Opple, a well-known lighting manufacturer, purchased several products from Dingfeng through an agent. It was found that the barcodes on the outer packaging boxes of the products had been torn off, but the barcodes on the inner packaging boxes were not. The product packaging used "OPPLE, Opple Lighting in Chinese, OPPLE Opple Electric in Chinese," and other words. On the bathroom heater product, the "Opple" product label was pasted on the side, but the QR code on the product label was scratched off. The QR code on the back of the ceiling lamp and the QR code on the flat lamp have all been scratched off, and the three codes on the packaging box were scratched off.
Opple filed an unfair competition lawsuit against Dingfeng for scrapping codes to sell goods. The first instance court found that:
As a seller, Dingfeng should know that any alteration or scratching on the product packaging will affect the integrity of the product outer packaging, even affect the traceability and quality assurance functions of the goods sold, and also destroy the order of fair competition among all dealers that sell the brand's goods, increase the cost of communication between consumers and brands when they encounter quality problems, harm consumer's rights and interests, and may also cause derogation of the brand value of the right holder. Dingfeng's sales of code-scratch products undermined the rights holder's product management system, disrupted the normal order of market competition, harmed the legitimate rights and interests of other operators and consumers, and constituted unfair competition.
Regarding the amount of compensation, since Opple did not provide evidence to prove the benefits gained by Dingfeng from the infringement or the losses it suffered due to the infringement, the first instance court comprehensively considered the popularity of Opple's brand and trademark, Dingfeng's subjective fault and the nature and consequences of its infringement behavior, as well as Opple's reasonable expenses to stop the infringement, and determined that Dingfeng should compensate in the amount of RMB 60,000 (USD8,346).
Dingfeng Company appealed. After the trial, the court of second instance found:
Regarding the products sold by Dingfeng, the logistics outer packaging and the QR codes on the products were scratched, but the QR codes on the outer packaging of the products, as well as all packaging, instructions, trademarks and manufacturer information on the products were completely retained. And according to Opple's statement, the products involved are indeed products manufactured and sold by Opple. Consumers can also verify the authenticity and apply for after-sales service through the QR code on the product packaging. Therefore, Dingfeng's sales behavior will not cause consumers to confuse or misunderstand the origin of the products involved.
(1) Regarding consumer interests. What consumers buy are genuine products produced and sold by Opple. They can verify the authenticity and apply for after-sales service by scanning the QR code on the packaging box of the product involved. Although Dingfeng did not inform consumers in advance about the code scratching, consumers were able to determine the source of the products involved by relying on trademarks and authenticity verification, and could still enjoy the product quality and after-sales services provided by Opple, and their interests were not harmed. Moreover, ordinary consumers can freely choose and determine goods or services through information such as trademarks, manufacturers, and after-sales services. The distribution management system within the manufacturer will not have an impact on the free decision-making of ordinary consumers. The source of the goods is authentic, and the after-sales service is guaranteed. Under the circumstances, Dingfeng's scratching will not affect consumers' rational judgment on free decision-making.
(2) Regarding the interests of operators. Dingfeng sold genuine products produced and sold by Opple at normal market prices. This behavior had no adverse impact on Opple's product market share, product sales profits, products and corporate reputation. Dingfeng's code scratching behavior made it impossible for Opple to internally trace the information of authorized dealers, but it only damaged Opple's internal management system to a certain extent. Opple's external operations, external trading opportunities, and external market competitive advantages were all undamaged.
(3) Regarding social and public interests. In this case, the goods trading behavior was open and free, and the transaction price was fair. There was no behavior that restricted competition or harmed the interests of other competitors of Opple. It did not have a negative impact on the legitimate and orderly market competition order, and social and public interests were not harmed.
In summary, this court believes that although Dingfeng's code scratching hindered Opple's internal management and caused certain damage its interests, according to the principle of proportionality and the principle of interest measurement, this behavior did not harm consumers. The interests have not reached the level of adversely affecting the competitive environment and order of competition, and there is no need to apply the Anti-Unfair Competition Law. The first instance court made an error in its determination, resulting in an erroneous judgment. This court corrected it and ruled that the original judgment should be revoked and all of Opple's claims should be dismissed.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
