Float-Tek International

1267th Commissioners' Meeting (2016)

Case:

Float-Tek International was complained for violating the Fair Trade Law by unjustifiably sending warning letters

Keyword(s):

Warning letter, patent

Reference:

Fair Trade Commission Decision of February 17, 2016 (the 1267th Commissioners' Meeting)

Industry:

Manufacture of Boilers, Metal Tanks and Pressure Containers (2531)

Relevant Law(s):

Article 19(i) in effect at the time of the conduct and Article 25 of the Fair Trade Law

Summary:

1. Full Most Co. Ltd. (hereinafter referred to as Full Most) filed a complaint about Float-Tek International Co., Ltd. (hereinafter referred to as Float-Tek International) sending a warning letter on November 14, 2015 to its agent Beijing Rongxin Heda Technology Co., Ltd. (hereinafter referred to as Beijing Heda) in Mainland China concerning the brick-style honeycomb floating discs Beijing Heda has purchased from Full Most in 2012. The letter accused that Beijing Heda had no right to purchase and use without the consent of Float-Tek International because the patent in China for such "oil tank floating roof" devices was owned by Float-Tek International. Full Most thought Float-Tek had violated the Fair Trade Law by sending the warning letter.

2. Findings of the FTC after investigation and grounds for disposition:

   Inventor and patentee are two different concepts. Only patentees may claim to own patents. The patent in question was issued in Mainland China and the representative of Full Most and a third party were registered as the patentees. Float-Tek International was not one of the registered patentees at all. Even if Float Tek International contested that Full Most had obtained the patent illegally, the dispute would be over the ownership of the said patent and both parties should have taken measures stipulated in the Patent Act to seek the resolution and related remedies. Such matters were not subject to the Fair Trade Law. Since Float-Tek International was not the owner of the patent in question, 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" should not apply in this case. Another finding revealed that Float-Tek International had sent the warning letter on November 14, 2014 to protect its own rights. As there were still many competitors in the relevant product market, Float-Tek International only had limited market power and would not be able to impose any restriction on market competition. Besides, Full Most did not provide any concrete evidence to show Beijing Heda, its trading counterpart in the Mainland China market, had refused to do further business after receiving the warning letter from Float-Tek International. In fact, Full Most admitted that Beijing Heda was still its general agent. For this reason, the FTC found it difficult to conclude the warning letter was able to affect the trading order in the relevant market. In other words, with existing evidences, it was impossible to conclude that Float-Tek International had violated Article 19(i) of the Fair Trade Law in effect at the time of the said conduct and Article 25 of the current Fair Trade Law by sending the warning letter. However, to prevent the company from breaking the law or affecting the trading order on the relevant, the FTC still issued a written warning to remind Float-Tek International to abide by regulations set forth in the Fair Trade Law.