In compliance with Article 19 of the Company Law, all companies should complete registration procedures with the Ministry of Economic Affairs (MOEA) before running a business. The Chinese name of the company is required when registering with the government and serves as a symbol and an identification of the company, the same as the name of a natural person. Once the name has been approved and the registration procedure completed, can such a name can still violate Fair Trade Law by means of unfair competition.

The “symbol” referred to in Article 20 of the Fair Trade Law is as an identification of the origin of particular product or service and allows consumers or relevant enterprises to distinguish them from products or services offered by others and must have inherent distinctiveness or secondary meaning. The symbol of product or service includes trademarks, business or company names, and outer appearance (trade dress) of the product or package. If the symbol has become well known to relevant enterprises or consumers, other people should not use the symbol in the same or similar manner to the extent of causing confusion. Such confusing use is against the subject point of law. As a result, even if a company name has been registered by the MOEA, having passed the pre-check, if the company name is identical or similar to a commonly known product or service and causes confusion, the Fair Trade Law will prohibit such usage.

As to the meaning of “commonly known” of the above-mentioned product or service, most consumers and relevant enterprises should acknowledge the fame of such product or service. To measure the degree of fame, the following non-exhaustive aspects are taken into consideration: the amount of advertisements, duration of sale, market share, and exclusivity. If the product or service fails to reach such standard, it will not meet the requirements of Article 20 in the Fair Trade Law.

The legal effect of violation Article 20 of the Fair Trade Law:

1. Administrative and criminal provisions

Article 35 of the Fair Trade Law provides both administrative and judicial sanctions. If there is a violation of the article, the Fair Trade Commission will, pursuant to Article 41 cease or rectify such infringing conduct or take other necessary corrective action. In addition, the FTC may assess upon such enterprise an administration penalty of not less than fifty thousand nor more than twenty-five million New Taiwan Dollars. And if such enterprise continues the action, or fails to take necessary corrective action after the lapse of the prescribed period, the Commission may continue to order the enterprise to cease the action. If the enterprise pursues the same or similar violation again, the actor shall be punished by imprisonment of not more than three years.

2. Civil liability

Articles 30 to 34 of the Fair Trade Law provides that the injured party may demand the removal of such infringement; and the enterprise that infringes upon the rights and interests of another shall be liable for the damages arising there from. If the violation is intentional, penalty not exceeding three times the amount of damages will be awarded and the injured may request the content of the judgment to be published in a newspaper at the expenses of the infringing party.

To assert the violation of Article 20, the following three elements must be present. First, the symbol of the product and service shall be well known to relevant enterprises and consumers. Second, the symbol shall be used in the same or similar manner. Last, the use of the symbol shall cause confusion. In some recent cases, although the defendants had completed registration procedure, their company names were regarded as symbols of other products and services. Furthermore, those companies used such symbol to confuse relevant enterprises and consumers, as the result and according to the Court’s opinion, the defendants were considered to violate Article 20 of the Fair Trade Law.

However, if the infringed symbol is not famous, in other words, the symbol does not meet the requirement of Article 20 of Fair Trade Law, is use thereof legal?

Such use depends on the use and the situation of infringement. If the actions constitute “taking a free ride”, constituting unfair competition, such action will violate Article 24 of the Fair Trade Law, which states that “no enterprise shall otherwise have any deceptive or obviously unfair conduct that is able to affect trading order.”

Conclusion

The purpose of the Fair Trade Law is primarily in maintaining trading order, protect consumer’s interests and ensure fair competition. The profit of a business should be derived from hard work and diligence, not by taking advantage of other famous symbols to improve the business. Even if the name of the company was registered after completion of the administrative procedure, if the usage of such name causes confusion with other symbol or company names, it may not be considered as normal usage or in good will so may violate the Fair Trade Law. The Court can ask the defendant to change the registered company name on the demand of the infringed party. As a result, people who are going to apply for company registration should be careful in these respects.

(Author: Daniel CHEN is a paralegal in Tai E International Patent & Law Office. He received LL.B. degree at Soochow University in 2003 and was admitted to Chung Yuan Christian University to study his master's. Mr. Chen is now assisting the Dispute Resolution Group to perform legal research as well as its administrative affairs.)