A complaint was filed against SDC Co., Ltd. for copying the product and service representation of Yum! Restaurants (Taiwan) Co., Ltd., has deceptive or obviously unfair conduct that is able to affect trading order and violated Article 20 and Article 24 of the Fair Trade Law

Chinese Taipei

Case:

A complaint was filed against SDC Co., Ltd. for copying the product and service representation of Yum! Restaurants (Taiwan) Co., Ltd., has deceptive or obviously unfair conduct that is able to affect trading order and violated Article 20 and Article 24 of the Fair Trade Law

Key Words:

Kentucky, Kala Chicken Leg Burger, O bviously U nfair, SDC, R epresentation, c onfusion

Reference:

Fair Trade Commission Decision of August 18, 2005 (the 719th Commissioners' Meeting), Disposition (94) Kung Ch’u Tzu No. 094088

Industry:

Restaurants (5110)

Relevant Laws:

Article 20 and Article 24 of the Fair Trade Law

Summary:

1. Yum! Restaurants (Taiwan) Co., Ltd. (hereinafter referred to as the complainant) has filed a complaint stating that the Kentucky Company is a world famous fast food chain restaurant and has operated in this country since 1985. At present time , there are more than 120 Kentucky Fried Chicken chain restaurants across the nation. Since its establishment, the Kentucky Fried Chicken has used the globally well-known “KFC” and “Kentucky” trademark and service mark as its product and service representation. This representation is generally known to the relevant consumers. In addition, the product names “Licking Finger,” “picture of chicken,” “Kala Chicken,” “Kala Chicken Leg Burger,” “Take-out Family Meal $399” and “the design of red, white and blue colors combination” are also representations commonly known to consumers. SDC Company (hereinafter referred to as the punished) has named its fried chicken stores as “Shun Zhi Wang Kala Chicken”, as well as copied and named its fried chicken products as “Kala Crispy Chicken,” “Kala Chicken Leg Burger,” “Shun Zhi Chicken Nugget” and “Family Meal”. In addition, SDC Company used the picture and the red, white and blue colors combination that is similar to the “chicken picture” of the complainant on its signboards, advertisements, buckets of Family Meal and meal orders. Such conducts have violated the provisions of Subparagraph 1 and Subparagraph 2, Paragraph 1, Article 20 and Article 24 of the Fair Trade Law.
1. Article 24 of the Fair Trade Law stipulates that “i n addition to what is provided for in this Law, no enterprise shall otherwise have any deceptive or obviously unfair conduct that is able to affect trading order.” Although the act of an enterprise copying the well-known product’s name or service representation of other enterprise does not meet the confusion criterion stipulated in Article 20 of the Fair Trade Law, if there is a circumstance that such conduct is an attempt to free ride on other’s goodwill or exploit other’s efforts, then it is contrary to the business ethics and also impair the market competition and thus meets the requirement of obviously unfair conduct that is able to affect trading order as stipulated in Article 24 of the Fair Trade Law.
2. As described earlier, the complainant is a world famous fast food fried chicken chain restaurant and operates in this country for more than twenty years. At present time , there are more than 120 Kentucky Fried Chicken chain restaurants across the nation. The service mark and its product names “picture of chicken”, “Licking Finger Chicken”, “Kala Chicken” and “Kala Chicken Leg Burger” are commonly known to relevant enterprises and consumers. The punished company has just established and registered fried chicken operation in September 2002 and should know that the “Licking Finger” symbol of the complainant is commonly known to relevant enterprises or consumers. But, the punished still registered its company’s name as “SDC Co., Ltd.” and named its franchise stores as “Shun Zhi Wang”. Also, the franchise stores have used Shun Zhi Wang (SDC) and picture (picture of chicken) as their business symbols. Although the symbols did not cause any confusion with “KFC and picture”, its overall model, a design that used a combination of red, white and blue colors, and appearance seems to be similar to that of KFC. Furthermore, the product name “Kala Chicken Leg Burger” of the complainant indeed is a representation to show the origin of product. Although the punished neither use character design that is completely similar to that of the complainant nor copy totally the packaging designed by the complainant in its marketed product “Kala Chicken Leg Burger,” there is no marketing creation or own character designs or create a product appearance and layout of service that are different from that of the complainant. Even though it may not have caused confusion with the business and service of the complainant, there is still a deception act of free riding on the complainant’s goodwill.
3. Although the product name of the complainant, “Take-out Family Meal $399” does not meet the requirement of representation that is commonly known to relevant enterprises or consumers, the complainant has already devoted considerable efforts in marketing the aforementioned product and made a significant amount of sales. Naturally there are certain economic benefits for the aforementioned product’s name. Moreover , from the viewpoint of the time that the punished established its business operation and sold products of fried chickens that were similar to the complainant, it is unreasonable to say that the punished did not know the product names of the complainant. Although the punished has named the marketed product as “Family Meal $399 (with a X placed on its top)”, in fact, the punished SDC Company never sell Family Meal at the price of $399, intentionally labeled the price of its product similarly to that of the complainant, that is the Family Meal was sold at NT$399 (with a X placed on its top). Therefore, it is difficult to conclude that the punished company did not have any intention to free ride on the complainant. Moreover, the punished company has extensively used the colors red, white and blue in its designs and layouts of the bucket for take-out Family Meal, signboards and meal orders, these are colors similar to that used by the complainant. Although that does not cause any confusion, a view of the overall appearance is substantiate to conclude that the punished has vigorously free ride on the complainant’s goodwill and exploited its efforts.
4. To sum up, the punished SDC Company has used business and service symbols “Shun Zhi Wang” and “picture of chicken” that are similar to the symbol of the complainant, and used product names “Kala Chicken Leg Burger”, “Shun Zhi Chicken”, and “Family Meal $399 (with a X placed on top)” that are rather similar to the products’ names of the complainant; such conduct was an attempt to free ride on the complainant’s famous goodwill and exploit the complainant’s efforts, thus is regarded as obviously unfair conduct that is able to affect trading order and violated the provision of Article 24 of the Fair Trade Law. Therefore, a fine of NT$350,000 is imposed on SDC Company.

Summarized by Liu, Keh-Hae;
Supervised by Shen, Li-Yu

Appendix:

SDC Co., Ltd.’s Uniform Invoice Number: 80252962
Yum! Restaurants (Taiwan) Co., Ltd.’s Uniform Invoice Number: 97161500