The enforcement of patent, trademark and copyright rights is not without boundaries. Prior to the issuance of a warning letter (or similar) alleging infringement, sufficient due diligence must be undertaken in order to avoid anticompetitive violations. Without such caution, warning letters may be deemed as dissemination of false statements harmful to the recipient’s business reputation or as deceptive or unfair conduct capable of undermining market order.[1] A recent Supreme Court judgment in June 2025 elaborated on these limitations.[2]

  Bgreen, a manufacturer and designer of ergogenic beds and sports furniture, owns Taiwan Invention Patent No. I302469, titled “Vibration Fitness Training Apparatus”. Bgreen sued iNO Corporation and its representatives for willfully infringing several claims of the ‘469 patent by manufacturing and offering for sale a series of whole-body vibration exercise machines. Bgreen sought joint and several damages of TWD 2 million. In defense, iNO denied infringement, arguing that its products were not read on by the patent claims. iNO also made a counterclaim, alleging that Bgreen’s distribution of patent warning letters to iNO’s downstream resellers and e-commerce platforms constituted unfair competition under the Fair Trade Act (FTA). According to iNO, these warning letters caused resellers and platforms to suspend sales of iNO’s products, resulting in significant losses. iNO sought damages amounting to TWD 1.6 million.

  Upon review, the Intellectual Property and Commercial Court (IPC Court), as the appellate court, denied both the plaintiff’s infringement allegations and the defendant’s counterclaim.

  In the main lawsuit involving the infringement claim, the IPC Court held that the defendant’s product did not fall within the literal or equivalent scope of the ‘469 patent. A key claim element recites a seesaw-like oscillation whereby the left and right ends of a support plate displace vertically. By contrast, the defendant’s accused product utilized an L-shaped support plate with one end moving horizontally from right to left rather than vertically. Thus, the accused product failed to meet the all elements rule. Furthermore, although the accused product achieved a similar result of a linear vibration of the housing, it did so through different means and functions. Specifically, the accused device employed two L-shaped support plates that generated vertical and horizontal swings respectively by transmitting parallel and opposing forces. As such, the technical solutions proposed by the accused product and ‘469 patent differed in both ways and function, precluding a finding of equivalence.

  As for the defendant’s counterclaim, the IPC Court found that the plaintiff’s warning letters were not unlawful. The court emphasized that the plaintiff had fulfilled its pre-enforcement obligations, including obtaining a patent characterization report to substantiate its infringement allegations.[3] In the opposite, the defendant’s reply failed both to provide a detailed claim-product comparison and to identify specific errors in the plaintiff’s report. Accordingly, the IPC Court concluded that the plaintiff had not acted willfully or negligently in sending subsequent warning letters.

  The case was further advanced to the Supreme Court for appeal. The central issue before the Supreme Court was whether the plaintiff’s issuance of warning letters constituted a legitimate exercising of patent rights.

  The Court first confirmed the procedural validity of the defendant’s counterclaim. The defendant had alleged that the plaintiff’s warning letters damaged its commercial relationships with resellers, and since the accused products and the resellers’ products were the same, the factual and legal basis for the counterclaim were sufficiently connected to the main infringement suit.

  Turning to the merits, the Supreme Court reiterated that under Taiwan’s Fair Trade Act, no business may disseminate false statements that may be harmful to the business reputations of competitors or may induce others to cease business dealings in an anticompetitive manner. While the legitimate exercising of IP rights is exempt under Article 45 of the Act, such exemption is not absolute. Notably, compliance with procedural requirements (such as obtaining a characterization report and providing prior notice) does not absolutely protect the patent holder from liability. If a patent holder willfully or negligently misuses IP rights to intimidate competitors through indiscriminate warning letters, such conduct may still be deemed a violation of the Fair Trade Act.[4]

  In the present case, the plaintiff had issued five warning letters between April and September 2022. After receiving the third letter, the defendant responded with a rebuttal, explaining that its products operated based on mechanical principles distinct from the claimed invention. Despite this clarification, the plaintiff continued to issue further letters.

  The Supreme Court criticized the IPC Court for focusing solely on the defendant’s failure to submit a non-infringement characterization report and for disregarding whether the plaintiff had acted willfully or negligently after being informed of the mechanical differences. That is, the lower court failed to examine whether there is willfulness or negligence in the continued issuance of warning letters despite the indications that the accused products did not fall within the patent scope. The Supreme Court held that the IPC Court’s finding of the plaintiff’s actions to have been lawful lacked sufficient factual and legal support.

  Consequently, the Supreme Court vacated and remanded the 2nd-instance judgment, thereby showing more favor to the defendant.

  This case highlights Taiwan's balanced approach between IP right protection and fair market competition. Patent holders must act with caution when enforcing their rights and should avoid misusing infringement claims as a tool for commercial intimidation. Even if a patent owner’s actions comply with pre-enforcement obligations, the issuing of a series of follow-up letters after receiving preliminary clarifications may still constitute unfair competition.

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