Warning letters must conform to Fair Trade Commission warning letter guidelines

IP owners must take care when issuing warning letters to trading counterparties in Taiwan. Two Taiwan Supreme Administrative Court decisions have confirmed that IP owners are required to follow the preliminary procedures set forth in the Guidelines on the Review of Cases Involving Enterprises Issuing Warning Letters for Infringement on Copyright, Trademark and Patent Rights, published by Taiwan’s Fair Trade Commission (FTC), when issuing warning letters to assert rights or to request the cessation of infringement. If the sender does not comply with the guidelines, the act of issuing a warning letter will be deemed to violate Article 24 of the Fair Trade Law  if such an act is deceptive or obviously unfair and affects the trading order (97-Pan-Zi No 437 and 95-Pan-Zi No 93). 

The FTC will order violators to cease, rectify their conduct or take necessary corrective action within a specified timeframe, and may also impose a fine of between NT$50,000 and NT$25 million. If the violator fails to comply with the FTC's order within the specified timeframe, the FTC may continue to order that it take the necessary action, and each time it is obliged to issue such an order may successively impose an additional administrative penalty of between NT$100,000 and NT$50 million until the violator complies.

Further, according to Articles 31 and 32 of the Fair Trade Law, the violator will be liable for damages arising from its act and a court may, taking into consideration the nature of the violation, award damages that exceed the actual damages if the violation is deemed to have been intentional. However, the award granted cannot exceed three times the amount of actual damages proven.

The main points of the warning letter guidelines may be summarised as follows:

• The guidelines apply to the issuance of:
  • Warning letters.
  • Notification letters.
  • Attorney letters.
  • Open letters.
  • Advertisements or public notices.
  • Other written materials sufficient to inform a trading counterparty or potential trading counterparty.
• A warning letter issued subsequent to confirmation that the sender’s rights have been infringed, through one of the following procedures, constitutes proper exercise of rights pursuant to the Copyright Law, Trademark Law or Patent Law: 
  • A copyright, trademark or patent right infringement ruling has been issued by a court of first instance.
  • A determination of copyright infringement has been issued by the Copyright Review and Mediation Committee after conciliation.
  • The allegedly infringing article has been submitted for assessment by a professional infringement assessment institution and an assessment report has been obtained; and the potentially infringing manufacturer, importer or agent has been notified either beforehand or simultaneously regarding the issuance of a warning letter and has been requested to cease such infringement.
  • The enterprise has availed itself of procedures for obtaining legal remedy beforehand or exercised all reasonably possible due diligence with respect to the notification; or alternatively, such notification was objectively impossible or there is concrete evidence that the party being notified already knows of the infringement claim.
• Enterprises that have not violated Articles 19, 21, 22 and or 24 of the Fair Trade Law shall be deemed to have properly exercised their rights pursuant to the Copyright Law, Trademark Law or Patent Law when issuing warning letters to:
  • Request the allegedly infringing manufacturer, importer or agent to cease the infringement either beforehand or simultaneously with the issuance of the warning letter.
  • State clearly the precise content and scope of its copyright, trademark or patent rights, and identify the concrete facts of infringement in the warning letter (eg, the time and place for the rights at issue, the production process, uses, sale or import), so that the recipients have sufficient knowledge that the rights at issue are possibly being infringed.
    
    In each case, the enterprise must have availed itself of procedures to obtain a legal remedy beforehand or have exercised all reasonably possible due diligence with respect to the notification; or altermatively such notification must have been objectively impossible or there must be concrete evidence that the party being notified already knows of the infringement claim.

These requirements differ from the applicable requirements  in other jurisdictions. Many enterprises have filed complaints with the FTC regarding warning letters received by trading counterparties from competitors. IP owners should thus keep the guidelines in mind when planning to assert their rights or to request the cessation of infringement by issuing a warning letter to trading counterparties in Taiwan.