AMP Incorporated (AMP ) issued public notice advertisements which improperly implied that its patent was infringed by its competitors in violation of Article 24 of the Fair Trade Law

Chinese Taipei

Case :

AMP Incorporated (AMP ) issued public notice advertisements which improperly implied that its patent was infringed by its competitors in violation of Article 24 of the Fair Trade Law

Key words:

obviously unfair act, public notice advertisement, infringement of patent rights

Reference:

Fair Trade Commission Decision of 15 June 1994(the 140th Commission Meeting); Disposition (83) Kung Ch'u Tzu No. 066

Industry:

Computer Component Manufacturer (3145)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1. The sanctioned party, AMP issued public notice advertisements in the Economic Daily News and Commercial Times claiming that because some computer companies in Chinese Taiepi, without obtaining licenses from AMP, had manufactured electronic connectors in question and therefore infringed AMP's patent both in Chinese Taipei and the United States, AMP required cessation of the infringement. Any public notice which is made in connection with patent rights in marketing functions to threaten competitors and prevent them from entering the market. Therefore, in order to prevent the abuse of the patent right from creating an improperly threatening effect, the patent owner should be very careful with regard to issuing warning letters to potentially infringing enterprises. Before the court judgment confirms that a patent infringement exists, the patent owner could, to some extent, exercise its patent right by issuing warning letters to the potentially infringing manufacturer. Nevertheless, if the letters are issued to the distributor or to the consumer of the potentially infringing manufacturer and the letters fail to clearly describe the scope of the patent right and the alleged infringement conducted by the potentially infringing enterprise, such action taken by the patent owner goes beyond the degree necessary to protect its patent and gives rise to unfair competition, thus constituting a violation of Article 24 of the Fair Trade Law. In the instant case, as the sanctioned party had placed the public notice advertisements in the Economic Daily News and Commercial Times to which most industry people subscribe , the sanctioned party's aforesaid act had a wide-spread effect compared with the effect of issuance of letters to potential infringing enterprises. And if the content of the advertisements made by the sanctioned party is inappropriate, the adverse effect of unfair competition is even more substantial.

2. The investigation showed that the sanctioned party in its advertisements only included Chinese Taipei and the U.S. patent numbers and patent names without clearly describing the content and the scope of the patent. As there are numerous patents which are related to connector products, patent numbers and patent names alone were not sufficient to judge which connector products infringe the sanctioned party's patent right, in particular the American patents are even harder for the domestic manufacturer to identify. Moreover, under the current anti-counterfeiting policy, the public notice advertisement of infringement of patent rights tends to scare enterprises and prevents them from adopting the product with respect to which infringement is alleged as a component of the enterprise's product in order to avoid any involvement of any lawsuit. The public notice advertisement, in other words, will likely give rise to suspicion. The investigation further showed that the sanctioned party with the public notice advertisements, accompanied by its distributors visited the manufacturers which adopted the connector product as the components of their products, and stated that Chinese Taipei's companies infringed upon AMP's patents and requested that they not purchase the counterfeits. Apparently the sanctioned party willfully intended to increase suspicion by means of the aforesaid conduct which had a beneficial effect on the sales of its own products. As the complainant was Chinese Taipei's largest connector maker, most of the connector purchasers associated the complainant as the patent infringing enterprise. The Commission's investigation showed that the conduct of the sanctioned party had substantially affected the complainant's business, whereas whether the complainant infringed the patent rights of the sanctioned party had not been confirmed by the competent authority. The acts of the sanctioned party went beyond the degree necessary to protect its patent right and is obviously unfair to the complainant. Therefore, the sanctioned party's aforesaid conduct constitutes the an "the obviously unfair act which affects the order of trade".

　

Summarized by Kuo, Shu-Jen

＊＊: For information of translation, click here

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