January 2022
Julian Lai
The Fair Trade Commission (hereinafter, the “FTC”) rendered the Gong-Chu-110081 Disposition of December 2, 2021, holding that Perquiss Co., Ltd. (hereinafter, “Perquiss Co.”) violated Article 25 of the Fair Trade Law (hereinafter, the “Law”) for using the word “Dreambed” contained in the company name of Dreambed Co., Ltd. (hereinafter, “Dreambed Co.”), a competitor, in keyword advertising and for concurrently presenting the word “Dreambed” and the website link of Perquiss Co. in the keyword advertisement, which are obviously unfair acts that exploit the fruits of labor of others and are sufficient to undermine trading order. In addition, a fine of NT$100,000 was imposed.
Reasons of the FTC’s findings
According to the disposition, the brand of the mattresses sold by Perquiss Co. is “ModelQ.” From February 2 to March 16 of 2021, Perquiss Co. used the company name of its competitor in keyword advertising. When the consumers entered “Dreambed” in the Google search engine, the search results would include the keyword advertisement, which indicated that “recommending ModelQ anti-mite and anti-bacterial mattresses – anti-mite and anti-bacterial plus multi-layer composite pressure-reducing materials” with the website link of Perquiss Co. indicated on top of the heading.
According to the disposition, the purchase of a keyword advertisement that used the company name “Dreambed” of its competitor by Perquiss Co. is prone to cause Internet users to believe that ModelQ is a mattress brand or sub-brand of Dreambed Co. and is recommended by Dreambed Co. and to mislead that the two are derived from the same sources or have a certain connection so that the consumers previously searching Dreambed Co. are guided to the website operated by Perquiss Co., thus reducing the complainant’s opportunity to reach potential customers and undermining the economic interest embedded in the company name of Dreambed Co. Since this undermines the trading order of the mattress market in violation of Article 25, a fine of NT$100,000 was imposed.
Points to note for this case
First of all, in past cases involving illegal keyword advertising, the keywords used were mostly company names that the consumers had been familiar with or had enjoyed certain goodwill due to the considerable marketing resources committed by the companies. In this case, however, the deposition further concluded the complainant “had made a significant degree of effort” and “had enjoyed a certain economic interest in the market” merely on the ground that the complainant had been licensed by the trademark owner to use “Dreambed.” The criteria were looser than before.
In addition, as to whether this case met the threshold of being “sufficient to undermine trading order”, which triggers intervention by the authority, within the meaning of Article 25 of the Law, the FTC only held that since the keyword advertisement at issue was clicked on 25 times in total, the consumers who previously sought to search “Dreambed” were indeed directed to the website operated by the entity subject to the disposition, and the complainant’s opportunity to reach potential customers was reduced as a result. Therefore, the FTC further held that this had undermined the trading order of the domestic mattress market.
Based on the foregoing, it is worthy of continued attention that the rendition of the disposition seems to suggest that the FTC’s law enforcement position concerning the use of a competitor’s company name in keyword advertising is getting tougher and tougher.