FTC Targeted Free Riders on Famous Companies’ Good Will

The Fair Trade Commission (FTC) has constantly punished enterprises for free riding famous companies’ good will, and even requested such enterprises cease using their registered company names.

The FTC recently punished Taiwan Tanabe Food, Co. for free riding good will of famous Taiwan Tanabe Seiyaku Co., Ltd. Although Taiwan Tanabe Food, Co. registered its company name with MOEA in compliance with Corporation Law, the FTC ruling such behavior would reap the fruits of efforts from others and constitute unfair competition. The FTC pointed out that registration of a company name does not exclude the application of the Fair Trade Law. If use of a registered company name shows obvious facts of free riding or the marketing advertisement misleads the consumers to believe that the company is another famous enterprise, it is likely to violate the Fair Trade Law.

The competent authority for registration of company names is the MOEA, which has long tended to allow registration of similar names for different companies, as long as those companies are in different fields of business. Such a practice produced a number of companies with similar names, and resulted in consumer confusion as to whether those companies are associated or affiliated with the same business conglomerate. From the FTC’s resent sanctions on free riding behaviors, it is indicated that the FTC intended to affirmatively interferes with the regulation on unfair competition causes by company name registration.