Judgment on case between Umax and Hung You involving claim to cease infringement
Chinese Taipei
Case:
Judgment on case between Umax and Hung You involving claim to cease infringement
Key Words:
patent rights, ceasing infringement, scanners
Reference:
Supreme Court Civil Judgment (87) T'ai Shang Tzu No. 2828
Industry:
Manufacturing of Data Processing Equipment (3141)
Relevant Laws:
Summary:
The two parties, Hung You and Umax are domestic manufacturers of scanners. In October and November 1996, at the time Hung You was in the process of applying for public listing in the stock market, Umax made statements through the media that Hung You's products, Paragon 600IISP (model number MFC-600S) and Paragon 800SP (MFS-8000SP) infringed on Umax's new utility model patents relating to color scanners. Hung You alleged that Umax knew the statements to be false and further alleged that Umax's actions damaged Hung You's sales, business reputation and plans for listing on the securities market. The laws allegedly violated include Articles 22, 24, 30, and 34 of the Fair Trade Law (FTL), and Articles 18(1), 184 and 195 of the Civil Code.
Hung You requested that the court order Umax to allow Hung You to produce, sell, display, import or otherwise dispose of the aforementioned products as well as advertise and promote the products in catalogs, trade shows, seminars or other promotional activities. Hung You also asked that Umax be ordered to refrain from using means other than judicial process to interfere with Hung You's listing activities and to refrain from making any public statements that the products of Hung You infringe on its new utility model, patent number 92088. Finally, Hung You asked that Umax, at its own expense, poses a front page ad with the size of 25 x 36 cm in the Commercial Times and Economic Daily for one day, stating the content of the decision by the court of first instance.
Umax on the other hand stated that it was a legitimate exercise of its patent rights and was not in violation of the FTL.
In accordance with the judgment rendered by the High Court, Umax and Hung You are two domestic firms engaging in the manufacturing of scanner. It is undisputed by Umax that it had in its press releases on October 28 and November 4, 1996, alleged that Hung You's aforementioned products had infringed on its patent. As a result, the allegation was widely published in a number of newspapers, which could be evidenced by the copies of the releases by Umax and the newspapers. The High Court pointed out that in order to realize the economic benefits derived from its creation or invention, the patentee has the right to exclude others from using the technology in its patent during the fixed period granted pursuant to the Patent Law. But when the exercise of this exclusionary right went beyond the proper exercise of right in the Patent Law, or even was used to impede market competition, Article 45 of the FTL is applicable.
The High Court also found that Umax made the accusation of patent infringement against Hung You based on a patent infringement assessment report prepared by Wan Kuo Patent & Trademark Office (Wan Kuo) and financed by Umax. As Wan Kuo is not an agency specializing in patent assessment, its report can not be treated as one issued by an impartial and objective patent assessment agency. Without having verified the alleged infringement through appropriate procedures, Umax's press releases were not in compliance with the law. As the allegation was reported by a number of newspapers and consumers reading the news reports had no means by which to verify the accuracy of the allegation, it would be difficult for them to make reasonable judgments. As such, the conduct of Umax meets the requirements of Article 24 of the FTL, which proscribes activities that would adversely affect trading order or are patently unfair. In addition, intention is not a prerequisite for the violation of Article 24 of the FTL. Even though Umax did not commit the violation intentionally, it is sufficient to say that Umax is negligent in making the allegation. It still constitutes a violation of Article 24. Therefore, the request for compensation from Umax by Hung You pursuant to Articles 30 and 34 of the FTL should be upheld.
Except for the press release stating that Hung You had infringed on its patents, Umax did not engage in other activities that would impair or interfere with the production, sale, display or disposition of the products in question. Accordingly, the High Court concludes that there is no basis to uphold Hung You's claim pursuant to Article 30 of the FTL that Umax be ordered to permit Hung You to engage in those activities described above.
The Supreme Court considers that the scope of obligations set out in the conclusion of a judgment must be clear. Since the High Court only upheld part of the judgment by the District Court against Umax, the rest of the judgment relating to Hung You's request that Umax permit Hung You to produce, sell etc. the products in question should be overruled. However, the High Court still ordered Umax to pose an advertisement bearing the whole District Court judgment on the newspapers. This creates a contradiction between the conclusion and the reasons in the judgment and thereby is a violation of the relevant laws.
The Supreme Court finds that Umax contested at the District Court that its press release regarding the patent infringement by Hung You is mandated by law. According to Article 36(2)(ii) of the Securities Exchange Law and Article 7 of its Enforcement Rule, a company that issues shares to the public is required to make an announcement, within two days, and report to competent authority of any important matter that might affect the rights of shareholders or the value of the shares, including any event arising out of litigation, non-litigious, or administrative action, that has a substantial impact on the finances or operations of the company.?Therefore, Umax was obligated by law to disclose to the public and report to the Security Exchange Commission the fact that it was involved in a patent infringement dispute. The content of the press release was a statement of the fact that legally needed to be disclosed and did not violate the Fair Trade Law. Umax's assertion is an important defense that was closely related to the determination of whether its behavior has violated Article 24 of the FTL, which condemns activities that would affect trading order or were patently unfair. This Court finds that the High Court failed to elaborate on this defense and made a decision against Umax without so considering, which is a judgment made in lack of reasons and is a violation of the relevant laws.
Summarized by Ch'iu Shu-fen
Supervised by Ch'en Hui-p'ing
Appendix:
Umax Data Stst Emx, Inc. Uniform Invoice No. 22624873
Hung You Technologies Limited Company's Uniform Invoice No.: 23117191