Formosa Plastics Gas Station Corp.'s use of "Formosa Plastics" as a specific part of the name under which it operated gas stations and related services constituted an obviously unfair act sufficient to adversely affect the trading order
Case:
Formosa Plastics Gas Station Corp.'s use of "Formosa Plastics" as a specific part of the name under which it operated gas stations and related services constituted an obviously unfair act sufficient to adversely affect the trading order
Key Words:
affiliated enterprise, dilution, efficient competition, obviously unfair
Reference:
Fair Trade Commission Decision of July 19, 2001 (the 506th Commissioners' Meeting) and August 30, 2001 (the 512th Commissioners' Meeting); Letter (90) Kung San Tzu No. 8907984-007 and Disposition (90) Kung Ch'u Tzu No. 122.
Industry:
Gasoline Filling Stations (5441)
Relevant Law:
Article 24 of the Fair Trade Law
Summary:
1. The complainant in this case operates an oil refinery and is engaged in the manufacture of petrochemical products and operation of gasoline stations. As of the present, the company has been in operation for more than 10 years and has registered the trademarks "Formosa Plastics & Design" and "Formosa Plastics Petroleum" (both in Chinese characters). Records indicate that the Yung Chang Gas Station Corp., approved for operation in May 1996, changed its name to Formosa Plastics Gas Station Corp. (respondent) in July 1998 and proceeded to use the well-known "Formosa Plastics" name with intent to pass off the goodwill of another in violation of the Fair Trade Law. 2. The Fair Trade Commission's investigation found that the complainant had continuously set up affiliated enterprises to engage in production and retail sales in the petroleum products market and had put into considerable effort to build its goodwill through advertising in mass media. The Formosa Plastics Gas Station Corp. began its use of the name in dispute later than the complainant. Although the respondent's use of the name is in compliance with the Company Law, its use of "Formosa Plastics" as a specific part of its name is similar or identical to the use by the complainant. While the respective names are clearly designated for distinct classes of service, there remains the possibility of brand dilution. Also, although the Formosa Plastics Gas Station Corp. clearly displays its registered trademarks at the actual sites of its gas stations, the five Chinese characters comprising the words "Formosa Plastics Gas Station" are especially large, while the characters for "Fengyuan" and "Houli" (two towns in central Taiwan) and "directly operated gas station" are relatively small. Also, nowhere at the point of sale is the company's complete name "Formosa Plastics Gas Station Corp" displayed. 3. The Fair Trade Commission's investigation showed that the Formosa Plastics Gas Station Corp. was originally named Yung Chang Gas Station Corp. and, during the process of the government's liberalization of the petroleum products market and the complainant's subsequent entry into that market, the company changed its name to its current "Formosa Plastics Gas Station Corp." to gain a competitive edge in the gas station market. Consequently, the respondent's act of changing its name and using a name identical or similar to that of the well- known company Formosa Plastics Corp. was clearly aimed at securing business opportunities by manipulating the trust that consumers and related enterprises have in the well- known Formosa Plastics name. It was an active and intentional effort to pass off the goodwill of another. The acts of respondent have eroded the complainant's ability to efficiently compete in the gas station market, thus constituted obviously unfair acts sufficient to adversely affect the trading order. In addition, the company should have competed in the gas station market on its own merits on the basis of fair trading principals. Instead it adopted the well-known "Formosa Plastics" name with the intention, as is clear from the signage at its gas stations, to pass off the goodwill of the Formosa Plastics Group, without regard to the confusion that this could cause consumers or the adverse effect it could have on the complainant's business. The acts of respondent have impaired essential characteristics of efficient competition such as quality, price, and service, and thus constituted obviously unfair acts under Article 24 of the Fair Trade Law. Appendix: Formosa Plastics Gas Station Corp.'s Uniform Invoice Number: 97001624 Summarized by Lai, Mei-Hua; Supervised by Wu, Ting-Hung