BJICTI Corporation published false and misleading advertisements in violation of the Fair Trade Law
Case:
BJICTI Corporation published false and misleading advertisements in violation of the Fair Trade Law
Key Words:
Master reseller, sole agent, technology transfer and licensing
Reference:
Fair Trade Commission Decision of June 21, 2001 (the 502nd Commissioners' Meeting); Disposition (90) Kung Ch'u Tzu No. 079
Industry:
Computer Systems Integration (7202)
Relevant Law:
Article 21 of the Fair Trade Law
Summary:
1. The respondent, BJICTI Corporation (BJICTI), in April 2000 placed an advertisement in Issue 76 of Taiwan Telecom magazine. The advertisement stated that BJICTI was "RING!'s most important working partner ("Master reseller") in Chinese Taipei and Chinese Taipei's only company to obtain technology transfer and authorization rights from the world's cutting edge developer of computer software." Although BJICTI has no agency contract with the Swiss company RING!, the advertisement clearly stated that BJICTI was RING!'s most important working partner in Chinese Taipei, misleading consumers into believing that BJICTI was a working partner of RING! and the sole agent for RING! in Chinese Taipei, and that the products sold by BJICTI were being sold on an sole agency basis with RING!, or were jointly developed by the two companies. BJICTI also published the following statement on their webpage: "In addition to becoming the general agent for NMS, the world's largest language hardware company, we have also become an important distributor for language software developer RING! ..." The statement was intended to confuse public perceptions of BJICTI's agency rights and was a severe infringement on the complainant's legal distribution rights in violation of Article 21 of the Fair Trade Law (FTL). 2. Whether BJICTI is a major working partner ("Master reseller") of RING! in Chinese Taipei must be determined on the basis of whether BJICTI has established a resale relationship with either a RING! branch office or the parent company. And whether the two parties have a resale relationship is determined by whether the two parties have executed a resale contract. RING! had previously expressed willingness in an email to supply BJICTI with RING! Impact products, and also stated that, in the future, all marketing, sales, and technical support would be handled by the head office in Amsterdam, the Netherlands. That email however contained merely an expectation of future negotiation, it neither discussed nor confirmed the existence of a contractual relationship between the two parties. BJICTI's working relationship with RING! extended no further than the product testing stage, and that working relationship had been ended as RING!'s Hong Kong office was abolished. While two parties continued to raise the possibility of a working relationship, but it never went further than oral negotiation. In an appearance before the Fair Trade Commission (FTC), BJICTI admitted that it had no written authorization to act as an agent or distributor in Chinese Taipei for RING!. Although BJICTI is, in fact, a Master reseller for NMS, it has no direct agency, resale or technology licensing relationship with RING!. Thus, BJICTI's claim in the advertisement in question of being a major working partner of RING! was false and misleading, with clear intent to promote its own business opportunities and was potentially damaging to the fair trade opportunities of RING!'s lawfully authorized agent in Chinese Taipei. In addition, on the recruitment page of the BJICTI website, except for the bottom half of the page, which contains the description of the job, the content of the upper portion of the page relates to the characteristics of BJICTI products and the relevant agency and marketing positions of those products, sufficient to mislead consumers browsing the page into believing that BJICTI was not only the Chinese Taipei agent for NMS but also the Chinese Taipei distributor for RING! Since BJICTI could provide no evidence to prove that an agent or distributor relationship existed between BJICTI and RING!, BJICTI's act constituted a clear violation of Article 21(1) of the FTL. Furthermore, in its appearance before the FTC, BJICTI admitted that, prior to placing the advertisement in question, it was aware that RING! already had an agent in Chinese Taipei and acknowledged the fact that RING!'s chief methods of partnership in the Asia region was mainly the resale of software and that RING! had never entered into any technology transfer or licensing agreements with any company. Despite this, BJICTI still placed the advertisement in dispute, which stated in part: "Chinese Taipei's only company to obtain technology transfer and licensing from the world's cutting edge developer of computer software." Thus, before establishing a technology transfer and licensing relationship with RING!, the BJICTI advertisement made a clearly false representation, exclusionary in nature, to mislead trading partners into believing that BJICTI was an agent for RING! and was Chinese Taipei's only company obtaining technology licensing from RING!, in order to gain an advantageous market position and trading opportunities by precluding competition from RING!'s lawful resale agent and other industry competitors, in obvious violation of Article 21(1) of the FTL. 3. BJICTI's false and misleading representations in its product advertising and on its company website violated Article 21 of the FTL. After consideration of the company's motivation, purpose, anticipated profit in connection with the unlawful act, the damage to the trading order and duration of the unlawful practice, profit from said practice, business scope, operating status and market position, as well as prior unlawful acts and attitude following the unlawful act, the FTC ordered BJICTI to immediately cease the false and misleading representations and fined it NT$300,000 under the fore part of Article 41 of the FTL. Appendix: BJICTI Corporation's Uniform Invoice Number: 84487012 Summarized by Wu, Lieh-Ling; Supervised by Yeh, Tien-Fu