Importation and sale of counterfeit Pikachu toy products by Hui Ching Trading Co., Ltd. in violation of the Fair Trade Law
Case:
Importation and sale of counterfeit Pikachu toy products by Hui Ching Trading Co., Ltd. in violation of the Fair Trade Law
Key Words:
Pokemon, appearance of toy, product symbol, deception, obviously unfair trading practice
Reference:
Fair Trade Commission of February 22, 2001 (the 485th Commissioners' Meeting); Disposition (90) Kung Ch'u Tzu No. 045
Industry:
Retailing of Toys and Recreational Items (4663)
Relevant Law:
Article 24 of the Fair Trade Law
Summary:
1. The case was originated with a citizen phone call from Top-Insight International Co., Ltd. to the 3rd Peace Preservation Police Corps informing the police of a freight container filled with counterfeit goods imported by the Hui Ching Trading Co., Ltd. (Hui Ching). In the morning of 27 May 1999, accompanied by the complainant, Top-Insight International Co., Ltd., the police went to the Huan Chiu container yard in Hsi Chih Town, Taipei County, and obtained from all Hui Ching containers of toys that were alleged counterfeits of the Pikachu [a Pokemon character] toys for which the complainant was the Taiwan agent. A total of 146 boxes of counterfeit Pikachu toys were obtained, and the Fair Trade Commission (FTC) was requested to investigate whether such importation of counterfeit Pikachu toys by Hui Ching constituted a violation of the Fair Trade Law. 2. The FTC dispatched personnel to the sites of "claw" toy-vending machines operated by Hui Ching to investigate how they were operated, and to inquire of the shop managers where the stuffed toys imported by Hui Ching were located. Some managers expressed that in July of 1999, Hui Ching had indeed placed stuffed toys similar to the Pikachu toy in the machines at their venues for about a month. 3. Grounds for disposition (1) Characters as copyrightable works will not easily gain protection unless they are perceived by the general public as originating from a single source, that is, the product must be indicated as having been produced by a specific enterprise. If a character frequently appears in various media, the public will not easily perceive it as originating from a specific source and as possessing a secondary meaning. In this case, JR Higashi Nihon Kikaku of Japan granted license to the complainant on 31 August 1998 for use of characters and names from the Pokemon animated series in manufacturing and on products and services in Taiwan. While the Pokemon series enjoyed the highest ratings in the time slot from its first broadcast in late November 1998, consumers were mostly unaware that the complainant was licensed to introduce Pokemon products in Taiwan, but were instead under the impression that the cartoon toys had been imported from Japan. Further, the various advertisements appearing on television, newspapers, signboards, and posters did not reveal that the products came from a single source. Consumers were motivated to purchase the products in question because they found the products cute or attractive, not because of the manufacturer. Consumers did not associate the products with Top-Insight International or Japan's Nintendo, and therefore the products were not seen as originating from a specific source and thereby possessing a secondary meaning. (2) The hangtag on the Pokemon products indicated the name of the manufacturer in Japanese, and also indicates the Japanese licensor, while a silver sticker indicates Top-Insight International as a licensee for Taiwan only. Presentations such as the appearance or shape of the product would not cause consumers to associate them with either the manufacturer of the Pikachu product in question or with Top-Insight International as the licensee. The appearance or shape of the products was therefore not symbols of a product as set forth under Article 20 of the Fair Trade Law. Nevertheless, the three-dimensional shape of the Pokemon toys is one form of trademark use, and while there was no registered three-dimensional trademark on which to elaborate any claims, the shape of the Pokeman toys can serve as an indication of the products' origin. However, most consumers will not notice the licensee or care whether there is in fact a licensee, but are only concerned with whether the product is attractive or well made, nor will they notice the source of the product or care whether it is likely to cause confusion. The issues of this case therefore lay in whether the manufacturer actively differentiated the appearance or symbols of its own products from others, and whether the manufacturer engaged in unfair competition by taking advantage of another's business reputation or by coping the appearance of another's product. The items collected from the two parties in this case were virtually identical in their overall yellow coloring, as well as in their eyes, red cheeks, black-tipped ears, the size of their feet, the two coffee-colored stripes running along the back, and the shape of the tail, all of which were sufficient to show that Hui Ching improperly copied the appearance and shape of the complainant's Pikachu products, attempting to benefit thereby from the fruits of others' labors. These acts constituted deceptive or obviously unfair trading practices under Article 24 of the Fair Trade Law. The respondent was ordered to immediately cease the unlawful practices, and was imposed an administrative fine of NT$ 40,000. Appendix: Hui Ching Trading Co., Ltd.'s Uniform Invoice Number: 84416376 Summarized by Chiang, Kou-Lun; Supervised by Wu, Ting-Hung