Mr. Li and Huah Jenn Machine Co., Ltd.

Case:

Key Words:

warning letter, authentication report, pre-procedural action

Reference:

Fair Trade Commission Decision of November 18, 2009 (the 941st Commissioners' Meeting), Disposition Kung Ch'u Tzu No. 098166

Industry:

Textile, Apparel and Leather Production Machinery Manufacturing (2924)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1. This case originated with a complaint letter reporting that Mr. Li and Huah Jenn Machine Co., Ltd. sent two warning letters in the form of attestation letters regarding a patent infringement to two of the complainant's clients on February 19, 2009. There were not any patent documentations or infringement authentication reports enclosed in the two letters. The sender of the letters simply accused the complainant of infringing upon the new domestic patent No. M306593 owned by the sender. The letters also alleged that the complainant had ceased using such patent and requested the letter recipients not to continue using any such products purchased from the complainant to avoid any liability of compensation. The complainant claimed that Mr. Li and Huah Jenn Machine Co., Ltd. violated the Fair Trade Law by engaging in a conduct that was sufficient to affect the trading order.

2. Findings of the FTC after investigation:
   (1)The letters in question as provided by the complainant contained only the name of "Li XX" but not "Huah Jenn Machine Co., Ltd." It was also found that these letters to the complainant's two trading partners did not contain any statements involving Huah Jenn Machine Co., Ltd. Huah Jenn Machine Co., Ltd. also denied any participation or knowledge of these letters. Mr. Li admitted that he himself sent the attestation letters to the complainant and its trading partners to claim his own patent rights which were unrelated to Huah Jenn Machine Co., Ltd. The action in question here should be attributed solely to Mr. Li. Mr. Li was entitled to make products by himself or licensing others to do so with the patent rights he owned. Since the products might enter the market at any time, though the letters were sent in the capacity of an individual, his actions may still create impacts upon market competition of this industry competition. As a result, Mr. Li should still be subject to the Fair Trade Law.
   (2)Mr. Li respectively sent two attestation letters to two of complainant's trading partners on February 19, 2009. Mr. Li claimed in the letters that after the complainant was informed of the infringement of patent rights, it ceased using the product, "water saving device for high-temperature dyeing machines," as improved by the complainant and purchased by the two companies. Mr. Li further requested these two companies not to continue using the patented product in question to avoid any liability of compensation. It was found that Mr. Li did not submit the subject of Patent No. M306593 to any professional agency for authentication or obtain any authentication report. Neither was he granted a court decision with regard to the infringement of his patent rights, which was admitted by the respondent. It was also found that the warning letters in question did not provide any definite contents, scope of the patent rights, nor any concrete facts of the alleged infringement.

3. Grounds for disposition:
   The conducts of Mr. Li's sending patent warning letters, failing to submit the subject of Patent No. M306593 to any professional agency for authentication or obtain any authentication report, failing to obtain a final court decision proving the patent right infringement, and failing to adopt any pre-procedural actions set forth in Items 3 and 4 of the FTC Guideline were not the proper behaviors to exercise one's patent rights at all and should be culpable in terms of commercial ethics. These conducts were obviously unfair and sufficient to affect the trading order, in violation of Article 24 of the Fair Trade Law. Mr. Li was therefore imposed with an administrative fine of NT$50,000.

Summarized by Peng, Wei-Cheng; Supervised by Wu, Lieh-Ling