D&J Image Co., Ltd. violated the Fair Trade Law by using misleading advertisements and sending letters of attorney to the distributors and customers of its competitors
Chinese Taipei
Case:
D&J Image Co., Ltd. violated the Fair Trade Law by using misleading advertisements and sending letters of attorney to the distributors and customers of its competitors
Key words:
scope of patent rights, public notice advertisement, letters of attorney
Reference:
Fair Trade Commission Decision of June 2, 1993 (the 7th Commission Meeting); Disposition (82) Kung Ch'u Tzu No. 041
Industry:
Manufacturing and Repair of Electricity and Electronic Machinery and Equipment (2190)
Relevant Laws:
Summary:
1. D&J Image Co., the sanctioned party acquired the utility patent on "the structure of a machine which can key in, search, check and print computer images." Such patent is applied by putting CCD camera, CPU of personal computer, LCD displayer, and hard drives into a box as an office machine. Its acquisition of the utility model does not mean that the key-in, search, checking and printing of computer images were invented by the D&J Image Co. However, the investigation conducted by the Commission showed the following:
(1) On 28 February 1992 the D&J Image Co. placed a public notice advertisement in the Commercial Times stating that: "Recently, the banking and financing industries have started to adopt computer seal impression checking machines in their systems in order to improve the efficiency of the counter activities and achieve the goal of creating one-stop service. D&J Image Co. has invested enormous amount of capital and manpower in the research and development of a computer seal impression checking machine (with a structure of key-in, search, checking, and printing of computer images), which has obtained a variety of utility-model patents (utility model certificate No. 54664(2)) from the Central Bureau of Standards of the Ministry of Economic Affairs. Concerning the friendly relations among the same industry, and protection of customers' rights, thus D&J Image Co. placed this public notice advertisement to the public to plead for public efforts in resisting counterfeits and respecting our legal rights and interests. Any future support and critiques by our fellow members of the industry and our customers will be very much appreciated." Both of the Medium Business Bank in Chinese Taipei and the Hua Nan Commercial Bank were notified by the D&J Image Co. that complainant had counterfeited its system. IBM, one of the complainants' agents, was also advised by the owner of the D&J Image Co., Liu Chun-liang, with a threatening tone to read the aforesaid public notice advertisement carefully.
(2) D&J Image Co. commissioned its lawyer to sent letters to the complainant's distributors and customers. The recipients and the contents of the corresponding letters are as follows:
(i) On June 23, 1992, a letter of attorney was sent to Images, Super TV, Tungch'i, IBM Taiwan Corporation, and Xerox Taiwan. The letter stated the scope of D&J Image Co.'s Utility Model No. 54664 and asked those companies to recognize its patent rights.
(ii) On June 25, 1992, the original copy of the letter of attorney was sent to the complainant while a duplicate copy was sent to Taiwan Supply Bureau ("TSB"). The content of the letter was as follows: the complainant sold three sets of seal impression checking systems to TSB for setting up the linkage between the mainframe in the TSB and its branch offices. A portion of these system infringed upon the patent rights of D&J Image Co.'s utility model No. 54664. The complainant was advised to cease such infringing activities.
(iii) On July 21, 1992, the original copy of letter of attorney was sent to the complainant and the complainant's distributor, IBM Taiwan Corporation, and a duplicate copy was sent to the Taiwan Supply Bureau. The letter stated that IBM Taiwan Corporation sold Taiwan Supply Bureau a seal impression checking system which links the mainframe with those of the branch offices. A portion of the system infringed upon patent rights of the sanctioned party's utility model No. 54664, and both the complainant and IBM Taiwan Corporation were advised to cease such infringing activities.
(iv) On July 27, 1992, the original copy of the letter was sent to the complainant's distributor, Xerox Taiwan, and a duplicate copy was sent to the headquarter of Hua Nan Commercial Bank. The letter stated that Xerox Taiwan sold Hua Nan Commercial Bank a set of seal impression checking system a portion of the structure of which infringed upon patent rights of the sanctioned party's utility model No. 54664, and the recipients were advised to cease such infringing activities the following day. Because of the letter, IBM Taiwan Corporation told the complainant that the distribution of the product in question would be halted until the dispute is resolved. D&J Image Co. regarded the said letters of attorneys as a proper exercise of its rights pursuant to Article 81 of the Patent Law.
2. The investigation showed that D&J Image Co. has acquired patens for utility model Nos. 54664, 54664(1), 54664(2) and the patent name of the utility model is "the structure of the key-in, search, checking, and printing of computer images." Its utility model did not include a patent right for the checking software. In addition, when separated into basic components, the aforementioned equipment was merely a combination of technologies which had been in use and none of which were included in D&J Image Co.'s patent rights. The Central Bureau of Standards of the Ministry of Economic Affairs also noted that utility model No 54664(2) "had been visible in publications prior to the application, and was prong to be subject to piracy. It utilized technologies and know-how which are commonly in use before the application; thus does not improve efficiency or effectiveness." Nevertheless, D&J Image Co. placed a public notice advertisement in newspapers and changed the name of "the structure for the key-in, search, checking and printing of computer images" to "computer seal impression checking machine" (the structure of the key-in, search, checking, and printing of computer images.)" The patent rights of the model was not clarified. The content of the advertisement easily misled persons to believe that the D&J Image Co.'s utility model's patent rights included both the software programs and machinery for seal impression checking.
3. Advertisements relating to patent rights may, in the marketing sense, deter competitors from entering into a specific market. In order to prevent such advertisements from exerting as an undue deterrence and resulting in unfair competition, patent owners, while demonstrating their patent rights through advertisements or other means, must not mislead people with regard to the scope of the patent rights in question. Otherwise such advertisements or representations would be deemed as false, untrue or misleading. The content of the aforesaid public notice advertisement in this case caused persons to mistakenly believe that the scope of the D&J Image Co.'s patent rights covered both the software programs and machinery for seal impression checking. This act constitutes an "untrue or misleading representation which may likely cause confusion to or mistake by consumers such as the quality or content of the product" as defined in Article 21 of the Fair Trade Law.
4. Article 24 of the Fair Trade Law provides, "In addition to what has been provided for in the Fair Trade Law, an enterprise shall not conduct other deceptive or obviously unfair acts are sufficient to affect trading order." Owners of intelleFtual property rights who issue or commission a third party to issue letters of attorney to infringing parties may do so as long as such acts fall within the permission ground. However, in this case, the sanctioned party, i.e., the D&J Image Co., took out a public notice advertisement, which misled people to mistaken about the scope of its patent rights even though its utility model rights covered only the hardware structure. Moreover, before it obtained a judgment from the court that would determinn&J Image Co.'s argument that its said acts was a proper exercise to protect its patent rights pursuant to Article 81 of the Patent Law was not reasonable.
Summarized by Chiang, Hung-tse
Supervised by Pai, Yu-chuang
Appendix:
D&J Image Co., LTD.'s Uniform Invoice Number: 22435535
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