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ACTUAL HARM NOT NECES-SARY FOR INVOKING FTA AR-TICLE 24
In a recent judgment overturning a judgment of the Taipei High Administrative Court, the Su-preme Administrative Court stated that for a business to import or offer for sale counterfeit copies of well known goods in itself constituted an "act sufficient to affect the orderly conduct of trade" in violation of Article 24 of the Fair Trade Act. It was not necessary that actual harm had occurred. In other words, the act of importing counterfeit goods alone violated the FTA, even if such goods had not been sold.
On 18 September 2002, Sanrio Taiwan Co., Ltd., a subsidiary of Sanrio of Japan, filed a complaint with the Fair Trade Commission against OWK First Enterprise, Ltd. for allegedly importing and offering for sale goods that imitated Sanrio's "Hello Kitty" design, in violation of Articles 20 and 24 of the Fair Trade Act as then in force. In its defense, OWK asserted that although the goods it had imported were counterfeit, their importation was only a precursor to actions that might "affect the orderly conduct of trade". The goods concerned had been detected and seized by the police after their importation, and had not entered the market; thus there had been no pos-sibility for them to effect the orderly conduct of trade.
After investigating the complaint, the FTC de-termined that OWK had indeed improperly pla-giarized the appearance and form of "Hello Kitty" goods, thereby exploiting the fruits of another's labor, in a manner sufficient to affect the orderly conduct of trade. The FTC ordered OWK to immediately cease such actions, and imposed an administrative fine of NT$200,000. OWK contested the FTC's decision by bringing an administrative suit in the Taipei High Ad-ministrative Court, which held in a 2003 judg-ment that before fining an enterprise for a de-ceptive or obviously unfair competitive act in violation of the FTA, the FTC must prove that the enterprise concerned had engaged in com-mercial transactions in a deceptive or obviously unfair manner, and that there had been a likeli-hood of the orderly conduct of trade being af-fected. The fact of an enterprise's engaging in a deceptive or obviously unfair competitive act was not in itself enough to justify the application of Article 24 of the FTA; the act concerned must be serious enough to affect the orderly conduct of trade. They must be likely to cause harm to competitors or consumers. Based on this rea-soning, the court revoked the FTC's decision.
The FTC the appealed to the Supreme Adminis-trative Court, and the Supreme Administrative Court reversed the lower court's judgment. The Supreme Administrative Court stated that the legislative intent of Article 24 of the FTA was to protect the orderly conduct of trade and assure free and fair competition. If actions could be held to have violated Article 24 only if they had resulted in actual harm, it is impossible to achieve the article's legislative purpose. For Ar-ticle 24 to effectively prevent the harm and act as a warning to enterprises, it should not be neces-sary for the actions to cause actual harm. Ac-cordingly, for an enterprise's actions to be "suf-ficient to affect the orderly conduct of trade" under Article 24, it would suffice if its actions had resulted in the possibility of the orderly conduct of trade being affected. In the present case, the appellee had imported the products with the intention of sale, and there was a clear like-lihood that such action would affect the orderly conduct of trade.