Global Sun Technology Inc. violates of the Fair Trade Law by improperly issuing warning letters

Case:

Key Words:

warning letter, wireless router

Reference:

Fair Trade Commission Decision of May 20, 2004 (the 654th Commissioners' Meeting)

Industry:

Other Electronic Parts and Components Manufacturing Not Elsewhere Classified (2799)

Relevant Laws:

Article 19(i), 19(iii), 19(v),22 and 24 of the Fair Trade Law

Summary:

Cybertan Technology Inc. (hereinafter called "Cybertan Inc.") filed a complaint alleging that Global Sun Technology Inc. (hereinafter called "Global Sun Inc.") sent letters to the complainant's downstream customer in the US, the Linksys Group Inc., (hereinafter called "Linksys Inc.") stating that the complainant’s "wireless router" product infringed upon its patent rights. In addition, Global Sun Inc. took advantage of joint development opportunities with Cybertan Inc. to obtain the complainant’s research and development technology, and applied to the patent authority for patents with said technology. This act obviously involved the use of improper methods to infringe on Cybertan Inc.’s patent application rights and obtain said company’s technical secrets, in violation of Articles 19(i), 19(iii), 19(v), 22 and 24 of the Fair Trade Law (FTL).
Findings of the Fair Trade Commission (FTC) after investigation:
1. Global Sun Inc. assigned an US attorney to send the letter to the US Linksys company with the intent of asserting its claim on the US patent rights and requesting cessation of infringement. This cannot be said to constitute a boycott action "for the purpose of injuring a particular enterprise," and hence did not satisfy the requirements for illegality specified in Article 19(i) of the FTL. Furthermore, the letter involved in this case solely stated that the "wireless router" sold by Linksys Inc. infringed upon the respondent’s patent rights and urged Linksys Inc. to take note of this situation. Consequently, in consideration of the respondent's motivation, intention, and means, it cannot be determined immediately whether the letter in question was intended to cause a competitor's trading counterpart to purchase from the sender of the letter, and it also cannot be determined whether this violated Article 19(iii) of the FTL.
  Moreover, the complaint letter explicitly stated that the technical characteristics of the product in this case had been published on the US Federal Communications Commission’s (FCC’s) public website. Whether the technology in question "possesses secrecy" is therefore in doubt. The two parties in this case originally were involved in the joint development of the product in question, and commissioned a relevant organization to perform system integration testing. Both parties had to be aware of the product's relevant technology at this stage of cooperation to perform joint development. Even if the two parties subsequently had a falling out, and the respondent continued to use its original technology to develop new products, and even acquired patent rights on that basis, it did not use coercion, inducements, or other improper methods to obtain the complainant's business secrets, customer data, or other relevant technical secrets.
  Accordingly, the actions in question are not consistent with the constitutive requirements of Article 19(v) of the FTL.
  Subjectively, it cannot be asserted that the warning letter in which Global Sun Inc. claimed its US patent rights constituted the use of improper means to achieve competitive superiority, and there is no evidence to determine such action was sufficient to damage the business reputation of a particular enterprise. Therefore, Article 22 of the FTL shall not apply.
2. Since the patent infringement warning letters in this case was both sent and received within US territory, the recipient was a US enterprise, the rights claimed by the respondent in its letter were rights exercised in accordance with the US patent laws, the relevant product market was also overseas, the actions in question are clearly insufficient to have any effect on domestic market order. The warning letter sent by the respondent was received by a foreign company, and the content of the letter expressed the US patent holder's concern that infringement had occurred in the US market, all of which shall be legitimate, from the point of view of domestic market order and overall competitive order. The respondent's action of sending the letter cannot be said to violate the requirements set forth in Article 24 of the FTL regarding the deceptive or obviously unfair conduct affecting the trading order.
In summary, based upon the available evidence, it cannot be found that the respondent violated Articles 19(i), 19(iii), 19(v), 22, or 24 of the FTL through its issuance of the aforementioned warning letter regarding patent infringement.

Appendix:
Cybertan Technology Inc.’s Uniform Invoice Number: 16594892
Global Sun Technology Inc.’s Uniform Invoice Number: 86180733

Summarized by Hwu, Jishyan; Supervised by Wu, Pi-Ju

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