Rayee Tech. Ltd.

Case:

Key Words:

lawyer's letter, patent, trading order

Reference:

Fair Trade Commission Decision of December 7, 2011 (the 1048th Commissioners' Meeting), Disposition Kung Ch'u Tzu No. 100242

Industry:

Other Electronic Parts and Components Manufacturing Not Elsewhere Classified (2699)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1. The FTC received a letter complaining that Rayee Tech. Ltd. (hereinafter referred to as the Accused) posted on its website on July 23, 2010 a statement claiming that Guan Show Technology Co., Ltd. (hereinafter referred to as the informer) had infringed its patent while between January and March of the same year it had also sent to auto supply dealers a document requesting them to "eradicate piracy" and also carrying the warning that "investigation is under way to collect evidences." The accused had not taken the alleged proof of patent infringement to any professional institution for appraisal before sending out the said document to the downstream clients of the informer. By making the said clients panic, the accused achieved the purpose of unfair competition and was in violation of the Fair Trade law.
2. Findings of the FTC after investigation:
   (1) On August 10, 2010, Com-Shine Technology Inc. received from the accused a lawyer's letter claiming that the design of Southstar GPS680 and GPS818 speed radar detectors that Com-Shine was selling had infringed its patent and should be taken off its shelf to avoid patent disputes.
   (2) Six businesses that had received the lawyer's letter (or fax sheets of the letter) were requested to describe the document and its impact. Some of them admitted that they, after receiving the said warning letter, made the decision to return the products, cancel their orders, and switch to new trading counterparts for similar products.
3. Grounds for disposition:
   The use of its website and sending of the lawyer's letter by the accused to condemn the informer (a competitor) as infringing its patent met the definition of the "act of issuing a warning letter by an enterprise" in Point 2 of the Fair Trade Commission Disposal Directions (Guidelines) on the Reviewing of Cases Involving Enterprises Issuing Warning Letters for Infringement on Copyright, Trademark, and Patent Rights. Although Rayee Tech. Ltd. had filed a civil compensation claim and won the case in the first trial at Kaohsiung District Court before sending the warning letter, the only product referred to in the Zhi-Tzu Verdict No. 27 from the said court in 2006 was a Dragon split system radar detector (Dragon Best 9090) which was not the same as the GPS 1688, MDB 2000, or GPS 555 of the Guan-X series or the GPS 680 or GPS 818 of the Southstar series. As the products of the aforesaid series had not been confirmed by any court as involving patent infringement before the warning letter was sent out and neither had the accused taken the alleged proof of patent infringement to any professional institution for appraisal and attached the appraisal report to the letter, the conduct could not be regarded as proper exercise of patent right. At the same time, the lawyer's letter the accused sent out did cause the trading counterparts of the informer to take the products at issue off their shelves or return them to the informer and some of the said trading counterparts also admitted having made the decision to switch to Rayee Tech. Ltd. for supply. The conduct had indeed misled the said trading counterparts and affected the trading order of the corresponding market. Therefore, it was deemed obviously unfair conduct able to affect trading order in violation of Article 24 of the Fair Trade Law. Acting according to Article 41 of the same law, the Commission ordered Rayee Tech. Ltd. to immediately cease the unlawful act and at the same time imposed on the company an administrative fine of NT$300,000.

Appendix:
Rayee Tech. Co., Ltd.'s Uniform Invoice Number: 27777406

Summarized by: Liu, Yu-chuan; Supervised by: Wu, Lieh-Ling