Case concerning the application for retrial filed by Shenzhen Tasgo Watch Co., Ltd. against Casio Computer Co., Ltd. as respondent and Guangzhou Teyuan Watch Industry Co., Ltd. as defendant in the first instance and respondent in the second instance, regarding a dispute over unauthorized use of signs identical or similar to the trade dress of another party with certain influence
The adjudication in this case gradually unfolded around the issue of protection of trade dress consisting of product shape and configuration. First, the shape and configuration of the product itself may constitute the “trade dress” as referred to in Article 6 of the Anti-Unfair Competition Law, provided that it has distinctive features capable of identifying the source of the goods and does not fall within functional designs determined by the nature of the goods themselves, technical effects or substantial value. Second, the termination of a patent right does not automatically mean that the market recognition interests formed by the appearance lose protection. As long as an operator, through continuous use and promotion, accumulates market reputation for such appearance and establishes a stable association with a specific source of goods, it may still obtain protection when the conditions under the Anti-Unfair Competition Law are met. On this basis, the court comprehensively considered factors such as duration of sales, sales regions, intensity of promotion and stability of the trade dress, and confirmed that the trade dress at issue had formed a stable corresponding relationship with the right holder and constituted trade dress with certain influence. Based on the above findings, the defendants’ use, on identical goods, of trade dress that is visually almost indistinguishable from the trade dress at issue, is sufficient to cause the relevant public to mistakenly believe that the goods originate from the right holder or have a specific connection with the right holder, even though the accused products use different trademarks and differ in price and quality. Evidence of actual confusion further corroborated this determination.
Brief Introduction of the Case
The “GA-110” series watches produced and sold by Casio Computer Co., Ltd. (hereinafter “Casio”) enjoy a high level of market recognition among the relevant public, and nine design features of this series jointly constitute its trade dress. Shenzhen Tasgo Watch Co., Ltd. (hereinafter “Tasgo”) and Guangzhou Teyuan Watch Industry Co., Ltd. (hereinafter “Teyuan”) were accused of manufacturing and selling watches under the “TASGO/特斯高” brand, the trade dress of which, apart from differences in trademark indications and the like, is basically identical in overall visual effect to the above trade dress of Casio. Casio contended that such conduct constituted unfair competition by unauthorized use of signs identical or similar to the trade dress of another party with certain influence, and therefore sought an injunction against infringement and compensation for economic losses and reasonable expenses totaling RMB 5 million.
The court of first instance found that the trade dress at issue constituted trade dress with certain influence, and that the conduct of Tasgo and Teyuan constituted unfair competition. After comprehensively considering factors such as sales volume, fake transactions (“brushing”), and subjective fault, the court, in the exercise of its discretion, ordered the two defendants to be jointly and severally liable for compensation of RMB 3 million. Both Casio and Tasgo were dissatisfied and appealed. Upon trial, the court of second instance dismissed the appeals and upheld the original judgment. Tasgo subsequently applied for retrial. Upon examination, the Supreme People’s Court held that the trade dress at issue belonged to trade dress consisting of product shape and configuration, had distinctive features for distinguishing the source of the goods, and, through long-term use by Casio, had acquired a high level of market recognition, sufficient to be found as trade dress with certain influence. The accused products used, on identical goods, trade dress that is visually almost indistinguishable, which is sufficient to cause confusion among the relevant public and therefore constituted unfair competition. The discretionary award of RMB 3 million in compensation by the courts of first and second instance was not obviously inappropriate, and the Court therefore ruled to dismiss Tasgo’s application for retrial.
Key Points of the Judgment
1. Trade dress consisting of product shape and configuration may be protected under the Anti-Unfair Competition Law
Words, patterns, colors and their arrangement and combination, which have distinctive features and are used to identify and beautify goods, may constitute the trade dress as referred to in Article 6 of the Anti-Unfair Competition Law. Trade dress is not limited to packaging design, nor does it automatically exclude the shape of the product itself. Functional shapes arising from the nature of the goods themselves, technical effects or substantial value are generally not protected, whereas shapes that, apart from such functional elements, have decorative and beautifying effects and can identify the source may be protected. The nine design features of the GA-110 series watches asserted by Casio are not functional designs, and their combination clearly distinguishes them from other watches on the market, having distinctive features for distinguishing the source, and therefore constitutes trade dress protected by the Anti-Unfair Competition Law.
2. Expiry of a patent does not automatically preclude protection under the Anti-Unfair Competition Law
The expiry of the design patent for the appearance of the trade dress at issue does not automatically result in the trade dress no longer being protected under the Anti-Unfair Competition Law. The objects, conditions and purposes of protection under the Patent Law and the Anti-Unfair Competition Law are different. The appearance of the same product may simultaneously involve protection as a design patent and as trade dress under the Anti-Unfair Competition Law. After the expiry of the design patent right, if the relevant appearance, through use, meets the conditions for protection under the Anti-Unfair Competition Law, it may still be protected. Such protection is based on the market recognition interests and competitive interests formed by the operator, and does not constitute a disguised extension of the patent protection term.
3. The trade dress at issue constitutes trade dress “with certain influence”
The evidence on record shows that the GA-110 series watches of Casio have been sold for a relatively long period, across a wide range of regions, and in large amounts, and, through continuous and extensive promotion, have acquired a high level of market recognition in mainland China. Over more than ten years, the nine design features of this trade dress have remained basically stable, and the overall appearance has been consistent, forming a stable association with Casio, such that the relevant public can identify the source of the goods through the trade dress. Therefore, this trade dress constitutes trade dress with certain market recognition and distinctive features.
4. The accused conduct constitutes unfair competition and the compensation is reasonable
The defendants used, on identical goods, trade dress that is visually almost indistinguishable from the trade dress of Casio which has certain influence, which is sufficient to cause confusion among the relevant public, and actual confusion has occurred. Differences between the accused products and the goods at issue in respect of trademarks, price, quality and other aspects are insufficient to eliminate the likelihood of confusion, and therefore the accused conduct constitutes unfair competition. Taking into account factors such as sales volume and sales price through different channels, fake transactions (“brushing”), subjective fault, circumstances of infringement and reasonable expenses, the discretionary award of RMB 3 million in compensation by the courts of first and second instance is not inappropriate.
