China: China Court Ruled Infringement For Ambush Marketing In Film Industry

The term "Ambush Marketing" originally came from inappropriate sport advertisement in western countries. It involves a marketing strategy wherein the advertisers associate themselves with, and therefore capitalize on, a particular event without paying any sponsorship/license fee. As more and more film producers are engaging such marketing strategies to promote their films over recent years in the PRC, there have been controversies on whether Ambush Marketing activities should be deemed as infringement in the Film Industry.

Beijing People's Courts recently ruled unfair competition in two high-profile cases against the film producer's ambush marketing activities.

In the case of Beijing Yoshow Film & TV Co Ltd v. Beijing Xinghe Lianmeng Entertainment Co Ltd et al., the defendant was sued for adoption of the Chinese title of its series of horror movie "笔仙惊魂Ⅲ" (The Death Is HereⅢ) which is similar with the plaintiff's homochronous "笔仙Ⅲ" (BunshinsabaⅢ) series of horror movie of high fame, and false advertising, which allegedly constituted unfair competition.

On July 1, 2014, the Beijing No.3 Intermediate People's Court ruled in favor of the plaintiff. The Court held that the defendant produced and screened the horror movie "笔仙惊魂Ⅲ" (The Death Is HereⅢ) on April 4, 2012, three months ahead of the release date of the plaintiff's "笔仙Ⅲ" (BunshinsabaⅢ). Since the Chinese title of the defendant's movie completely contained that of plaintiff's movie of the same theme, the audiences would easily be misled and believed that  "笔仙惊魂Ⅲ" (The Death Is HereⅢ) was produced by the plaintiff. Therefore the Court ruled that defendant's action violated the principle of good faith and business ethics, and thus constituted unfair competition. In addition, in the defendant's promotion materials, it stated that "笔仙惊魂Ⅲ" (The Death Is HereⅢ) is the upgraded horror work of "笔仙" (Bunshinsaba) series. The Court ruled that this behavior constituted false advertising. Finally the Court ruled that defendant publicly apologize to the plaintiff within 30 days of the effective date of the Court Decision, in order to eliminate the adverse effect of the unfair competition. The Court also awarded to the plaintiff damages in amount of RMB500, 000 (approximately $82,000). This case was widely named as a landmark case for regulation of the Ambush Marketing activities in the film industry in the PRC.

In a most recent case, Wuhan Huaqi Movies & TV Production Co Ltd v. Beijing Enlight Media Co Ltd et al., Beijing High People's Court ruled that defendant's well known comedy movie "人在囧途之泰囧" (Lost in Thailand's (2012)) constituted unfair competition upon plaintiff's prior movie entitled "人在囧途" (Lost on Journey's (2010)) wherein the chief actors (Xu Zheng and Wang Baoqiang) were the same, and awarded a damage of RMB5 million to the plaintiff.

The comedy movie "人在囧途" (Lost on Journey's (2010)) was produced by the plaintiff and achieved a success in the PRC in 2010. Two years later, the defendant produced the "人在囧途之泰囧" (Lost in Thailand's(2012)) and used the same chief actors, and similar title, plot, story, theme and dialog etc. The defendant also indicated in its promotional materials that "人在囧途之泰囧" (Lost in Thailand's(2012)) was sequel of "人在囧途" (Lost on Journey's (2010)). Later, "人在囧途之泰囧" (Lost in Thailand's(2012)) was proved a big success, and now it's still keeping the record of China's highest grossing domestic film, making RMB1.25 billion (approximately $205million). Then the plaintiff sued the defendant for copyright infringement and unfair competition before Beijing High People's Court, and claimed a damage of RMB100 million ($16.3 million).

According the defendant's official announcement, it received the Court's Decision on September 22, 2014, and had decided to appeal the decision to the Supreme People's Court (SPC). While the text of the decision and the Court's reasoning have yet been disclosed so far, it is still unclear which legal provisions of the PRC Anti-Unfair Competition Law were invoked by the Court to determine the infringement.

Discussion

Like the trademark free-ride activity, ambush marketing strategy has been adopted by more and more film/show producers to promote their films or shows in view of other's prior famous movies/shows without a license or consent. While there are no Laws and Regulations to specifically address this phenomenon, the above mentioned Beijing Court's decisions provide some guidance to similar disputes in the future.

In the Bunshinsaba case, the Court invoked Article 2 of the PRC Anti-Unfair Competition Law to address the use of similar title of the movie by the defendant. However, Article 2 involves the principle of good faith which also is provided by many other Laws such as the General Principles of the PRC Civil Law. Therefore it is still unclear on how to define the behavior type of the violation for using other's title of movie of certain fame. One viewpoint is that the title of the movie could be protected as "the specific name of good/service with high fame" under Article 5(2) of the PRC Anti-Unfair Competition Law, while others argue that there is no precedent for protecting the title of a movie under Article 5(2), and it needs further discussion on whether a title could be interpreted as "the specific name of good/service".

As for the damages, in an unfair competition case, the People's Court usually decides the amount of damages within the statute damages of other Intellectual Property Laws such as the PRC Trademark Law if the plaintiff cannot prove its loss of profit due to defendant's infringement. For instance, in the Bunshinsaba case, the Court ruled damages of RMB500, 000 which is much lower than the maximum limit of the statute amount of the Trademark Law (i.e., RMB3 million). In the Lost in Thailand's case, although the damages awarded are higher than the statute amount, the damages are nearly negligible compared with the defendant's huge profit gained from the alleged movie. Therefore, the determination of damages is also a hot topic to be discussed and addressed in the future.

It is worthy to mention that, during the trial of the above mentioned two cases in the first instance, the plaintiff were unable to present evidence which can prove their ownership of other IP right such as trademark, trade dress, design patent etc. to the relevant films, which means the investors and/or producers do not pay much attention on the multiple-dimensional IP protection for their film works in the PRC film industry.

Although the above mentioned Court Decisions did not address all the problems encountered in the ambush marketing cases, the SPC's upcoming decision will hopefully provide more clear and specific guidance to this kind of cases.

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.

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