No disposition was made in the case of Chi Chun Plastics Co., Ltd. was complained to violate the Fair Trade Law by abusively distributing warning letters of patent infringements

Case:

No disposition was made in the case of Chi Chun Plastics Co., Ltd. was complained to violate the Fair Trade Law by abusively distributing warning letters of patent infringements

Key Words:

warning letter, plastic mist spray cap, patent law

Reference:

Fair Trade Commission Decision of April 15, 2004 (the 649th Commissioners' Meeting)

Industry:

Plastic Houseware Manufacturing (2103)

Relevant Laws:

Article 22 and 24 of the Fair Trade Law

1. The offense reported by Johnson Professional Wax Taiwan Ltd. (hereinafter called "Johnson Ltd.") concerned the patent infringement warning letter issued by Chi Chun Plastics Co., Ltd. (hereinafter called "Chi Chun Ltd."), which was addressed to Johnson Ltd. and its trading counterparts on July 2, 2003, asserting that the "Radar Rapid Cockroach and Ant Pesticide" marketed by Johnson Ltd. and its trading counterpart have violated the "new patent right of structurally improved New #157732 Mist Spray Cap" owned by Chi Chun Ltd., and requesting Johnson Ltd. and its trading counterparts to terminate all acts of patent right infringements upon receiving the letter, and to enter negotiations for settlement concerning the patent right infringement. Before issuing the warning letter, Chi Chun Ltd. did not notify the complainant and request for cessation of the infringement, thereby lacking the preceding procedures of advance notices, and violating the Articles 22 and 24 of the Fair Trade Law (FTL).
2. Findings of the Fair Trade Commission (FTC) after investigation:
   1. Pursuant to the FTC Guidelines on the Reviewing of Cases Involving Enterprises Issuing Warning Letters for Infringement on Copyright, Trademark, and Patent Rights", the "act of issuing a warning letter by an enterprise" refers to the distribution of information by an enterprise, to the trading counterparts of its own or other enterprises, indicating that another enterprise has infringed on its intellectual property rights. The respondent Chi Chun Ltd. mailed, on July 2, 2003, the said letter to twenty-three enterprises, who were the importer (such as Johnson Ltd.) and channel retailers (such as B&Q) importing or marketing the unlicensed product. The letter asserted that the importation and distribution of the product in dispute has violated the new patent right of "structurally improved Mist Spray Cap" owned by Chi Chun Ltd. and requested the cessation of the patent right infringements. The letter did not substantially accuse "another enterprise" of patent right infringement, therefore the act of warning letter issuance in question was inconsistent with the act of warning letter issuance as defined in the above-mentioned Guidelines of the FTC.
   2. In addition, while the respondent is the owner of the new patent right, it is entitled to follow relevant remedial procedures under the Patent Law to seek the cessation of infringements on its patent right. Prior to issuance of the warning letter, the respondent did contact the complainant by telephone for negotiations. It was only after the negotiations failed then were the letters mailed simultaneously to Johnson Ltd. and its trading counterparts. The investigation report on patent right dispute by China Productivity Center was also enclosed in the letter, providing sufficient basis for the recipient enterprises to reach reasonable judgments. The above evidences cannot be recognized as deceptive or obviously unfair acts and therefore cannot be deemed as a violation against Article 24 of the FTL.
   3. Article 22 of the FTL provides that "an enterprise shall not, for the purpose of competition, make or publicize any false statement, which is likely to cause damage to another person's business reputation." The responsible person of the respondent Chi Chun Ltd. had obtained patent right of the new "structurally improved Mist Spray Cap" back on April 11, 2000, it was naturally entitled to follow relevant remedial procedures under the Patent Law to seek the cessation of potential infringements on its patent right, which is considered a proper remedial act against patent right infringements. Furthermore, the accused party is a plastic mist spray cap injection molding processing plant, which is totally different from complainant whose business items include the manufacturing, importation and sale of varying pesticides, sanitary products, and mist spray drugs. Without the basis of a competitive business relationship, it is difficult to determine if the act of letter issuance was based on competition purposes, and therefore cannot constitute a violation against Article 22 of the FTL.
3. In conclusion, based on the existing evidences, the above-mentioned act of letter issuance by the respondent Chi Chun Ltd. cannot be deemed as a violation against the FTL.
   

Summarized by Chiu, Chia-Yun; Supervised by Lin, Gin-Lan