The case relating to Chuan Lian Metal Corp. and Chuan Li Canning Corp. violated the Fair Trade law by counterfeiting the appearance of the container of Lu Li series of drink products
Chinese Taipei
Case:
The case relating to Chuan Lian Metal Corp. and Chuan Li Canning Corp. violated the Fair Trade law by counterfeiting the appearance of the container of Lu Li series of drink products
Key Words:
to counterfeit, product container, appearance
Reference:
The Fair Trade Commission Decision of March 7, 1997 (the 123rd Commission Meeting); Disposition (85) Kung Chu Tzu No. 018
Industry:
Manufacturers of Other Metal Products (289)
Relevant Laws:
Article 24 of the Fair Trade Law
Summary:
(1)The company obtained exclusive use of the trademark for Lu Li series of drink products in 1986. The company also developed different kinds of canned drink products, among them was canned peach juice, introduced to the market in 1988. Due to its unique flavor and good taste, the product became very popular with consumers.
A carefully designed drawing was printed on the product container, consisting of an isosceles right triangle as background and the drawing of a peach and three leaves; the drawing also included words arranged in a special manner. Due to massive advertising campaigns and distribution of product brochures, the product container became a product symbol recognizable to the general public.
(2)Lu Li peach drink products were exported to mainland China in November 1990 in an effort to expand the company's overseas market. Because of its good flavor, the product became popular among mainland Chinese consumers. In addition, the special drawing and word arrangement on the product container also became a product symbol recognizable to the general public.
(3)The company had received complaints from its mainland Chinese customers that counterfeit products were prevalent in the market. After investigation, it was found that the defendant printed the design of the Lu Li product container on tin sheets, fabricated the tin sheets into product containers, exported them to the mainland, and sold similar peach drink products for high profits. Changhwa County investigators found a fax message sent by the Fukien Lian Chien Co. on July 27, 1992, instructing the defendant to counterfeit the appearance of the Lu Li peach drink product with an intent to infringe upon the company's trademark.
(4)On April 1, 1993, Taichung customs officials found 669,981 empty Luo Hua brand containers and 668,800 empty Hung Li brand containers, all of which had drawings and word arrangements printed in a manner that was the same as that used by the company. The false labels Chi Feng Enterprise, Manufactured by Taiwan Chi Feng Super Co., and Address: No. 108, Flat A, Hsi-nan Industrial Park, Taichung County were printed on the counterfeit containers. In addition, the words Li Li were used to closely resemble the pronunciation of the popular Lu Li trademark of the company and to mislead consumers. The Changhwa County investigators then forwarded the case to the district prosecutor for investigation and later to the district court for legal actions. The case is currently being investigated by the criminal court.
(5)Investigation also showed that the defendant counterfeited product containers of more than 10 different brands of products of the company. The aforementioned counterfeit Li Li and Chi Feng brands were not registered as drink products. Although the Luo Hua and Hung Li marks were claimed to be registered marks, the marks were registered on the mainland and were valid only for canned products and not for drink products. In addition, the photocopy provided by the defendant to the court was for the registered trademark Li Chin, rather than Hung Li. The drawing used was also different from that on the registered trademark; thus the defendant was suspected of changing the drawing for use for another purpose.
The complainant of this case, Vedan, iterated that the drawing on the container of its peach drink product, which consisted of an isosceles right triangle as background and the drawing of a peach and three leaves, was a symbol recognizable to the relevant public. However, investigation showed that other peach drink products in the market also had drawings of peaches and leaves on the container. Therefore, the drawing only served to indicate that the product contained was peach juice, rather than differentiate between different brands of peach drinks. In other words, when purchasing the product, consumers did not use the peach drawings to distinguish the different brandnames.
In addition, peach drinks are daily items. Consumers choose these items based on their experience of purchase, brandnames and manufacturers; a consumer using normal observation would be able to easily select the brandname of his choice. Therefore although the Lu Li drink products in question used an isosceles right triangle as the drawing background, the entire drawing still focused on the drawing of the peach as its main subject. The drawing could only make the consumer aware that the product is a peach drink, but it could not be used by the relevant public to identify the origin or manufacturer of the product. Thus when making purchases, the appearance of the containers would not confuse the consumer as to the origin or manufacturer of the product. Article 20(1)(i) of the Law was therefore not applicable.
As mentioned before, the drawing on the container of the Lu Li peach drinks did not serve the function of a symbol. However, the empty containers printed and manufactured by the defendant, whether the peach drawing (including the background isosceles triangle), arrangement, color, dimension of the container, dimension of the printed words, or location of the trademark, were all similar with those on the containers of the Lu Li peach drinks. Yet the containers of the different brands of peach drink in the market all have different physical appearances.
Investigation also showed that the Lu Li peach drinks manufactured by the complainant were available on the market since 1988. The defendant started to print and manufacture the empty containers in 1992, thus it was evident that the defendant counterfeited the container of the Lu Li peach drinks to a high degree of similarity.
While defending his case at the Commission on July 20, 1993, the defendant claimed that the Lien Chien Metal Co. of mainland China, through Lien Cheng Trading Co. of Hong Kong, commissioned the defendant to print the brandnames Luo Hua and Hung Li on tin sheets and fabricate into empty containers for export to the mainland. The drawing in question was provided by Lien Cheng Trading Co. of Hong Kong.
However, based on the fax message sent by the Fukien Lian Chien Co. on July 27, 1992 that was found by the Changhwa County investigators, the message clearly instructed the defendant to counterfeit the container of Vedans peach drink product. The message also instructed the defendant to change the name of the manufacturer to Hung Lai Foods Co., Ltd., print the words Popular Product of Chinese Taipei in place of the original trademark, change Lu Li to Hung Li, and copy all the color scheme and design of the Lu Li container. It was obvious that the defendant had ill malice intent and prior knowledge of the counterfeiting act.
In addition, counterfeit containers of more than 10 different brands were confiscated from the defendant, among which only Luo Hua and Hung Li were registered trademarks. Yet, the two brands were registered on the mainland and were valid only for canned products and not for drink products. Likewise, the photocopy provided by the defendant to the court was for the registered trademark Li Chin, rather than Hung Li. The defendants claimed that he was commissioned by another party, and that the drawings were provided by another party. However, it was obvious that the claims were without basis and pure alibis.
However, there are varying degrees to which the appearance of others products may be used, ranging from similar use to exact copying. Therefore, the degree of similarity in the use of the appearance of others products should be taken into account while determining how a particular case should be handled. It is inappropriate to consider that all such instances will not be protected by law, especially in cases where the use is highly similar or an exact copy. In such cases, the act of counterfeiting obviously infringed upon the original company; such act may be considered deceptive or obviously unfair act that is sufficient to affect trading and is prohibited by Article 24 of the Fair Trade Law.
Although the defendant was neither a manufacturer nor a vendor of drink products, but a can manufacturer, the defendant copied the appearance of the containers of the Lu Li series of drink products without prior authorization. The malice intention to inflict damage on Veda was intolerable and seriously affected order in trade. Thus its actions were in violation of Article 24 of the Law.
Summarized by Wu, Tsui-feng