Rung Sheng Enterprise Co., Ltd. was complained for improperly mailing patent infringement warning letters in violation of Article 24 of the Fair Trade Law
Case:
Rung Sheng Enterprise Co., Ltd. was complained for improperly mailing patent infringement warning letters in violation of Article 24 of the Fair Trade Law
Key Words:
patent infringement warning letter, patent rights
Reference:
Fair Trade Commission Decision of February 7, 2002 (the 535th Commissioners' Meeting); Disposition (91) Kung Ch'u Tzu No. 091033
Industry:
Bamboo Furniture and Fixtures (1712)
Relevant Law:
Article 24 of the Fair Trade Law
Summary:
1. Rung Sheng Enterprise Co., Ltd. (Rung Sheng) mailed patent infringement warning letters respectively on 14 May 2001 and 14 June 2001 to the downstream retail outlets of Adelaide Co., Ltd. (Adelaide). The warning letters alleged that Adelaide's Plum Blossom Style Moso Bamboo Seat Covers, Plum Blossom Style Moso Bamboo Single-Person Floor Mats, and Plum Blossom Style Moso Bamboo Two-Person Floor Mats "infringed upon the patent rights of Rung Sheng," and further requested that the retail outlets "provide information regarding the manufacturer, importer, or agent in order to clarify the facts of the case and avoid a lawsuit." As a result of these warning letters, Adelaide's products were withdrawn from store shelves. Rung Sheng's actions were suspected to violate Article 24 of the Fair Trade Law.2. Rung Sheng stated that the goods at issue bore no labeling indicating their source, and claimed that its purpose in mailing the warning letters was only to obtain information regarding the violating manufacturer and importer, but the Fair Trade Commission's （FTC）investigation revealed that Rung Sheng had already learned in early 2001 that the goods at issue were manufactured and imported by Wang Shui-cheng (responsible person of Fu Cheng Mat Company), and had furthermore mailed a letter in February 2001 to Mr. Wang requesting that he cease the infringing behavior. The FTC's investigation further revealed that after Rung Sheng sent its first warning letters to the Adelaide's retail outlets, Adelaide mailed a letter in response, but Rung Sheng did not pursue any further action; instead, Rung Sheng mailed warning letters once again to four large retail outlets (RT Mart, Tainan branch; Far Eastern Department Store, Fuhsing branch; Far Eastern Department Store, Tainan branch; and Far Eastern Department Store, Chungkang branch), making the same request for information regarding the source of the goods.3. Rung Sheng was found in violation of Article 24 of the Fair Trade Law. The elements of the violations, and the evidence upon which the finding was based, are as follows:(a) Before mailing letters to the retail outlets, Jung Sheng had already sent a letter to the importer, Mr. Wang Shui-cheng, asking him to cease infringement. But after learning that Adelaide was the agent for the goods at issue, Jung Sheng, without sending prior notice to Adelaide asking it to cease infringement, sent warning letters by documented certified mail directly to Adelaide's clients. In addition, prior to mailing those letters, the respondent failed to adopt one of the following procedures necessary to the proper exercise of its rights: (1) it failed to obtain a ruling by a court of first instance that Adelaide had in fact committed a patent infringement; (2) or to deliver the allegedly infringing objects to a professional verification institute jointly appointed by the Judicial Yuan and Executive Yuan for patent infringement verification and obtain a verification report; (3) or to attach to the warning letters a report by a professional verification institution other than those jointly appointed by the Judicial Yuan and Executive Yuan, and, before mailing the warning letters, to notify the allegedly infringing manufacturer, importer, or agent and ask it to cease the infringement; (5) or to include in the warning letter a clear description of the content and scope of the patent upon which infringement is alleged and the facts of the alleged patent infringement with specificity sufficient to enable the recipient of the letter to make a reasonable judgment. As a result, Adelaide's downstream retail outlets became worried and terminated their business dealings with the complainant.(b) It is objectively clear that the inappropriate mailing of patent infringement warning letters by the respondent, Rung Sheng, placed improper pressure upon the complainant's trading counterparts, a violation of the principle of efficient competition and a reprehensible breach of business ethics that was severe enough to affect the trading order, and therefore constituted a violation of Article 24 of the Fair Trade Law. Considering the motive and purpose for Rung Sheng's illegal actions, the undue benefit it expected to reap thereby, the gravity of its disruption on the trading order, the sustained period of time during which the illegal actions disrupted the trading order, Rung Sheng's market position, and the degree of the respondent's cooperativeness in the FTC's investigation, the FTC, acting in accordance with the fore part of Article 41 of the Fair Trade Law, ordered the respondent to cease the offending actions, and imposed an administrative fine of NT$100,000.Appendix: Rung Sheng Enterprise Co., Ltd.'s Uniform Invoice Number: 89895157Summarized by Lin, Chia-Hua;Supervised by Wu, Te-Sheng