Taipei District Court requested the Fair Trade Commission in writing to determine whether Taiwan branch of Hang Ten Enterprise Corp. violated the Fair Trade Law for selling apparels with "HANG TEN"

Chinese Taipei

Case:

Taipei District Court requested the Fair Trade Commission in writing to determine whether Taiwan branch of Hang Ten Enterprise Corp. violated the Fair Trade Law for selling apparels with "HANG TEN"

Key Words:

improper competition practices, trading counterparts, fair competition, false, untrue, or misleading representations, passing off

Reference:

The Fair Trade Commission Decision of December 24, 1997 (the 321st Commission Meeting)

Industry:

Retail Industry (8231)

Relevant Laws:

Articles 19, 20, 21, and 24 of the Fair Trade Law

Summary:

1. The term symbol used in Article 20(1)(i) of the Fair Trade Law refers to a particular feature that alone is sufficient to indicate the source of a product, i.e., the symbol will enable the consumers to know the manufacturer or the origin of the product. The symbol is also used to differentiate between different kinds of products or services. The Fair Trade Law protects symbols that can satisfy the aforementioned criteria. Any shape, product container, packaging, descriptive words, text, color, or name that is in general use for the products concerned, but does not denote the source or origin of the products or services, is not considered a symbols according to the Fair Trade Law. The above clarification is thus made.

Investigation showed that the complainant, the Taiwan branch of Chie Shih Overseas Trading Co. of Hong Kong, claimed that since the Giordano brand of all cotton wrinkle-free pants was introduced in the Taiwan market in July 1996, the products style, make, and hang tag (printed with the word Authentic) became known to the relevant public due to the companys massive advertisement campaigns and large sales volumes. Wrinkled paper were used to print the advertisements and product brochures, and the words wrinkle-free were used to describe the products.

However, investigation showed that the style, make, and hang tag of the aforementioned Giordano brand of all cotton wrinkle-free pants were common to all leisure pants, and were not distinguishing or different from other brands of leisure pants in the market. The only difference with previous existing product in the market was the wrinkle-free feature. Yet apart from the complainants brandname Giordano and the respondents brandname Hang Ten, other popular brandnames also included Lee, Unicorn, and Baleno. It was impossible for the relevant public to determine that a product was from the complainants company by merely looking at the style, make, and hang tag of the product.

Investigation also showed that the English word Authentic printed on the hang tag meant that the product was true and reliable and was used to guarantee product quality and composition. Since the hang tags were sewn on the pants in a manner similar to other products, it was difficult to consider the hang tags as the products symbol. In addition, investigation showed that he complainant's use of wrinkled paper and the words wrinkle-free in its advertisements and product brochures, and the respondent's use of two-rounded-clothes-irons mark, were to explain that their respective products were wrinkle-free and did not need ironing, as well as to denote product quality. The acts were simple manifestations of the products' features, and did not constitute the products' symbol. Moreover, consumers in the leisure pants market often relied on their own purchase experience, other than brandnames, manufacturers, and product composition in determining purchase. The consumers only had to pay normal attention to be able to distinguish the different kinds of leisure pants and avoid confusion.

Considering the above analysis, the style, make, the Authentic hang tag of the products, the advertisements and products brochures, either from Giordano, the complainant or from Hang Ten, the respondent, could not be deemed as symbols known to the relevant public. The similarities in overall appearances of the two products would not confuse the consumers as to the origin of the products.

2. Article 24 of the Fair Trade Law is to regulate unfair competition practices. Whether an act constitutes unfair competition is determined by the trade between the party and its trading counterpart, as well as whether there is an impediment in market competition. If an enterprise did not engage in deceptive or obviously unfair acts during trade, and if such acts of trade did not impede market competition, Article 24 of the Fair Trade Law is not applicable.

Further, if an enterprise copies the symbol of other peoples products that is known to the relevant public, actively associates its product with other's goodwill or exploits the fruits of others hard work, although such acts do not constitute a violation of Article 21 of the Fair Trade Law, they are, however, in violation of Article 24 of the Law. To constitute a violation of Article 24, the enterprise have actively copied others symbols to a high degree of similarity or should have deliberately misled the consumers into believing that the products being offered are related to the products of the other enterprise; otherwise, Article 24 is not be applicable.

Investigation showed that the pants from Hang Ten, the respondent, and Giordano, the complainant, had similar style, make, and location of hang tags. However, as above-mentioned analysis, the symbols were common to all leisure pants. Due to years of advertising and marketing within the domestic market, both the Hang Ten and Giordano trademarks were known to the relevant public. For the respondents product line in question, the Hang Ten label was conspicuously printed on the hang tags as well as sawed on the product itself. Consumers used this label to determine the origin of the product. In addition to the Hang Ten trademark and the two footprint symbol, the product brochures also contained the name and telephone number of the company, the word wrinkle-free, and the two-rounded-clothes-irons mark, similar to a No making sign. Products from the two companies would not confuse the consumers, since consumers could identify the product by using common observation. It was therefore difficult to conclude that the respondent actively associated its product to the complainant's goodwill, or was exploiting the fruits of the complainants hard work.

3. Article 19(iii) of the Fair Trade Law states that an enterprise shall not commit acts which are likely to impede fair competition such a s causing the trading counterparts of its competitor to transact business with it by coercion, inducement with profit, or other improper means. To constitute an impediment to fair trade, the following conditions should be present: where improper competition practices are used; where the goal is to compete for trading counterparts of its competitors; and where fair competition in a specified market is adversely affected. Article 19 of the Law is only applicable in these cases.

Investigation showed that the respondent labeled 50% in price, 100% in quality on the product brochure and advertisements of its Hang Ten brand of all cotton wrinkle-free leisure pants. The label was part of an advertising and marketing strategy to attract consumers, emphasizing that the product line in question had high quality at low prices. The advertisement did not mention any specific company or enterprise, and there was no other evidence showing that the respondent used unreasonably low prices to promote sales. Thus, its motive could raise no objections. As there was also no violation of normal trade, it was difficult to find that such actions constituted a violation of Article 19(iii) of the Fair Trade Law.

4. Article 21 of the Law states that an enterprise shall not make, on goods or advertisements relating thereto, or in any manner know to the public, any false, untrue, or misleading presentation on the price, quantity, quality, and content of the product.

Investigation showed that the respondent labeled 50% in price, 100% in quality on the product brochure and advertisements of its Hang Ten brand of all cotton wrinkle-free leisure pants. The label was used as the products selling point, which was high quality at low prices. The advertisement was neither disparage nor did it exclude products of other companies.

In addition, it was easy for the customers to know the price of the products since the prices were clearly marked in the advertisements; the customers would not be misled with regard to pricing information. Without other evidence showing that the advertisement of the respondent was false and untrue, it is difficult to find that the advertisement in question was in violation of Article 21 of the Fair Trade Law.

Summarized by Lin, Chiu-miao
Supervised by Wu, Ting-hung

Appendix:
Taiwan branch of Hang Ten Enterprise Corp.'s Uniform Invoice Number: 89390754

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