Tien Hong Co., Ltd. violates the Fair Trade Law by improper issuing the warning letters of patent infringement

Case:

Tien Hong Co., Ltd. violates the Fair Trade Law by improper issuing the warning letters of patent infringement

Key Words:

patent infringement warning letters, patent rights, warning letter

Reference:

Fair Trade Commission Decision of March 18, 2004 (the 645th Commissioners’ Meeting); Disposition (93) Kung Ch’u Tzu No. 093031

Industry:

Other Non-metallic Furniture and Fixtures Manufacturing (1419)

Relevant Laws:

Article 24 of the Fair Trade Law

1. This case originated with a complaint letter from Seng Fong Furniture Co., Ltd. (hereinafter called “Seng Fong”) accusing Tien Hong Co., Ltd. (hereinafter called “Tien Hong”) of issuing patent infringement warning letters to Seng Fong with a copy to the Eastern Home Shopping Network (hereinafter called “EHSN”), one of Seng Fong’s downstream trading counterparts. In those letters, Seng Fong was accused of having infringed upon the patent rights to Tien Hong’s New Utility Model Patent No. 112835 “Spring mattress with clip wrinkle prevention,” and was requested to cease the infringement and to provide a settlement proposal within seven days after receipt of the letter. Tien Hong thus allegedly violated Articles 19(i) and Article 24 of the Fair Trade Law (FTL).
2. Findings of the Fair Trade Commission (FTC) after investigation:
   1. Tien Hong shifted from its former position as Seng Fong’s supplier of mattress body products and entered the spring mattress manufacturing market, becoming one of Seng Fong’s competitors, in April and May of 2002.
   2. Around September or October 2002, Tien Hong saw Seng Fong’s spring mattress product on the EHSN cable television channel and believed that the product was likely to infringe upon its rights. Tien Hong purchased a mattress from EHSN, conducted a comparison, and concluded that the features of the product are exactly the same as those of its product within the scope of patent claims in the Patent Gazette.
   3. Tien Hong engaged Yang Cheng International Patent and Trademark Office (Yang Cheng) to handle the infringement matter. Yang Cheng in its turn issued a letter to Seng Fong on November 20, 2002, stating that the features of Seng Fong's product were exactly the same as those Tien Hong’s New Utility Model Patent No. 112835 “Spring mattress with clip wrinkle prevention,” and requesting it to cease the patent infringement. Yang Cheng annexed to the letter a photocopy of the Patent Gazette, and explained the details and scope of its patent rights and the facts of infringement by Seng Fong. However, Yang Cheng failed to exercise its professional due care and directly issued a copy of the letter to Seng Fong's trading counterpart, EHSM.
   4. Tien Hong, on November 20 and 26, 2002, issued patent infringement notifications to Seng Fong, to which Seng Fong responded by letter respectively on November 22 and December 10 of the same year. Copies of all letters above were also sent to EHSN.
3. Grounds for disposition:
   It was true that Tien Hong annexed a photocopy of the Patent Gazette to the patent right infringement warning letters with a clear account of the details and scope of its patent rights and of the facts of infringement, giving the recipients a basis on which to make a reasonable judgment. However, knowing that Seng Fong manufactured the product in question, Tien Hong did not follow the advance notification procedures under the FTC Guidelines on the Reviewing of Cases Involving Enterprises Issuing Warning Letters for Infringement on Copyright, Trademark, and Patent Rights. Instead, it issued letters to Seng Fong with a copy to one of the latter's downstream trading counterparts, namely, EHSN. The concurrent issuance of letters was a reprehensible breach of business competition ethics and constituted an obviously unfair act capable of affecting trading order under Article 24 of the FTL. Accordingly, the FTC, pursuant to the forepart of Article 41 of the same law, ordered Tien Hong to immediately cease the aforesaid violation.
   

Appendix:
Tien Hong Co., Ltd.’s Uniform Invoice Number: 23259037

Summarized by Lin, Chia-Hua; Supervised by Wu, Bi-Ju