Charng Shun Trading Co., Ltd.

1258th Commissioners’ Meeting (2015)

Case:

Charng Shun Trading violated the Fair Trade Law for posting false advertisements when marketing the “Alstrong hex bolt extractor L wrench set”

Keyword(s):

Wrench, advertisement, patent

Reference:

Fair Trade Commission Decision of December 16, 2015 (the 1258th Commissioners’ meeting), Disposition Kung Ch’u Tzu No. 104131

Industry:

Manufacture of Metal Hand Tools (2511)

Relevant Law(s):

Article 21(1) of the Fair Trade Law

Summary:

1. Charng Shun Trading Co., Ltd. (hereinafter referred to as Charng Shun Trading) marketed the “Alstrong hex bolt extractor L wrench set” and the prints on the packaging claiming that “Taiwan 198032”, “Germany Patent and Trademark Office Patent No. 203 03 312.4” and “European Union Intellectual Property Office Patent No. 001769027-0001”. In the meantime, on the company website of Charng Shun Trading, “Taiwan 198032”, “Germany Patent and Trade Mark Office Patent No. 203 03 312.4” and “European Union Intellectual Property Office Patent No. 001769027-0001” were also posted. However, the FTC’s investigation result revealed that the said patents in Taiwan and Germany had already expired. Furthermore, the product in question had never been acquired the patents. The FTC also found out that the application for the patents had been on May 22, 2002. According to Article 114 of the Patent Act, the patents had expired. Therefore, it was false advertising.

2. Findings of the FTC after investigation:

   Charng Shun Trading provided the funds to design and produce the advertisement itself and posted the advertisement on its company website as well as printed it on the packaging of the product. The Taiwan patent had expired on May 21, 2014. Though the German patent certificate did not indicate the patent expiration date but the patentee indicated that the patent had expired. Obviously, Charng Shun Trading had not checked whether the patents were still valid before posting the advertisement.

3. Grounds for disposition:

   (1)	Charng Shun Trading had produced and posted the advertisement itself to attract customers and make profits from the sale of the product. Therefore, the company was the advertiser.
   (2)	The posting and printing of “Taiwan 198032” and “Germany Patent and Trademark Office Patent No. 203 03 312.4” gave the receivers the impression that the product had indeed been patented both in Taiwan and Germany, and the patents were still valid and any competitors who copy the design would become in violation of the Patent Act. The practice had deterred competitors as well as misled consumers to believe the product patents were still valid and the performance or quality was better than unpatented products. However, the Taiwan patent had expired on May 21, 2014. Although the patent certificate from Germany did not indicate the patent expiration date, the patentee confessed that the patent had also expired. Hence, the advertisement was inconsistent with the facts.
   (3)	Based on the above findings, the FTC concluded that the wording of “Taiwan 198032” and “Germany Patent and Trademark Office Patent No. 203 03 312.4” posted in the advertisement by Charng Shun Trading to support the claim of the “Alstrong hex bolt extractor L wrench set” being a patented product was a false, untrue and misleading representation with regard to the quality of the product at issue and in violation of Article 21(1) of the Fair Trade Law. The FTC therefore imposed an administrative fine of NT$50,000 on the company according to the first section of Article 42 of the same law.