Newsletter
RIGHT TO EXPLOIT A FAMOUS COMPANY NAME
A highly controversial issue in practice has been that of whether the mere registration of a com-pany name with a distinctive portion identical to that of a previously registered company name, violates Articles 20 or 24 of the Fair Trade Act.
In a 2004 civil appeal judgment upholding a 1999 appeal judgment of the Taiwan High Court, the Supreme Court noted that the Company Act explicitly provides that a later-registered com-pany may use the same name as that of a previ-ously registered company if it is active in a dif-ferent field of business, and if distinctive addi-tional wording is used in its name, such as wording to designate the different field of busi-ness activity; and that if such wording is used, the name of the later-registered company should be deemed not to be identical or similar to that of the previously registered company. Therefore, the Court held that only if the later-registered company were engaged in active deception as referred to in the Principles Governing the Ap-plication of Article 24 of the Fair Trade Act (FTA), sufficient to mislead relevant sections of the public into believing that the two companies concerned were the same company, affiliated companies, or otherwise connected in their business activities, such that trading counterparts were likely to mistake the source of goods or services, would such registration constitute de-ceptive or obviously unfair conduct sufficient to affect the orderly conduct of trade, in violation of Article 24 of the FTA.
Accordingly, to determine whether the registra-tion of a company name with a distinctive por-tion identical to that of a previously registered company that is generally known to relevant enterprises or consumers, violates Article 24 of the FTA, it is necessary to consider whether there has been a deliberate attempt to take improper advantage of the previously registered com-pany's commercial reputation or to confuse the public.
In its judgment, the Court also cited Article 18 Paragraph 2 of the Company Act prior to the amendments of 12 November 2001 (''If compa-nies engaged in different fields of business ac-tivity use identical names, the name of the later-registered company shall include distinc-tive additional wording. If the names of two companies designate different fields of business activity, their company names shall be deemed not to be identical or similar''); Article 18 Para-graph 1 of the Company Act (''The name of a company may not be identical to the name of another company. If the names of two compa-nies include designations of different fields of business activity or other distinctive wording, they shall be deemed not to be identical''); Arti-cles 11 and 12 of the Rules for Examination, Approval and Reservation of Company Names and Scope of Business, announced by the Min-istry of Economic Affairs on 26 June 1992 (The question of whether the names of companies engaged in the same field of business activity are identical or similar should be examined on the basis of the distinctive portions of their names. But if companies' names designate different fields of business activity, then even if the dis-tinctive portions of the names are identical or similar, the names should be deemed not be identical or similar. Examination of similarity between company names should be based on whether there is a likelihood of confusion in the course of ordinary objective trade). Article 14 Paragraph 1 of the Principles for Handling Cases Governed by Article 20 of the Fair Trade Act also states: "Where two company names specify different types of business, it shall not be con-sidered 'identical or similar use' as that term is used in Article 20 of the Act."
The Court stated that the above citations are sufficient to show that the legislators and the competent authorities, taking into account the norms of business activity within society, con-sider that if companies in different fields of business activity bear the same name, but their names include wording designating different fields of business activity, their use of such names will not cause the possibility of confusion in the course of ordinary objective trade, and therefore the names should not be considered to be identical or similar. In other words, the law permits different companies to use the same name as long as their names include wording to distinguish their different fields of business ac-tivity.
The Court also stressed that the protection of intellectual property rights involves a compro-mise between the public interest and the indi-vidual private interest of the intellectual property rights holder. Thus the types of intellectual property rights that are recognized must be de-fined by law, and cannot be freely created. The only categories of intellectual property rights currently recognized under ROC law are copy-right, trademark rights, patent rights, trade se-crets, and integrated circuit layouts, each of which is protected by related legislation. But such protection does not extend to a ''right to exploit the fame'' of a famous company name. In the absence of such explicit protection under the law, to hold that a company's using the same name as a famous company in a different busi-ness without the latter's consent should be re-garded as an injury to the famous company's property interests in its ''right to exploit its fame'' so as to contravene Article 24 of the FTA would not only run counter to the legislative spirit of Article 18 of the Company Act, but would also be an overextension of the protection of exclu-sivity in company names, going beyond the leg-islative intent of the FTA's provisions against unfair competition.
The Court has evidently set very strict limits on the protection of famous company names. This is likely to have a substantial impact on the hearing of similar cases in future.