Court Decision on SMC’s Injunction Claims etc. against AirTAC Co., Ltd. for Unfair Competition (original) (raw)

On October 25, 2022, the Tokyo District Court issued a decision in a court case in which SMC Corporation (“SMC” or “our”) filed an injunction etc. against AirTAC Co., Ltd. (“AirTAC”) for unfair competition (Case No. 2021 (Wa) 32931) (the “Case”). The Court held that AirTAC’s product catalog and other marketing materials contain inaccurate information regarding the effective cross-section area and Cv value of its solenoid valves and air operation valves and that such indications constitute misleading indications of the quality of such products, and ordered AirTAC to pay SMC certain damages for the harm caused.

[Background]
On December 25, 2020, SMC filed the Case against AirTAC in the Tokyo District Court to seek damages for the harm caused and other remedies, claiming that AirTAC’s use of misleading indications of quality regarding incorrect information of the effective cross-section area and Cv value for some of AirTAC’s solenoid valves in the catalog published by AirTAC entitled “General Catalog of Products 2017” (“Catalog”), etc. (we note that the covered products were expanded in the petition for amendment of the claim dated October 29, 2021) constitutes unfair competition as specified in Article 2(1)(xx) of the Unfair Competition Prevention Act.

[AirTAC’s Response to the Case]
While the Case was pending, AirTAC took the following actions:
(1) Regarding the Catalog, AirTAC corrected the figures for the effective cross-section area and Cv value and also published an erratum on AirTAC’s website.
(2) AirTAC claims that it discontinued the distribution of, and discarded, the Catalogs (the version before the correction of the figures).

[Summary of the Judgments]
A summary of the Court’s decision in the Case is as follows:
(1) The Court found that AirTAC’s figures for the effective cross-section area and Cv value of the Defendant’s Products (which means certain solenoid valve products and air operation valves) are inaccurate and are indications that are misleading as to their performance (Unfair Competition Prevention Act, Article 2(1)(xx)). In this regard, AirTAC admitted that the effective cross-section area and Cv value were inaccurate, but asserted that these indications by AirTAC do not constitute indications that are misleading as to quality by pointing out that the effective cross-section area and Cv value are not figures that are related to the quality of the Defendant’s Products and affect product selection and that plant managers and others focus on the compatibility, price, and other details of the cylinder and not on the effective cross-section area and Cv value when purchasing solenoid valves. However, the Court rejected AirTAC’s assertion, based on the assumption that the effective cross-section area and Cv value represent the flow characteristic of pneumatically-controlled equipment, and stating that “the flow characteristic of pneumatically-controlled equipment is an important factor that may cause problems such as not being able to achieve the prescribed output in a pneumatic system if such characteristic is not properly identified.”
(2) The Court found that AirTAC was, at minimum, negligent for using such misleading indications. The Court also found that, when distributing the Catalog, despite having the duty to state the accurate figures regarding the quality of the Defendant’s Products, AirTAC neglected to do so. In this regard, AirTAC asserted that it did not act negligently, pointing out the fact that it has no choice but to rely on the measurements results of the research and development center because AirTAC (AirTAC Co., Ltd., which is the Japanese entity) does not have a facility that can verify the accuracy of the relevant figures listed in the Catalog. The Court rejected this assertion by AirTAC, pointing out that it is only natural for a seller to have the duty to ensure the accuracy of statements made in catalogs and other materials presented to business partners, that the Defendant’s Products are manufactured within the AirTAC group, and that the data set forth in the Catalog and other materials are also based on the measurement results obtained by a company within the AirTAC group.
(3) The Court awarded damages of an amount equal to the attorneys’ fees that have reasonable causal relationship with AirTAC’s unfair competition.

SMC’s Group Code of Conduct stipulates that “we will adhere to the customer-first principle and strive to provide superior products/services,” and “we will engage in fair competition.”

In light of the Code of Conduct, the most important reason for filing the Case was due to our view that “AirTAC’s use of misleading and inaccurate indications may harm the interests of our customers.”

The decision of the Court found that the advertising for AirTAC’s products in the present case was inaccurate and that it was an “act of unfair competition” that misled customers as to quality. Although AirTAC has already taken certain measures, we believe that obtaining such decision from the Court in relation to unfair advertising and product labeling will protect the interests of our customers and foster a fair competitive environment.

SMC will continue to adhere to the customer-first principle, and will continue to take resolute action, including taking legal action, against corporate activities which may be detrimental to the interests of our customers.

On November 8, 2022

SMC Corporation