Jane Tsai
The Intellectual Property Court rendered the 104-Min-Kong-Su-5 Civil Decision of February 2, 2016 (hereinafter, the “Decision”), holding that the Defendant had rushed to register a device (hereinafter, the “Device at Issue”) created in an attempt to imitate and plagiarize as a trademark (hereinafter, the “Trademark at Issue”) and issued warning letters to downstream distributors of the Plaintiff, i.e., the rights holder who created the Device at Issue, to request that the goods printed with the Device at Issue be taken off the shelf. As a result, the Plaintiff’s distributors and dealers dared not sell goods printed with the Device at Issue. Asserting that the Defendants’ acts of issuing warning letters undermines market competition, the Plaintiff sought joint and several damages in the amount of NT$1 million plus interest from the Defendants in accordance with Article 19, Paragraph 1, Subparagraph 1, Article 22, Article 24 and Article 31 of the Fair Trade Law before it was amended on February 4, 2015.
In this Decision, it was held that the Defendant only issued warning letters to the Plaintiff’s distributors, without concurrently informing the Plaintiff, based on the Device at Issue used by the Defendants in an attempt to imitate and plagiarize. As a result, the Plaintiff could not explain to its trading counterparties at the first time. According to general trading practices, trading counterparts receiving trademark infringement warning letters tend to become fearful or even refuse to trade. This is an expectable outcome according to the rule of thumb. That the Defendant actively engaged in such deceptive acts was likely to undermine trading order. Such deceptive acts were not legalized by the Defendants’ rushed registration of the Trademark at Issue, which was intended to imitate or plagiarize another trademark. According to the above explanation concerning Article 19, Paragraph 1 and Article 24 of the Fair Trade Law, the Defendants obviously violated Article 19, Paragraph 1 and Article 24 of the Fair Trade Law before amendment.
The Defendant asserted as follows. The postal demand letters did not mention that the Plaintiff had infringed the Defendant’s trademark rights. Since the Defendant owns the Trademark at Issue, issuing warning letters was part of normal exercise of rights. In this regard, the Decision cited the 98-Pan-1479 Decision of the Supreme Administrative Court. According to such decision, Article 45 of the Fair Trade Law provides that this law does not apply to the normal exercise of rights under the Copyright Law, the Trademark Law or the Patent Law. Therefore, if intellectual property rights holders may address the likelihood of infringement upon their intellectual property rights by exercising their rights with justification pursuant to relevant intellectual property laws, and the Fair Trade Law does not apply. However, if the rights are not exercised with justification or if the rights are abused or exercised in violation of the principle of good faith to the extent of undermining trading order, this will constitute an act of abusing intellectual property rights and thus should be subject to the Fair Trade Law.
Therefore, this Decision contains the following findings. It is not true that obtaining the Trademark at Issue always meets the trademark registration requirements under the Trademark Law. The Defendant was also clearly aware of the rushed registration of the Trademark at Issue. In addition, the Fair Trade Law seeks to maintain trading order and promote fair competition. Therefore, when a trademark owner exercise its trademark rights, such exercise shall not violate the Fair Trade Law to avoid undermining fair trading order. This is the objective of Article 45 of the Fair Trade Law before amendment. In this matter, the Defendant concealed, in an actively deceptive manner, the fact that it had rushed the registration of the Trademark at Issue in its warning letters, in violation of Article 24 of the Fair Trade Law. Pursuant to Paragraph 4 of the 2012 Principles for Handling Warning Letters, the criteria for justified exercise of rights could not be constituted, not to mention that the Defendant also failed to prove that it had informed the Plaintiff, who might have infringed the Trademark at Issue, in advance or concurrently, as part of the preliminary procedure to exclude infringement. Therefore, the Defendant’s assertion that it exercised its rights with justification was not acceptable.