A complaint is filed against Hsien Ching Stainless Steel Industrial Co., Ltd. for violation of the Fair Trade Law by improperly sending letters accusing of infringement of its patent

Chinese Taipei

Case:

A complaint is filed against Hsien Ching Stainless Steel Industrial Co., Ltd. for violation of the Fair Trade Law by improperly sending letters accusing of infringement of its patent

Key Words:

Warning letter

Reference:

Fair Trade Commission Decision of August 4, 2005 (the 717th Commissioners' Meeting), Disposition Kung Ch’u Tzu No. 094083

Industry:

Wholesale of Machinery (4541)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1. Chen Ming-Tang, the spouse of Chuang Mei-Hua who is the representative of one of the complainants Chua Hsin Food Machinery Co., (hereinafter referred to as Chua Hsin Company), is the patentee of New Model 175031 “Aluminum Alloy Heater of Infrared Fuel Gas Oven”. On August 6 2001, Chen Ming-Tang licensed another complainant Shun Hsin Fa Industrial Co., (hereinafter referred to as Shun Hsin Fa Company) to manufacture infrared fuel gas ovens , which were then distributed and sold by Chua Hsin Company. On December 27, 2004, without any verifications or investigation reports by professional institutions, Hsien Ching Stainless Steel Industrial Co., Ltd. (hereinafter referred to as Hsien Ching Company) disseminated letters to the distributors and clients of the complainants claiming that the complainants had jointly infringed its patent product “Tubular Heater of Infrared Oven”. Hsien Ching Company indicated in the letters that it ha d already filed a lawsuit for the said infringement, and offered reward for the distributors and clients reporting the infringement . At the end of the letter, Hsien Ching Company promoted its products and urged the recipients of letters to trade with it.
2. Th is Commission’s investigation found that Hsien Ching Company had neither received any judgment of first instance from the court nor provided the allegedly infringed product to a professional institution for a verification of patent infringement prior to issuing the warning letters at issue. Therefore, the letters at issue were not enclosed with any expert reports . Also , the content of the letters at issue did not describe clearly the substance and scope of its patent rights, and the concrete evidences that its patent had been infringed. The letters at issue were only enclosed with the first and second page of the civil complaint filed with court, stating the subject matter of litigation, names and addresses of the plaintiff and the defendant, and claims . Other than th ese, the letters at issue did not mention any concrete evidences that its patent had been infringed. Furthermore, the letters at issue explicitly and implicitly accused that the products of the complainants were counterfeit goods and urged the recipients of letters to return or exchange their purchases as soon as possible. The letters also clearly stated that the recipients of letters could contact Hsien Ching Company if they ha d any demand for the product at issue.
3. Grounds for disposition:
1. The warning letters disseminated by Hsien Ching Company did not include any concrete facts regarding the patent infringe ment and thus the recipients of the letters were unable to make reasonable decisions as to whether or not the patent has been infringed. Furthermore, there wa s no concrete evidence showing that Hsien Ching Company had notified, prior to issuing the letters, the relevant product manufacturers request ing them to correct the infringement . Therefore, the act of Hsien Ching Company in issuing the warning letters cannot be treated as a legitimate conduct in exercis ing its patent rights . Moreover, the content of the letter at issue caused the trading counterparts or potential trading counterparts of the complainants to be apprehensive and thus complained to the complainants . As a result, the complainants were troubled and it was likely that the trading counterparts would stop trading with the complainants. The letters at issue were disseminated to hundreds of kitchen equipments distributors and most of the recipients of letters were also trading counterparts of the complainants. Therefore, the act of Hsien Ching Company in issuing letter is sufficient to affect the market’s trading order and thus constitutes an obviously unfair conduct of Article 24 of the Fair Trade Law.
2. Taken into consideration the motivation, purpose, and expected improper benefit of the unlawful act of Hsien Ching Company; the degree of the act’s harm to market order; the duration of the act’s harm to market order; benefits derived on account of the unlawful act; the scale, operating condition, sales and market position of the Company; whether or not the type of unlawful act involved in the violation has been the subject of correction or warning by the Central Competent Authority; types of, number of, and intervening time between past violations, and the punishment for such violations; remorse shown for the act and attitude of cooperation in the investigation; and other factors, therefore, Hsien Ching Company is ordered to cease the unlawful acts immediately and an administrative fine of NT$50,000 was imposed according to the anterior paragraph of Article 41 of the Fair Trade Law.

Summarized by Lai, Shu-Ching;
Supervised by Liou, Chi-Jung

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