Tsann Kuen Awarded TWD630,000 in False Advertising Case against PChome

For the case initiated six years ago when PChome posted false advertisement on its website that misled consumers into believing that Tsann Kuen Enterprise Co., Ltd. (hereinafter “Tsann Kuen”) had been providing fewer and more expensive products and accordingly caused a drop in Tsann Kuen’s sales amount, the Taiwan Supreme Court decided that PChome impaired Tsann Kuen’s goodwill and awarded Tsann Kuen TWD630,000 in damages and ordered PChome to publish the court decision on PChome’s website for four days.  The court decision has become final with binding effects. 

The dispute between PChome and Tsann Kuen arose in April 2008 when Tsann Kuen held a special sale event for its registered members.  At the same time, PChome posted advertisement on its website, indicating that some products available on PChome were absent from Tsann Kuen’s special sale list and also making comparison of non-member prices.  Such advertisement caused consumers to mistakenly believe that Tsann Kuen provided fewer but more expensive products than PChome. 

Tsann Kuen filed a complaint against such advertisement of PChome with the Fair Trade Commission (FTC) out of the reason of goodwill impairment.  The FTC then examined and investigated the matter and decided that PChome should pay TWD200,000 in fine and immediately remove such advertisement for the act of violating Article 24 of the Taiwan Fair Trade Act by posting false advertisement.  PChome, however, failed to immediately remove the advertisement as demanded, for which Tsann Kuen initiated an action with the court to claim damages against PChome on the ground of goodwill impairment and sales decrease.

PChome defended itself by arguing that the advertisement in dispute was made based on price survey and comparison and by reference of the prices provided in Tsann Kuen’s catalogues, and that only 11 of the 28 products being compared in the advertisement were held falsely advertised by FTC.  PChome asserted that it had conducted reasonable survey and did not hold the intent to impair Tsann Kuen’s goodwill.

According to the holding provided in the first instance judgment, PChome made the said advertisement without conducting thorough price survey and thus caused consumers’ misunderstanding and impaired Tsann Kuen’s business reputation, for which PChome should pay TWD1 million to Tsann Kuen in damages and publish the court judgment on its website for four days.  The court of the second instance decided mostly in line with the first instance judgment but decreased the awarded damages to TWD630,000.  After the case had been brought to the Supreme Court upon both sides’ appeals, the Supreme Court dismissed their appeals and the above court judgment became final.  (April 2014)
/CCS