Chen Kung Saddles Limited violates the Fair Trade Law by faxing the Taiwan Nantou District Criminal Court subpoena to the trading counterparts of its competitor

Case:

Chen Kung Saddles Limited violates the Fair Trade Law by faxing the Taiwan Nantou District Criminal Court subpoena to the trading counterparts of its competitor

Key Words:

criminal court summon, fax, trademark

Reference:

Fair Trade Commission Decision of June 24, 2004 (the 659th Commissioners’ Meeting)

Industry:

Plastic Sheets, Pipes and Tubes Manufacturing (2101)

Relevant Laws:

Article 24 of the Fair Trade Law

1. Cionlli Industrial Limited and Chen Kung Saddles Limited are both manufacturers of bicycle saddles in Taiwan. Based on alleged violations by Cionlli Industrial Limited against the Trademark Act, Chen Kung Saddles Limited initiated a private criminal prosecution at the Nantou District Court on July 3, 2003. Then starting from July 14, Chen Kung Saddles Limited began faxing the criminal court summon (adding notations “Cionlli Industrial Limited as the defendant”, “please respect intellectual property rights”) to trading counterparts of the complainant, in violation of the Article 24 of the Fair Trade Law (FTL).
2. Findings of the Fair Trade Commission (FTC) after investigation:
   1. While Article 24 of the FTL indicates that “in 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”, the Article regulates as a general rule for unfair competitive behavior, and thus Article 24 shall be applicable only as a supplementary provision. In reference to the “Principles Governing the Application of Article 24 of the FTL” passed by the 528th Commissioners’ Meeting, a breach against the rules of Article 24 shall be determined on whether the tactics of competition are deceptive or obviously unfair, and whether the efficient market competitive functionality has been damaged. “Deceptive” as used in Article 24 refers to acts of engaging in trade with trading counterparts by misleading them through active deception or through passive concealment of material trading information; and “Obviously unfair” as used in Article 24 refers to engaging in competition or commercial transactions by obviously unfair means.
   2. It was found that on July 14 and August 1, 2003, the respondent Chen Kung Saddles Limited faxed the Taiwan Nantou District Criminal Court subpoena to Carol Cycle Industrial Co., Ltd. and Kenstone Metal Co., Ltd., adding notations of “Cionlli Industrial Limited as the defendant”, “please respect intellectual property rights”. The complainant asserted that the act was intended to undermine the complainant’s business reputation, for the respondent made it known to the complainant’s trading counterparts of the trademark law suits, where the complainant was the defendant, without giving more details for verifying the facts. However, the aforementioned criminal court subpoena distributed by the respondent was for the recipient to confirm that a law suit was in progress at the court, and did not mislead to a belief that Cionlli Industrial Limited had been found guilty by the court. Although Chen Kung Saddles Limited added language such as “please respect intellectual property rights” unto the fax, it is still not a substantial accusation that “another enterprise has infringed its copyright, trademark, or patent rights”. The addition of notations such as “Cionlli Industrial Limited as the defendant” and “please respect intellectual property rights” were insufficient to alter the format or meaning of the criminal court subpoena. Therefore, the contents of the said fax were not considered to be false or misleading for the trading counterparts. Moreover, the bicycle saddles produced by Cionlli Industrial Limited were accused by Chen Kung Saddles Limited of infringing its registered trademark #895907 “Pure Gel”, and Chen Kung Saddles Limited did initiate a private criminal prosecution at the Nantou District Court on July 3, 2003. The complainant also admitted to have received the Nantou District Court subpoena on July 10, 2003, thus the complainant is considered to have already been notified of the law suit prior to the fax being sent to Carol Cycle Industrial Co., Ltd. and Kenstone Metal Co., Ltd., and may not claim as not having an appropriate chance for defensive actions.
3. In conclusion, since the respondent Chen Kung Saddles Limited has not engaged in trade with trading counterparts by misleading them through active deception or through passive concealment of material trading information, and has not engaged in competition or commercial transactions by obviously unfair means, it cannot be held as a violation against Article 24 of the FTL.

Summarized by Lin, Chia-Ti; Supervised by Lin, Gin-Lan