TIPS^®  Taiwan Intellectual Property Special

Microsoft Taiwan Reached an Administrative Settlement with the FTC

Subsequent to the December 2002 of our TIPS, reporting the Administrative Settlement between the Fair Trade Commission in Taiwan (FTC) and Microsoft Taiwan (Microsoft), regarding the alleged Fair Trade Law violation by Microsoft Taiwan. Microsoft proposed a “Proposal for Administrative Settlement” (the Proposal) on December 9, 2002. The FTC found the content of the Proposal did not achieve the goal of fair trade and failed to ensure public interests, and requested a supplement submitted before January 6, 2003.

Microsoft responded by the due date, agreeing a price cut on its software, but the FTC was still dissatisfied with the offer. Therefore, the FTC proposed its settlement conditions, and proceeded the negotiation with Microsoft based thereon. Legal counsels of Microsoft met representatives from the FTC on February 21 to negotiate the settlement, and, after a 30-hour discussion, they reached an agreement.

Microsoft proposed its final settlement solution on February 25, which was accepted by the FTC on February 27. The conditions include a price cut by an average of 26.7 percent, individual sale of the components of Office Software, and sharing the Window source code. The FTC will supervise Microsoft's execution of the settlement agreement. In the 5-year term, if Microsoft breaches the agreement, the FTC will immediately terminate the agreement and resume the anti-trust investigation.Related Business Should Be Taken into Concern in Determining a “Famous Mark”

YHI International (Taiwan) Co., on October 23, 1997, filed a trademark application for “Viper prestigious and Device,” designated to use on tires, alloy wheels, mobiles and motorcycles, and components thereof. The application was approved by the TIPO as Approval No. 840269. During the publication period, Daimler Chrysler initiated an opposition action against the registration, reasoning that “VIPER” is a famous mark in the automobile industry, and that YHI’s use of VIPER as the major part of the trademark on automobile related goods would cause likelihood of confusing in the mind of the consumers. The Taiwan Intellectual Property Office (TIPO) dismissed the opposition, and Chrysler appealed.

The Taipei High Administrative Court (THAC) concluded, although the evidence used to determine a famous mark is not limited to evidence established in Taiwan, the determination should be made based on whether the public in Taiwan regards the mark as famous. VIPER sports cars are expensive, and only one or two cars can be found in Taiwan. Chrysler has never engaged in promotion of the car. The facts indicated that the car is not commonly seen in Taiwan. Moreover, even if Chrysler’s “VIPER” trademark was registered in Taiwan in 1985, it does not evidence that the “VIPER” trademark had became commonly known by the public before YHI filed the trademark application at issue in 1997. Therefore, “VIPER” is not a famous mark under the Taiwan Trademark Law.

However, after Chrysler’s further appeal, the Supreme Administrative Court ruled in 91-Pan-2221 Judgement that a “famous mark” shall mean a mark that is commonly recognized by related business and consumers. The decision below concerned only the public, which is not the same as “related business and consumers.” The Supreme Court pointed out that whether the mark is commonly recognized by the related business and whether the mark is commonly recognized by consumers are different in degree. The THAC failed to define the scope and nature of the related business and to determine whether the mark is recognized by the related business. Therefore, the THAC erred in determining the mark is not a famous mark. The decision is vacated and remanded.