ADDA Corporation disseminates false information on its web site homepage in violation of Article 24 of the Fair Trade Law

Chinese Taipei

Case:

ADDA Corporation disseminates false information on its web site homepage in violation of Article 24 of the Fair Trade Law

Key Words:

fans for computer use, web site, patent rights, false information

Reference:

Fair Trade Commission Decision of January 11, 2001 (the 480th Commissioners' Meeting); Disposition (90) Kung Ch'u Tzu No. 025

Industry:

Manufacturing of Other Electronic Equipment and Components (3179)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1. A complaint was filed claiming that the respondent ADDA Corporation had attempted to damage the complainant's business reputation by posting an article entitled "ADDA Blames Sunon For Her Wrongdoing" as the headline news story on its web site (http://www.adda.com.tw). (Sunon is the English name of the complainant.) The complaint asserted that the news was untrue and a deliberate distortion of facts. Not only had it concealed the fact that ADDA was suspected of infringing the complainant's patent rights, but had also created the misconception that the complainant had been engaging in misappropriating and improperly using the patents of others. ADDA was alleged to have violated the Fair Trade Law by such actions.

2. Investigation by the Fair Trade Commission (the Commission) indicated that the statements on the web page regarding whether certain patents had been revoked were not entirely consistent with the facts. ADDA argued in its defense that the web page had originally been written in Chinese and was subsequently translated into and published in English. It maintained that the original Chinese version did not contain any distortion of fact regarding patent revocations; nor had it been used by the ADDA with the intent to damage the complainant's reputation. However, in response to a written inquiry by the Commission, the Intellectual Property Office confirmed that when a decision to revoke a patent right becomes final, the patent becomes void ab initio. At the time the allegations that the patents "were on record as having been revoked" appeared on the web site, only one of Sunon's patents had been revoked by a final decision; a final disposition concerning another disputed patent had yet to be made by the Intellectual Property Office following a successful administrative appeal by the complainant. Therefore, it was still uncertain whether the patent had actually been revoked. Moreover, although ADDA attributed the web page's misleading content to an insufficient understanding of patent litigation procedure on the part of the employees who wrote it, this does not adequately explain why the article also gave incorrect reference numbers to the two patents revocation cases. In sum, the content of ADDA's web page was indeed factually misleading.

3. Disposition and Grounds (1) Background Products of ADDA had previously been seized and litigation initiated based on allegations by the complainant Sunon that the products infringed on Sunon patents. However, such procedures were inevitable between the two interested parties in this patent dispute. For purposes of clarification, it would have been sufficient for ADDA to have, for example, sent a letter of guarantee to its customers. By disseminating the assertions on a web page that could relay them beyond the scope of its customers to other unrelated businesses, ADDA created potential liability for its competitor that was obviously in excess of that which might have to be undertaken by ADDA from this patent dispute. This was obviously unfair to the competitor. (2) Content of the web page (i) In the interest of preserving fair competition, an enterprise should at least be mindful of the accuracy of the information concerning itself and to be published on its web site to avoid conveying false or misleading information that could harm fair competition in the market. With respect to the information concerning its competitors, an enterprise should be even more careful about their accuracy. Publishing false and misleading information in such cases could constitute fraud against the recipient or other parties potentially reached by the information. For competitors, it would constitute obviously unfair acts against them sufficient to affect fair competition and market trading order predicated upon effective competition. It would thus violate Article 24 of the Fair Trade Law. (ii) It is the finding of the Commission after investigation that ADDA's assertion that Sunon's two other patents unrelated to the current patent disputes between both parties were on record as having been revoked would very likely mislead people into suspecting that any activities by Sunon to acquire patents or any results of its patent reviews were questionable. ADDA actually bolstered its assertions with supporting evidence in the form of the reference numbers for revocation cases, which would seal the matter in the mind of the average reader. As the average person would objectively understand them, such assertions are unfavorable to Sunon. For ADDA to deliberately make assertions that it cannot substantiate or that it knows to be false, it had constitutes fraud toward their recipients and was obviously unfair to its competitors. (iii) In addition to its incorrect statements regarding the two above-mentioned patents, the web page dwelled extensively on allegedly misguided practices of the competitor, first strongly asserting that Sunon had obtained the patents by misappropriating the technology of others, and then further alleging that it had obtained other patents in this way as well. The gist of the text as a whole was that Sunon obtained patents by improper means, and its patents were frequently subject to cancellation and opposition actions and even revocations. Thus, the web page's less-than-factual assertions, as the ordinary person would objectively understand them, could not be considered to have been made in good faith. (3) Channel for information dissemination (i) The fact that the disputed information in this case was disseminated by modern technology over the Internet does not have any bearing on the applicability of the relevant laws. In fact, modern electronic media and the Internet are even more powerful modes of transmission than traditional print media, so the transmitter should be more accountable for the exercise of due diligence to verify the accuracy of information before they were transmitted through such media, and thus to preclude any possibility of unnecessary harm to fair market competition. Given the real-time nature of Internet transmissions, the transmitter should at least also be responsible for making timely corrections or revisions of inadvertent factual errors to alleviate any injury that may have been caused to itself, its competitors, or fair market competition. (ii) ADDA was found to have failed to exercise due diligence to verify the relevant information regarding the patents under review before disseminating the information about Sunon on its web site, and erroneously published the reference numbers for opposition as those of revocation. During the Commission's investigation, ADDA asserted that the web page was intended to provide clarification, and any erroneous assertions were the product of human error, and were not intended as an attack on a competitor. Yet despite knowing that the relevant patents were still under review or had been reexamined by the Intellectual Property Office, ADDA failed to make any correction or timely retraction during the period the web page was posted, with utter disregard to the potential injury that might cause the competitor. Such actions clearly went beyond mere carelessness. Furthermore, if ADDA had merely wanted to clarify the facts, it could have simply stated that it had not infringed on any of the complainant's patent rights. There was no need to raise the discussion of unrelated patents. Even supposing ADDA felt compelled to do so, it still had an obligation to check the facts and publish only information in accordance with the facts, or to revise any factually misleading information in a timely fashion, to avoid disseminating false information that could affect fair market competition. Thus, ADDA's dissemination of false information via its web site constituted obviously unfair acts sufficient to affect trading order. (4) In sum, ADDA's publication on its web site of factually inconsistent information, disparaging its competitor and touting its own goods or services had constituted deception of potential recipients of the information and were obviously unfair behavior toward its competitor. It clearly harmed market trading order, which is predicated on fair and effective competition. ADDA's arguments that it lacked subjective intent to do so were found untenable. Its actions were therefore deemed to have violated Article 24 of the Fair Trade Law. After considering the extent of the impact on the market and the respondent's degree of cooperation in the investigation, the Commission imposed a fine of NT$60,000 and disposed of the case pursuant to the fore part of Article 41 of the Fair Trade Law.

Appendix:

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