Appearances do matter!

Intellectual property rights (IPR) infringements against consumer goods in China come mainly in the form of counterfeits. However, infringement is sometimes not so clear cut. Infringers may target the packaging and visual presentation, rather than the actual contents, functional design, and trade mark logo of a product. For many consumer goods, packaging can be key to the identity of the product and thus its market appeal, meaning a potential loss of sales and harm to the original producer’s reputation if counterfeits reach the shelves.

Recent experience shows that the recognition of particular visual design elements as IP is becoming more widely accepted in China. For instance, a court recently ruled that one company’s use of a green and yellow colour combination was an infringement upon the trade mark of US agricultural machinery manufacturer John Deere (despite the fact that the trade mark certificate did not explicitly describe a colour combination).

Under Chinese law the visual identity of a product, its trade dress, is protected under trademark laws, patent laws, copyright laws and unfair competition laws. Thus there are many legal avenues to rely on in the case of infringement, though some may prove more viable than others. Understanding how the packaging and presentation of a product can be protected as IP is essential to the overall strategy of any consumer goods firm in China, in order to protect brand and product identity, and ensure future competitiveness. The following case study from the Helpdesk showcases the IP experiences of one European company operating in China.

Case study: French perfume

A French company designed and marketed a perfume bottle and packaging with a distinctive shape. In 2005, a Chinese company produced two types of perfume, using bottles and packaging nearly identical to the ones designed by the French company and marketed them in China and abroad under a different trade name.

Actions taken

Once made aware of the situation the French company took immediate steps to cease the copyright infringement. Considering the financial damages, the scope of the infringement and the harm done to its reputation, the French company brought legal action before the judicial courts, seeking compensation. The French company had registered the bottles as a design patent in China. The legal action was therefore grounded on infringement of the design, the copyright and violation of the Unfair Competition Law. It is interesting to note that the Unfair Competition Law protects packaging: “unauthorized use of the name, packaging or trade dress unique to well‐known products, packaging or trade dress similar to that of well‐known products, thereby causing confusion with the well‐known products of another party and causing purchasers to mistake the products for such well‐known products.” In order to rely on the Unfair Competition Law, it is necessary for the product to be well‐known in China, that there is the likelihood of confusion between the two products, that the trade dress is distinctive and unique, and that the plaintiff used the trade dress first. All these conditions existed in this case, thus the plaintiff also grounded his action on the performance of unfair competition.

Outcome

Despite the different legal grounds offered to the Court, the Beijing Court based its decision solely on the infringement of the copyright. The Court held that, since France and China acceded to the Berne Convention for the Protection of Literary and Artistic Works in 1992 and are members of the World Trade Organization, the works of the French company are protected in China according to the Copyright Law. As the Chinese party reproduced the bottles and packaging in large quantities, without the copyright owner’s permission, the court decided that the Chinese company committed copyright infringement and would bear the liabilities of ceasing the act of infringement, make an apology, and compensate the plaintiff for their loss.

In practice, it was not possible to evaluate the actual loss of the plaintiff and since the defendant provided the legal source and information on the company manufacturing the bottles, the defendant had only to pay for the ceasing of the infringement.

Lessons learnt

  • Be sure of the legal grounds that you intend to base your case on. Are they the most relevant? Do they give you the strongest possible case?
  • If possible establish and clearly specify the actual loss suffered by your business due to the infringement, otherwise adequate compensation is far from guaranteed.
  • Be aware that although there may be several grounds for complaint, the court may or may not choose to rule on all of them.

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