Two Patentees

Case:

Key Words:

warning letter, calcium sulfate, bone void filler

Reference:

Fair Trade Commission Decision of July 18, 2012 (1080th Commissioners' meeting), Disposition Kung Ch'u Tzu No. 101087

Industry:

Manufacturers of Other Medicinal Chemical Products (2009)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1. AG Digital Technology Corp. (hereinafter referred to as AG Digital Technology) and others informed the FTC that Central Medical Technologies Inc. (hereinafter referred to as Central Medical Technologies) had sent a legal attest letter in the name of patentees A and B on March 2, 2011 and a lawyer's letter on March 21, 2011 to every large medical institution claiming that the way the medical institutions applied calcium sulfate bone void fillers could constitute an infringement of their patent and demanded the medical institutions to request a letter of guarantee from their suppliers. The informers thought that the letters were beyond friendly warnings. In fact, they were an accusation of misconduct in business competition and ethics. The conduct was obviously unfair and in violation of Article 24 of the Fair Trade Law.
2. Findings of the FTC after investigation:
   (1) AG Digital Technology thought that Central Medical Technologies had to be the party issuing the said letters since the patentees had licensed Central Medical Technologies to use and manage the patent in question. However, the investigation showed that three letters had been issued between March and April of 2011. During that period, Central Medical Technologies was not yet the licensee of the patent in question. Further findings indicated that the letters had been sent by patentees A and B, and they also admitted it when they were invited to present their statements at the FTC. Therefore, the letters had been sent by the patentees and Central Medical Technologies had nothing to do with it.
   (2) The legal attest letter sent by the patentees between March 1 and 18, 2011 merely pointed out that medical institutions and physicians would be infringing their patent if they used their patented method to apply bone void fillers during bone surgeries, and it did not accuse the informer and medical institutions of infringement of their patent when applying injectable bone void fillers. However, as the objective of the lawyer's letter issued between March 25 and 31, 2011 was "hereby requesting your hospital to notify all bone doctors to stop performing any surgery using 'injectable bone void fillers" and "if your hospital does not give any concrete response within 5 days, related evidence will be presented and a lawsuit will be filed against your hospital and the director of the Department of Orthopedics without further notification." The aforesaid wording was a serious warning and at the end of the letter it was added that that the hospital could request for a letter of guarantee from suppliers promising that there would be no infringement of the patent in question. Then, a second lawyer's letter was issued on April 21, 2011 to repeat the demand for presentation of a letter of guarantee.
3. Grounds for disposition:
   (1)Without presenting any concrete evidence of infringement, the patentees demanded through the lawyer's letters 173 medical institutions to request their bone void filler suppliers to provide an affidavit to assure that there was no patent infringement. The wording in the warning letters could easily make the recipients believe the informer and others had probably infringed the patent in question. Furthermore, before sending out the warning letters, the patentees had not taken any preliminary procedure to confirm that their patent had been infringed at all. Hence, the conduct could not be considered a justifiable measure taken to exercise their rights according to the Patent Act.
   (2) Meanwhile, the findings of the investigation also showed that about 23.80% of the recipients of the warning letters had indeed requested for an explanation or affidavit from their suppliers after receiving the letters. The impact on trading order was thus apparent. Therefore, the sending of warning letters by the patentees was obviously unfair conduct able to affect trading order in violation of Article 24 of the Fair Trade Law. The FTC imposed an administrative fine of NT$50,000 on each of the patentee.

Summarized by: Lin Hsiao-Hung; Supervised by: Lin Gin-Lan