Bonanza International Computer Co. was complained for its false advertising and impeding fair competition

Chinese Taipei

Case:

Bonanza International Computer Co. was complained for its false advertising and impeding fair competition

Key Words:

warning letter; untrue and false, misleading, deceptive or patently unfair conduct

Reference:

Fair Trade Commission Decision of 29 June 1994(the 142nd Commission Meeting); (83) Kung Ch'u Tzu No. 081 Disposition

Industry:

Information software services (7501)

Relevant Laws:

Article 19(iii) and Article 21(1) of the Fair Trade Law

Summary:

1. The Bonanza Computer Company's trademark "Ying P'u PE3" was registered for the following designated goods: books, periodicals and maps and drawings. Bonanza never obtained the right for exclusive use of the mark in connection with computer software. However, Bonanza printed and sent fliers to schools and spread statements indicating that the complainant had violated the Trademark Law and the Fair Trade Law. By doing so Bonanza took advantage of the general public's lack of understanding of the status of the trademark registration and their inability to judge whether or not the complainant was in violation of the Fair Trade Law. This led the consumers' refraining buying or using the complainant's products, and thus enhanced Bonanza's own trading opportunities and cut off consumers trade with Bonanza's competitors. Furthermore, an advertisement placed by Bonanza in a magazine stated that "from January to May 1993, 90% of authorities, public and private major enterprises chose PE3 as their word processing software". This kind of advertisement could easily mislead consumers to believe that there were no other choices and they must make their purchases from Bonanza. This conduct of Bonanza constitutes the use of improper means to cause trading counterparts to deal with Bonanza as well as false advertising, and is likely to impede fair competition.

2. The investigation revealed that the interchangability of application software is low and that Bonanza's sales of word processing software only occupies 40% of the relevant market. Furthermore, Bonanza was unable to provide concrete evidence of the market share of its product. In addition to the PE3 product in the market, there are other word processors such as K'uo Ch'iau, Hui Hsing and PE2; that is to say, the Bonanza product is not the consumer's only choice. This is generally known to the market. Bonanza was unable to prove the veracity of the statements in its advertisement. It indicated that there were false an untrue statements and misleading people and contravened Article 21(1). Bonanza's distribution of letters stating the other companies violated the Trademark Law and the Fair Trade Law caused consumers to mistakenly believe that they had no choice but to deal with Bonanza. This improper activity which causes consumers to trade with oneself is likely to impede fair trade, and is thus a violation of the provisions of Article 19(iii) of the Fair Trade Law.

3. The 142d Commission Meeting of the Fair Trade Commission determined that Bonanza was in violation of the provisions of Articles 19(iii) and 21(1) of the Fair Trade Law, and Bonanza was ordered to cease and desist from the offending activities as of the day following the date on which this disposition was served on Bonanza.

Summarized by Wu, Lieh-Ling
Supervised by Kuo, Shu-chen

＊: For information of translation, click here

[Browse by APEC Member Economies] [Browse by Subject Categories] [Home]
[Decisions] [Approvals] [Interpretations] [Administrative Guidance]