Criminal judgment in a private prosecution filed by Hey-Song Corporation against Song Chien-min for suspected violation of the Fair Trade Law

Taiwan

Case:

Criminal judgment in a private prosecution filed by Hey-Song Corporation against Song Chien-min for suspected violation of the Fair Trade Law

Key Words:

right to exclusive use of a trademark, free riding, salty sarsaparilla

Reference:

Taiwan High Court Criminal Judgment (89) Shang Yi Tzu No. 206

Industry:

Non-alcoholic Beverage Industry (1183)

Relevant Laws:

Articles 20 and 35 of the Fair Trade Law

Summary:

1. Plaintiff's complaint
   Song Chien-min (the defendant), the responsible person of Taiwan Tina Enterprise Co., Ltd., knew that the "HEY-SONG & Gold and White Stripe Design" trademark was registered with the National Bureau of Standards (the Bureau was subsequently renamed the Intellectual Property Office) by the Hey-Song Corporation (the plaintiff), in March 1993, for the period 1 March 1993 to 15 July 2001. In addition, the defendant knew that the Hey-Song Sarsaparilla product (the Hey-Song product), using the aforementioned registered trademark, was sold favorably on the market, and was a leading and well-known brand among the general public. Yet, beginning in 1997 and with the intent to counterfeit, the defendant manufactured the Mr. Zebra Salty Sarsaparilla product (the Mr. Zebra product) packaged in an aluminum can and sold throughout Chinese Taipei including many convenience stores and large retailers in Taipei. The similarity between the product appearance of Mr. Zebra and the Hey-Song product's registered trademark in terms coloring (gold and white elliptical stripe design on coffee brown background) and size was likely to cause hurried consumers to make mistaken purchases when detailed product identification at the time of purchasing were not allowed. As a result, a complaint against the defendant was filed by consumers, which brought the counterfeiting behavior to the plaintiff's attention. The plaintiff subsequently filed a complaint with the Fair Trade Commission (the "Commission"). The Commission investigated and found that the defendant plagiarized the coloring and design of the plaintiff's trademark, took a free ride on its goodwill, and unduly reaped the fruits of its selling efforts. The Commission thereby found that this act was obviously unfair and likely to affect the trading order, and disposed against the defendant. As a result, the plaintiff alleged that the defendant had also committed the offense prohibited under Article 62(1) of the Trademark Law.
   
    
2. Defendant's reply
   The Mr. Zebra & Design trademark was registered by Taiwan Tina, which was operated by the defendant. Based on the premise that the integrity of the original trademark would not be altered, Taiwan Tina used a gold and white stripe design trademark on the can of the Mr. Zebra product. That alteration should not constitute alteration of the use of the trademark. In addition, the two-coloring stripe design was registered with the Copyright Committee under the Ministry of the Interior (MOI). The plaintiff filed a complaint requesting that the two-coloring stripe design be cancelled, but the request was rejected. Therefore, the defendant had not plagiarized the plaintiff's trademark.
   
