The appellants Yu Mou, Wen Moumou, and Zhao Moumou were involved in a dispute over unfair competition with the respondent Amer Sports Trading (Shanghai) Co., Ltd.
Brief Case Overview
Amer Sports Trading (Shanghai) Co., Ltd. asserted that the trade dress of its Salomon brand XT-QUEST series sports shoes (including such features as mountain-shaped broken lines, banded decorations, and eyelets) constituted “commodity trade dress with certain influence” and was therefore protected under the Anti-Unfair Competition Law. Yu Mou, Wen Moumou, and Zhao Moumou sold footwear products highly similar to such trade dress through their Taobao store “Unclewen稳叔”. Amer Sports contended that their conduct constituted confusion, and thus brought an action before the court, requesting cessation of the infringement and compensation for economic losses and reasonable expenses in a total amount of RMB 4 million.
The court of first instance, the Chengdu Intermediate People’s Court, found that Yu Mou, Wen Moumou, and Zhao Moumou had committed joint infringement, and ordered them to immediately cease the manufacture and sale of the infringing products, and to jointly and severally compensate Amer Sports for economic losses and reasonable expenses totaling approximately RMB 3.3958 million. Dissatisfied, the three appealed. Upon trial, the court of second instance, the Sichuan High People’s Court, dismissed the appeal and upheld the original judgment.
Gist of the Judgment
1. Delimitation of the scope of protection for trade dress:
The infringers argued that elements such as the “mountain-shaped broken lines” were functional designs and should enter the public domain. The court held that the trade dress at issue was “pattern-type trade dress” and did not constitute a product shape necessary for achieving a technical effect, and that it had acquired distinctiveness in the perception of consumers in identifying the source of goods. Accordingly, it should be protected under the Anti-Unfair Competition Law.
2. Clarification of the relationship between the lapse of design patent rights and protection under the Anti-Unfair Competition Law:
The infringers contended that, after the lapse of the design patent right, protection could no longer be extended by invoking the Anti-Unfair Competition Law; otherwise, the statutory term of patent protection would be rendered meaningless. The court explicitly stated that, in the field of intellectual property, a single subject matter may be simultaneously protected by multiple intellectual property rights, and the termination of one right does not necessarily result in the simultaneous loss of effect of other rights. If another party’s use of the appearance design of a certain product is sufficient to cause the relevant public to become confused or mistaken as to the source of the goods, such subsequent use would improperly exploit the goodwill of the prior user of that appearance design and constitute unfair competition. Therefore, upon the termination of a design patent right, the design does not automatically enter the public domain; where the conditions for protection under the Anti-Unfair Competition Law are met, it may still be protected by that law.
3. Method of calculating infringer’s profits:
In circumstances where the infringers refused to provide financial information, how to reasonably infer their profits from infringement became a difficulty. Based on transaction records obtained from the Taobao platform and by reference to the gross profit margin of listed companies in the same industry (the lowest being 41.4%) as the basis for calculation, the court pointed out that the infringers had obvious subjective bad faith in committing the infringement and had objectively saved research and development and promotion costs. Therefore, the adoption of gross profit margin rather than net profit margin was reasonable.
4. Determination of joint infringement:
The court, taking into account such factors as trademark use, store promotion, and production capacity, comprehensively determined that there existed a common intention and coordinated conduct among Yu Mou, Wen Moumou, and Zhao Moumou, thereby constituting joint infringement, for which they should bear joint and several liability.
Case Commentary
- Clarifying the boundary between protection of trade dress and patent rights:
The judgment emphasizes that, even if a design patent has lapsed, as long as the trade dress has acquired distinctiveness and influence in the market, it may still be protected under the Anti-Unfair Competition Law.
- Strengthening the punitive orientation against malicious infringement:
In calculating damages, the court comprehensively considered factors such as the infringers’ subjective bad faith, obstruction of evidence, and attempts to deregister entities to evade liability, and supported the calculation of profits based on gross profit margin, reflecting a tendency toward punitive compensation for malicious and large-scale infringement.
- Harmonizing adjudicative standards in similar cases:
This case provides a clear adjudicative approach for determining “free-riding” confusion-type acts, methods of presuming profits from infringement, and the constituent elements of joint infringement, which is conducive to unifying judicial standards in the identification of protection for trade dress and unfair competition acts.
