Moon Enterprise Ltd. violated the Fair Trade Law for its high degree of appropriation of the product design of another party
Chinese Taipei
Case:
Moon Enterprise Ltd. violated the Fair Trade Law for its high degree of appropriation of the product design of another party
Key Words:
hanging spears, indications, misappropriation, deceptive and patently unfair conduct
Reference:
Fair Trade Commission Decision of March 2, 1994 (the 125th Commission Meeting); Disposition (83) Kung Ch'u Tzu No. 031
Industry:
Metal Working Machinery Manufacturing & Repairing Industry (2933)
Relevant Laws:
Article 24 of the Fair Trade Law
Summary:
1. In today's society economic progress and development is the result of human work and effort. These results derive from the accumulated skills and experience of one's predecessors. Thus, using the work and efforts of another person as a blueprint for one's own production and manufacturing activities is, unless the law has granted a proprietary and exclusive right in the results of such work and effort, both acceptable and permitted. On the other hand, where one directly copies, or even plagiarizes, the efforts of another in order to obtain a more competitive position, such activity is not tolerated under the laws pertaining to competition. The hanging spear product sold by Moon Enterprise in May 1991 was identical in outward appearance to the ARROW-9S product which the complainant, Ch'ien Mau Company had exported in May 1985 to England and had exhibited in June of the same year at an exhibition held by the Small and Medium Business Administration of the Ministry of Economic Affairs. Furthermore, the language, order, photographs, colors, obverse diagrams and directions for use on the packaging were also identical. Although on the front of the Moon Enterprise product's packaging, the complainant's logo "CM" did not appear, this insignificant difference cannot cover up the similarity of the products.
Whether viewed as a whole or in detail, Moon Enterprise's packaging used some sort of technical means to remove the complainant's CM logo during the photo reproduction process in connection with its manufacturing of the copied packaging. Nevertheless, Moon Enterprise was unable to remove the symbol for the complainant's company "CMEC". Moon Enterprise copied the complainant's product packaging without any modification in design or attempt to distinguish its own products from those of the complainant. Although Moon Enterprise, prior to 4 February 1992 - the date on which the Fair Trade Law took effect, had already made some corrections and changes to its packaging as per the information submitted to this Commission, other than the addition of an "ARROW" trademark, such changes cannot be said to represent any effort or creative activity on the part of Moon Enterprise. And despite the changes, the packaging used by Moon Enterprise remains an identical copy of the complainant's package.
In response to the investigation Moon Enterprise asserted that the pictures on the complainant's were also misappropriated from the instructions for a hanging spear product originating from the Japanese company BARO'K. Although the investigation revealed that the complainant used the pictures from the instructions in the Japanese product as part of its own design on the outside packaging, the complainant redesigned, re-photographed the packaging, adding new text and adding instructions on the obverse side of the packaging (in place of the instructions which were in the Japanese product). Furthermore, the complainant was the first to test the product and otherwise to expend efforts for marketing and sales.
Moon Enterprise on the other hand, for its own profit, directly stole the results of the complainant's efforts and expenditures of time, energy and money. This high degree of misappropriation not only exceeds the appropriate boundaries of the freedom to refer to and build on the efforts of one's predecessors, such conduct that involves copying the design of another person also leads to consumer confusion as to the source of the product and thus constitutes an activity that "is deceptive and will adversely affect trading order" as prohibited by Article 24 of the Fair Trade Law.
2. The dispute between the parties in this case originates from controversy over which party had the right to use the ARROW trademark. Subsequently, because neither party was able to obtain registration of the trademark in Chinese Taipei, beginning in 1990 Moon Enterprise began filing applications for trademark registrations in Indonesia, Hong Kong, Madrid Agreement member countries, and Singapore. The designated goods under such applications were "cleaning guns" and hanging spears. No trademark registration for ARROW was obtained in Singapore, but after having obtained some legal rights to the trademark in other countries, representations were made to the complainant's agent in Singapore that Moon Enterprise had the exclusive rights to use the ARROW mark in conjunction with the hanging spears products. Moon Enterprise also stated that it would take legal action to prevent the complainant's Singapore agent from selling the complainant's counterfeit products in Singapore.
Although the outward appearance of the hanging spear product and its packaging have not achieved the status of being a product symbol that is commonly known to the relevant public, nevertheless, the acts of Moon Enterprise in connection with its quest for profit and advantageous market position, led Moon Enterprise to directly plagiarize the charts concerning the packaging for the complainant's product, to slavishly copy the complainant's package design, and to cause persons to believe that Moon Enterprise's products were products of the complainant. After having infringed on the product of the complainant's work effort, Moon Enterprise, for the purpose of shutting out its competitors, then proceeded to falsely state that because Moon Enterprise had the exclusive right of trademark use in the mark "ARROW", other parties were prohibited from selling the complainant's products. This sort of competition is not on the basis of price, quantity, quality or service, and is likely to adversely affect fair competition. This improper activities described above are conducts prohibited under Article 24 of the Fair Trade Law on the grounds that they are "obviously unfair conduct sufficient to adversely affect market order".
Summarized by Wang, Jung-Ch'ing
Supervised by Kuo, Shu-chen
＊: For information of translation, click here
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