    
3. Reasons of the judgment
   (1)The HEY-SONG & Gold and White Stripe Design had already been registered as a trademark by Hey-Song Corporation, and was used on the packaging can of the Hey-Song product produced and marketed in Chinese Taipei. The two-coloring stripe design of the Mr. Zebra & Design trademark registered by Taiwan Tina consisted of the coloring black and white. This could be evidenced by the trademark registration certificates of the two companies, and their application and approval documents submitted to the Intellectual Property Office (IPO) under the Ministry of Economic Affairs (MOEA). The Mr. Zebra product produced by Taiwan Tina and packaged in the aluminum can bore no coloring in the original application documents but was altered into a two-coloring stripe design consisting of a gold and white stripe design.
   (2) According to Article 62(1) of the Trademark Law, a party who, with intent to defraud others, uses a trademark that is identical or similar to another person's registered trademark on the same or similar goods, has infringed on its exclusive trademark rights. As to the question of whether the container, packaging, appearance, and coloring of the two actual products are identical or similar to the extent that it will cause confusion with another person's trademark, it is an issue under the applicability of Article 20(1) of the Fair Trade Law and is irrelevant to the consideration of whether another person's exclusive trademark rights has been violated.
   In a complaint, it was alleged that the work "two-coloring stripe design" (#80135) in this matter registered by Taiwan Tina with the MOI had plagiarized or reproduced the plaintiff's HEY-SONG & Design (#353353). It was requested that the work be invalidated. The MOI found that although the two trademarks were similar in that they were both expressed in terms of wave patterns, there also were obvious differences between them: The Hey-Song & Design was simple and concise whereas the two-coloring stripe design was repeated, overlapping, and complicated. They were also different in terms of proportion, degree of arch, orientation, and position of black coloring. The application for invalidation was rejected because the two-coloring stripe design did not plagiarize or reproduce the plaintiff's Hey-Song & Design. The two-coloring stripe design was not the same as the Hey-Song & Design; it did not plagiarize or reproduce the trademark. It possessed originality, and it was copyrighted with the MOI. Even though the defendant altered the coloring of the two-coloring stripe design to gold and white, the alteration would not affect the finding that the two trademarks were not the same. Accordingly, the altered gold and white two-coloring stripe design used on the Mr. Zebra product's aluminum can was not identical to the registered trademark of another person.
   There was also the question of whether the defendant's trademark, which was altered to gold and white, was similar to the plaintiff's, as shown in the attachments. The defendant argued that the two-coloring stripe design used the coloring black, and the defendant self-effectuated an alteration of the two-coloring stripe design of the Mr. Zebra product to gold and white. In addition, it argued that because the "actual appearance of the containers of the product" used a coloring and design similar to the plaintiff's registered trademark, consumers would be likely to confuse its product with the plaintiff's. The plaintiff argued that its right to the exclusive use of a trademark had been infringed upon as illustrated in the attachments.
   However, in the letter of July 21, 1999, ref. Chih Shang 980 Tzu No. 215368, the Intellectual Property Office suggested that once a trademark is registered, it is inadvisable to arbitrarily change its composition or make additions of symbols to the registered trademark on the consideration of avoiding superceding the protected scope of trademark right and affecting the rights and interests of others. When an applicant self-effectuates alteration of the coloring of a trademark's preliminary approval or registration, although this constitutes alteration of use, only the use of a registered trademark with self-effectuated alteration causing the trademark to become similar to another person's registered trademark for the same or similar goods constitutes grounds for cancellation of the trademark's preliminary approval or registration. According to Article 5 of the Trademark Law, a trademark is composed of words, pictures, symbols, combinations of coloring, or a combination thereof. Thus, a trademark is only a two-dimensional combination of words, patterns, and the like, and does not include the appearance or design packaging of a three-dimensional container.
   The defendant's registered trademark, Mr. Zebra, (#814110) also features the Mr. Zebra design in addition to the two-coloring stripe design. Although the trademark used by the defendant on the Mr. Zebra product was altered to gold and white, the same coloring as the stripe design coloring in the attachments submitted by the plaintiff, when the coloring designs of the two trademarks are separated from the aluminum cans and compared at different times, at different places, the designs are obviously different apart from colors. No consumers with the common knowledge and experience, and having exerted the normal level of attention would possibly be confused. Therefore, the trademarks are not similar.
   In addition, apart from that the defendant's trademark has a two-coloring stripe design, it bears the words "Mr. Zebra" and design. When the defendant's trademark with the two-coloring stripe design and the words "Mr. Zebra" are used on the container of the defendant's product, the trademark should constitute the configuration of the use of a trademark. Although the coloring was changed, yet the trademark does not constitute a "similar trademark" under the Trademark Law.
   Considering the Commission's disposition ref. (89) Kung Ch'u Tzu No. 019, although it indicated that the defendant was in violation of the effective Article 20(1)(i) of the Fair Trade Law when the act occurred, it found merely that the defendant used the appearance, design, coloring, and so forth, of the Hey-Song product, which was universally known to the related general public, on the Mr. Zebra product that the defendant had sold in 1997, causing confusion regarding the two products among consumers. The Commission did not find that the Mr. Zebra product had used the trademark of another person, which was universally known to the related general public. Therefore, the defendant did not infringe on the plaintiff's registered trademark.
   (3) In sum, the Commission found that the defendant did not use a trademark that was identical or similar to another person's registered trademark on the same or similar goods. So, its act did not constitute injury of exclusive trademark right pursuant to Article 62(1) of the Trademark Law. Even if the defendant altered the coloring of its own registered trademark and used it on its Mr. Zebra product, causing the size, color, and other symbols of the container to become integrated, when observed in terms of its overall appearance, the product would not be likely to cause confusion with respect to the plaintiff's products. Considering the above statements, the defendant's act did not constitute an infringement of exclusive trademark right. In addition, in the absence of conclusive evidence proving that the defendant committed the offense of injury of exclusive trademark right, the allegation cannot be sustained.
   (4) In the disposition ref. (89) Kung Ch'u Tzu No. 019, the Commission found that the defendant used the appearance, design, and coloring of the Hey-Song product's container, which was universally known to the related general public, on the Mr. Zebra product it sold in 1997, causing confusion regarding the two products constituting a violation of Article 20(1)(i) of the Fair Trade Law; and that it should be punished pursuant to Article 35 of the Fair Trade Law then in force when the act occurred. Yet, after the occurrence of the act, Article 35(1) of the Fair Trade Law was amended on February 3, 1999 to be applicable only to parties whose acts had violated Article 20(1) of the Fair Trade Law, and who had failed to cease or change its conduct, or adopt necessary corrective measures within a specified time period ordered by the central competent authority pursuant to Article 41 of the Fair Trade Law. Hence, according to the post-amendment provisions of the Fair Trade Law, only when the enterprise violating Article 20(1) of the Fair Trade Law had been ordered to cease or change conduct, or to adopt necessary corrective measures, and had fails to so comply within the specified time period would it be punished. Before issuing the disposition ref. 019 in 2000, the Commission found that the defendant's act was in violation of Article 24 of the Fair Trade Law. But, it did not order the defendant to cease or change conduct, or adopt necessary corrective measures on the grounds that the defendant was in violation of Article 20(1) of the Fair Trade Law in force when the act occurred. Therefore, pursuant to the post-amendment provisions of law in then force when the act occurred, the Taiwan High Court lacked the ground to impose fines on the defendant pursuant to the Fair Trade Law.

Appendix:
Hey-Song Corporation's Uniform Invoice Number: 20651901
Taiwan Tina Enterprise Co., Ltd.'s Uniform Invoice Number: 96870666

Summarized by Chiu Shu-fen
Supervised by Hsu Chao-ying