months of service of the disposition ordering it to do so.
Concerning the 1999 calendar:
4.1 The upper middle part of the bottom section of the 6 January 1999 page of the calendar at issue bore the "Teh Tai & Design" trademark and the words "registered trademark" [in Chinese]. To the left and right of that symbol, respectively, were the representations "A Teh Tai Mattress Manufacturing Company has been incorporated by this company in the United States" and "A Teh Tai Mattress Manufacturing Company has been incorporated by this company in Canada" [both in Chinese]. Underneath it were the words "France Bed Co., Ltd." [in Chinese] and the company's business address. Viewed in their overall context on the calendar at issue, the words "this company" would seem to refer to France Bed, and to mean that France Bed had established Teh Tai Mattress Manufacturing Companies in both the United States and Canada. This would leave trading counterparts with the understanding and belief that spring mattresses manufactured by France Bed enjoyed the right of exclusive use of the "Teh Tai & Design" trademark. However, registered trademark number 14701, "Teh Tai & Design," belonging to France Bed is designated for use on various springs, but not on spring beds. The presentation on the calendar at issue caused trading counterparts to mistakenly believe that the right of exclusive use of the "Teh Tai & Design" trademark extended to designated products including spring beds, and was in fact a misleading presentation.
4.2 The upper left hand part of the bottom section of the 9 January 1999 page of the calendar at issue was printed with the "Teh Tai & Design" trademark and the words "registered trademark" [in Chinese]. To the right of that symbol were the representations "Teh Tai Brand Springs" and "Yuan Teh Tai Spring Beds" [both in Chinese]. On the lower right was a picture of two mattresses, and on the lower left were the words "France Bed Co., Ltd." [in Chinese] and the company's business address. Although the France Bed Co., enjoyed the right of exclusive use of the "Teh Tai & Design" trademark on springs, and had printed the words "Teh Tai Brand Springs" on the calendar, the overall composition of the calendar at issue incorporated the words "Yuan Teh Tai Spring Beds" and a picture of two mattresses to the right of the "Teh Tai & Design" trademark and the words "registered trademark." Thus, the position of the presentation at issue would not suffice to inform an observer that the scope of the right of exclusive use of the trademark extended to springs only. Also, the business address printed on the calendar was that of an outlet that sells spring beds manufactured by France Bed, so the key objective of the calendar was to attract trading counterparts to purchase spring beds. This is further borne out by the pictures of the spring beds on the calendar. In summary, trading counterparts would likely be left with the impression that spring beds manufactured by France Bed were designated products covered by the right of exclusive use of the "Teh Tai & Design" trademark, which would in fact be a misleading presentation.
4.3 The left side of the bottom section of the 10 January 1999 page of the calendar had the "Teh Tai & Design" trademark and the words "registered trademark" [in Chinese]. To the right of that symbol were the words "France Bed" [in Chinese] and "France Bed" [in English]. On the lower left were the words "France Bed Co., Ltd." [in Chinese] and the company's business address. The business address indicated on the calendar was that of an outlet that sells spring beds manufactured by France Bed, so the key objective of the calendar was to attract trading counterparts to purchase spring beds. In summary, trading counterparts would likely be led to believe that spring beds manufactured by France Bed were designated products covered by the right of exclusive use of the "Teh Tai & Design" trademark, which is in fact misleading.
In sum, with respect to the failure to correct the cloth label tags on the products at issue, it was presumed that France Bed had made the corrections prior to 5 February 1999 when the amended part of the Law was put into effect, since France Bed was no longer able to recall when it had completed the corrections and in consideration that it would be more disadvantageous to France Bed to apply the provisions of Article 41 of the post-amendment Law than to apply those of the pre-amendment Law. Therefore, France Bed was found to have violated the provisions of Article 21 and the latter part of pre-amendment Article 41 of the Law. With respect to the calendar, France Bed's actions occurred before the partial amendment to the Law took effect on 5 February 1999, and continued to exist after that date. France Bed thus violated Article 21 and the fore part of Article 41 of the Law. The FTC therefore ordered France Bed to cease the acts of misleading presentation, and imposed an administrative fine of NT$200,000, after taking into consideration such factors as the harmfulness and duration of the act, the subjective factors and subsequent attitude on the part of France Bed, and the FTC's Disposition (87) Kung Ch'u Tzu No. 229 of 21 October 1998.
Summarized by Yang Chung-lin
Supervised by Pai Yu-chuang
Appendix:
France Bed Co., Ltd.'s Uniform Invoice Number: 68956591