LiYi Shop International Co., Ltd.

Case:

Liyi Shop International Co., Ltd. violated the Fair Trade Law for issuing notice on intellectual property right infringement to auction websites and then sending suggested price lists to urge those suspected of infringement to comply with suggested prices to avoid price competition

Key Word(s):

Auction website, notice on intellectual property right infringement, suggested list price

Reference:

Fair Trade Commission Decision of June 5, 2013 (the 1126th Commissioners' meeting); Disposition Kung Ch'u Tzu No. 102081

Industry:

Retail Sale via Mail Order Houses or via Internet

Relevant Law(s):

Article 19(iv) of the Fair Trade Law

Summary:

1. The FTC received from private individuals complaints stating that Liyi Shop International Co., ltd. (hereinafter referred to as Liyi Co.) had first issued a notice to auction websites where the said individuals were selling parallel imports of Nillkin cell phone cases and claimed that such sales were an intellectual property right infringement. As a consequence, the Nillkin product web pages of the said individuals were removed by the auction sites. However, the said individuals then received emails from Liyi Co. identifying itself as the agent for Nillkin in Taiwan and requesting them to sell the Nillkin products according to the suggested prices list provided in the email; otherwise, they would no longer be allowed to use the trademark and the product pictures from Nillkin. To avoid receiving further notice on intellectual property right infringement and having their auction website accounts suspended as a result, the said individuals had no choice but to raise the prices.
2. Findings of the FTC after investigation:
   

   Liyi Co. identified itself as the agent for the cell phone accessories in question and issued a right infringement notice to auction websites to point out controversial web pages. After reviewing the company registration and proof of intellectual property rights presented by Liyi Co., the auction websites removed all the web pages that Liyi Co. claimed to be involving in right infringement. Then, Liyi Co. sent an email containing a suggested prices list to sellers whose web pages had been removed and warned that its price review would be conducted weekly and those failing to comply with the prices it suggested would be disallowed to post the trademark and product pictures from Nillkin.

3. Grounds for disposition:
   

   Auction websites had the regulation that the seller's account would be suspended if a number of infringement notices were received. In fact that the web pages of the seller who received the infringement notice had been removed. It proved that the notice from Liyi Co. did make the recipient be afraid that there would be further infringement notices leading to suspension of their accounts. Therefore the individual sellers had cooperated with Liyi Co. and raise their product prices. In other words, the conduct of Liyi Co. did scare those who received the notices. It led the sellers to make decisions against their will and thus create a restraint on the freedom of competitors to determine their prices. It met the description of "improper means" set forth in Article 19(iv) of the Fair Trade Law. Although Liyi Co. contested that it had not force the recipients of the notices to comply with the price suggestions, the email did stress that the company would continue to perform its price review widely and it was hoped that the recipient could sell their products at suggested prices so that price competition could be avoided. In other words, the notice and the email were not sent only for the purpose of intellectual property right protection, but a measure to prevent sellers from engaging in price competition or to force them to stick to the suggested prices. In conclusion, the FTC considered that the conduct of Liyi Co. of issuing the intellectual property right infringement notices to auction websites and then sending emails containing the suggested prices list was an improper means to force others not to engage in price competition. It was an act of competition restriction or impediment to fair competition in violation of Article 19(iv) of the Fair Trade Law. In addition to ordering the company to cease its unlawful act, the FTC also imposed on it an administrative fine of NT$100,000.

Appendix:
LiYi Shop International Co., Ltd.'s Uniform Invoice Number: 28519363

Summarized by Chou, Huang-Chun; Supervised by Liou, Chi-Jung