A complaint filed against the American Genesis Microchip Corporation for improperly disseminating false accusation letters that affect the business reputation of another and may have violated the Fair Trade Law

Chinese Taipei

Case:

Key Words:

Display controller chips, TSU series products, exclusion order, warning letter

Reference:

Fair Trade Commission Decision of May 11, 2006 (the 757th Commissioners’ Meeting), Letter Kung Er Tzu No. 0950004406 of May 19, 2006

Industry:

Semi-conductors Manufacturing (2710)

Relevant Laws:

Article 19 , Subparagraph 1, Article 19, Subparagraph 3, Article 22, and Article 24 of the Fair Trade Law

Summary:

1. This case originated from a complaint filed by MStar Semiconductor, Inc., indicating that its company and the American Genesis Microchip Corporation are competitors in display controller chips market. Genesis filed an accusation with the U.S. International Trade Commission (hereinafter referred to as “ITC”) earlier alleging that the complainant has infringed upon its patented product. The ITC issued an order to embargo imports of the aforementioned products of MStar into the US in the preliminary determination of April 2004 and the final determination of August 2004. MStar redesigned the disputed products after learning about the preliminary determination in April 2004 and successfully researched and manufactured new products that were not related to the patent at issue. Also, the said new products have complied with the certification methods indicated in the ITC’s order, passed US Customs’ certification and could be imported into the U.S. Unexpectedly, Genesis by means of attaching PDF files to electronic mails sent out false accusation letters in December 2004. Without any references, Genesis alleged in the letters that the complainant’s display controller chips have infringed its patent and the complainant should prove that the new designed chips did not infringe its patent rights. Therefore, it can be deemed that Genesis may have violated the provisions of Article 19, Subparagraph 1, Article 19, Subparagraph 3, Article 22 and Article 24 of the Fair Trade Law.
2. Upon the investigation, the Fair Trade Commission (FTC) deemed that the first, second and forth paragraph of the letters at issue were indeed statements of facts. The main contention of the first paragraph was that Genesis is the patentee of US patent number 5739867, the stipulations of ITC’s determination and exclusion order. The second paragraph was statements concerning the report and successive clarification made by DigiTimes on TSU series products of MStar. A list of authorized representative companies was included in the forth paragraph. Genesis contended in the third paragraph that MStar has burden of proof that its new products were excluded from patent infringement and responsible for the application of exclusion order’s alteration. The third paragraph was subjective view of Genesis on the patent litigation. A deliberation of the letters showed that the said letters were Genesis’s response to clarify market rumors. The letters at issue in this case is different from the nature of “warning letter” as defined in the aforementioned decision guidelines. Genesis as the party concerned of this case sent out letters explaining the relevant details of ITC’s litigation and the successive developments to its clients. Based on its subjective recognition about facts, Genesis as the patentee feared that the relevant news reports may harm its rights and interests, and thus sent out the letters at issue to personal e-mail. It is still difficult to conclude that Genesis has intentionally sent out the letters because of “for the purpose of injuring such particular enterprise” or “causing the trading counterpart(s) of its competitors to do business with itself by other improper means”. Hence, it is yet difficult to conclude that Genesis has violated the provisions of Article 19, Subparagraph 1, and Article 19, Subparagraph 3 of the Fair Trade Law.
3. Exactly as above-mentioned, the contents of the letters at issue were probably for the protection of the patentee’s rights and interests of patent, or a response to the report of DigiTimes, or explanations of the case to the clients, or expression of opinions on the relevant patent litigation. Hence, with regard to the statement of facts that made from the subjective recognition, it is still difficult to say that the letters were sent out “on account of the purpose of competition”, thus it is still different from the requirement stipulated in Article 22 of the Fair Trade Law. Additionally, it is found that this case was a transnational patent litigation. Furthermore, both newspapers and the Internet had reported and given comments on the said patent right litigation beforehand. The relevant parties concerned may obtain information through public channels or inquired both parties involved in the accusation before the letters at issue were written. Considering the act of Genesis as an opportunity to give the public an explanation on the relevant dispute and necessarily to safeguard the company, it is still difficult to say that such act of issuing the letters was obviously unfair. Moreover, the FTC found that the recipients of the letters at issue were all individual staffs of particular departments. The companies of these staffs may not know about the said e-mails. The letters will not affect trading between both parties even if their companies knew about it. Therefore, it is still difficult to conclude that there is a violation of Article 24 of the Fair Trade Law.

Summarized by: Ma, Ming-Ling;
Supervised by: Lin, Gin-Lan