2018.2.8
Sean Liu
The Intellectual Property Court rendered the 106-Min-Gong-Shang-2 Civil Decision of February 8, 2018 (hereinafter, the “Decision”), holding that potential competitors refer to those who may enter the market for competition and may pose competitive pressure on existing players in the market.
According to the facts underlying this Decision, the Plaintiff filed a complaint asserting that it was a company incorporated in the US by a Taiwanese born in the US and created a tea brand called KUNFUTEA, which was a trademark registered in the US and Taiwan. US presidential candidate Hillary Clinton patronized one of the Plaintiff’s stores before. “Hand-made Kung Fu Tea” operated by the Defendant had no connection with the Plaintiff, even though the Defendant continuously released news about Hillary Clinton’s visit to the Plaintiff’s store in New York on the media. Therefore, the Plaintiff asserted that the Defendant had deliberately exploited the goodwill which the KF Tea USA Inc. had invested in, operated and used for many years to promote the Defendant’s own goods or services and enhance the opportunities for selling its own tea products. Since this was an improper anticompetitive act, the Plaintiff filed a complaint to seek damages and restore its reputation.
According to the Decision, all competitors including current or “potential” competitors are entitled to remedies under the Fair Trade Law in order to achieve the legislative objectives of ensuring free and fair competition under the Fair Trade Law. The so-called “potential competitors” should refer to competitors who may potentially access the market to compete, in addition to incumbent competitors, and who will put competitive pressure on incumbent players in the market after the scope of relevant markets are defined based on two dimensions, namely, the product market and geographic market.
It was further pointed out in this Decision that the Plaintiff had set up dozens of branch stores through licensing and franchise in the US and had registered and obtained a trademark for the “Kung Fu Tea” series in Taiwan and could enter the tea beverage market in Taiwan by setting up directly operated stores, licensing the trademark to another person or seeking franchisers back in Taiwan at any time within the term of the trademark, provide the same products and services as those provided by Hung Ming Co. and put competitive pressure on incumbent players in the market. In addition, the facts that the US presidential candidate Hillary Clinton consumed a bubble tea at a store of the Plaintiff and was widely covered on the media have greatly enhanced the publicity of “Kung Fu Tea”.KUNGFUTEA store and praised its wonderful taste, and that such event was extensively covered by domestic and overseas media further boosted the awareness of the US KUNGFUTEA brand in the Taiwan market. Therefore, it was concluded based on the foregoing reasons that the possibility of the Plaintiff’s future entry to the tea beverage market in Taiwan did exist, and that there were “potential competitive relations” between the Plaintiff and the Defendant.
It was further held in this Decision that the Defendant’s citation of the news about Ms. Hillary Clinton constituted a deliberate act of unfair competition. The Defendant was required under this Decision to pay damages to the Plaintiff in the amount of NT$3 million and publish a summary of the facts set forth in the Decision in newspapers for one day.