"Chin Yuan" trademark owner Hwu Chen-Jin's violation of Article 24 of the Fair Trade Law by issuing warning letters sufficient to adversely affect the trading order
Chinese Taipei
Case:
"Chin Yuan" trademark owner Hwu Chen-Jin's violation of Article 24 of the Fair Trade Law by issuing warning letters sufficient to adversely affect the trading order
Key Words:
warning letters, sufficient to adversely affect the trading order, obviously unfair act
Reference:
Fair Trade Commission Decision of July 22, 1998 (350th Commission Meeting); Disposition Ref. (87) Kung Ch'u Tzu No. 169
Industry:
Chinese Restaurant Industry (5711)
Relevant Laws:
Article 24 of the Fair Trade Law
Summary:
Chu Shang International Corp. (the complainant) filed an application to register the "Cheng Tzung T'ang Chin Yuan" (complainant's mark) trademark with the National Bureau of Standards (currently the “Intellectual Property Office”) in August 1997 and began recruiting franchisees, the number of which reaches 15 to date. The family of Hwu Chen-Jin (respondent) has operated the "Chin Yuan P'ai Ku" (respondent's mark) restaurant for 40 years. The respondent thought that the complainant's franchise, under the complainant's mark, had infringed on his trademark right, and issued warning letters to Su Ch'ing-lung, the complainant's responsible person, and the complainant's franchisees. The dispute is whether the respondent's issuance of the warning letter violated the Fair Trade Law (FTL).
The Fair Trade Commission (FTC), after receiving the complaint on 20 March 1998, notified both parties to respond. The respondent supplemented material in writing twice during the FTC's investigation. The FTC found:
(1) The respondent's family registered its mark in June 1978 and has operated restaurants and franchises under the same mark to date. The registration of the respondent's mark No. 26007 that had previously expired on 15 August 1997 has been renewed and will expire on 15 August 2007. The original trademark registrant Chin Yuan Food Ltd. terminated operation on 1 June 1997, and the mark was then transferred to the individual, the respondent.
(2) In August 1997, Su Ch'ing Lung opened the first restaurant under the complainant's mark and started to recruit franchisees. The respondent's family, after learning of Su's business, started to collect relevant evidence and then issued warning letters to Su and the complainant's franchisees. On 20 March 1998, the respondent filed a complaint with the Taipei Police Department alleging Su (as the responsible person of the complainant) of fraud and trademark infringement.
The FTC reviewed the entire content of the warning letters issued by the respondent and found that most of the content was the respondent's subjective speculation. The warning letter reads: "Some people with evil intentions are recruiting business partners in the name of 'Cheng Tzung Chin Yuan P'ai Ku' for unjustified profit." Such representation was sufficient to adversely affect the complainant's competition.
In accordance with the "Disposition Principles for the Screening of Cases Involving Enterprises Issuing Warning Letters for Infringement of Copyright, Trademark, and Patent Rights" established by the FTC, the act of issuing a warning letter by an enterprise constitutes proper exercise of rights pursuant to the Copyright Law, the Trademark Law, or the Patent Law where such enterprise issues the warning letter subsequent to confirmation, through one of the following procedures, that the rights of such enterprise have been infringed:
(1) a court judgment of the first instance confirming copyright, trademark or patent infringement; or,
(2) an assessment report that confirms infringement issued by an impartial and objective assessment agency which has examined the allegedly infringing article.
Paragraph 9 of the said Disposition Principles provides that:
where an enterprise issues a warning letter, if the contents of which meet one of the following criteria and sufficiently affect trading order, there shall be a violation of the provisions of Fair Trade Law Article 24:
(1) there is no legal copyright, trademark, or patent right.
(2) the scope of the copyright, trademark, or patent has been overstated or exaggerated.
(3) untrue statements are made by a competitor or persons in the market regarding the infringement of the enterprise's copyright, trademark or patent.
(4) other statements that are deceptive or patently unfair.
In conclusion, the respondent issued the warning letters without prior confirmation in accordance with procedures, the content of which letters was unfair to the complainant and would affect the operation and development of the complainant's franchise business. Such acts were questionable in terms of business ethics and found to be in violation of FTL Article 24.
Summarized by Lin Chin-lang
Supervised by Hung Te-chang