Confusion behaviors refers to business operators who make false representation, description or promise of their goods or services by various untruths, or improperly use the intellectual work of others to promote their goods or services, causing misunderstanding among users or consumers, disrupting the market order, harming the interests of competitors in the same industry or the interests of consumers. Such behaviors remain a difficult and complicated legal matter for business operators in China, especially the foreign ones.
Despite trademarks being registered or copyright being recorded in China, the smart infringers can always find an easy alteration of infringement making the enforcement of such behavior more expensive and difficult. In such occasions, the practioners will always look to Art. 6 of Anti-unfair Competition Law.
On March 20th, the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Law of the People's Republic of China against Unfair Competition (hereinafter referred to as "the Interpretation") was officially enacted. The Supreme People's Court made further interpretation upon the confusion behavior regulated under Art. 6 of the PRC Anti-unfair Competition Law using 12 articles amongst 29. During the press release, the Supreme People's Court explained that in the Interpretation, Supreme Court specified the meaning and elements in considering "certain influence" in Art. 4 of the Interpretation:
The People's Court may determine that a distinctive mark with certain market popularity and distinguishing the source of the goods "has certain influence" as stipulated in Article 6 of the Law against Unfair Competition.
When determining whether a mark stipulated in Article 6 of the Law against Unfair Competition has certain market popularity, the People's Court shall comprehensively consider the factors such as the knowledge level of the relevant public within the territory of China, the time, region, amount and target objects for sale of the goods, the duration, degree and territorial scope of the publicity and the protection of the mark, etc.
In this article, The Supreme Court is saying: to render a business identifier, not registered as trademark (product name, product packaging or product decoration, company name, domain name, etc.) qualifying as protectable under unfair competition, this business identifier shall be:
- Having certain market popularity;
- Can work as distinguishing the source of goods.
And to prove that a business identifier is having certain market popularity, one must provide evidence on:
- How well you are known in the territory of China;
- The status of the sales, including how long have you been selling, where have you been selling, amount of your sales and who are you selling to;
- Advertisement and publicity: how long have you been advertising, and much have you invested in advertised, which areas have you been advertising;
- Whether there were prior protections granted on your business identifiers
The Interpretation also set a bar in Art. 13 of the Interpretation, reads below:
Where an undertaking has either of the following confusing acts, which is sufficient to cause people to mistake its commodities for others' commodities or to believe certain relations exist between it and others, the People's Court may determine it in accordance with Item (IV) of Article 6 of the Law against Unfair Competition:
(I) using, without authorization, a mark that "has certain influence" other than those as stipulated in Items (I), (II) and (III) of Article 6 of the Law against Unfair Competition; or
(II) using others' registered trademark or unregistered well-known trademark as the trade name in its enterprise name, so as to mislead the public. It seemed to us that the Supreme Court is trying to set a bar for those infringement where the court finds inappropriate, but difficult to confirm all the elements under Art. 4 of the Interpretation at the brand owners' side. With above indication, we would like to review a decision on unfair competition issued by Hangzhou City Xihu Dist. People's Court a few days after the enaction of the Interpretation1.
HFG successfully secured a favorable decision for Italian furniture brand TURRI ("the Plaintiff").
Defendant's product (left) vs Plaintiff's product (right)
The Defendant here is a Chinese furniture company who is:
- Using a similar word mark "TULLI" as the Plaintiff during business operation (websites, WeChat accounts, trade fairs);
- Setting up a company with Chinese characters "图礼" (TU LI) having similar pronunciation as TURRI. These Chinese characters were never actively used by TURRI to represent its brand in China;
- Manufacturing and selling furniture highly similar with TURRI brand (with similar series names as the Plaintiff).
On the official website of the Defendant, 38 pieces of furniture were displayed, and 38 of them are identical / similar with TURRI products.
The decision of the court reads:
The business scope of the plaintiff and the two defendants includes furniture manufacturing, both parties have a direct competitive relationship. After long period of continuous publicity, the plaintiff has a relatively high reputation in the domestic furniture industry.
The evidence shows that over 30 pcs of furniture displayed on Defendant's website are basically visually indistinguishable with the product brochure of the Plaintiff. After entering the Chinese market, the plaintiff cooperated with domestic famous furniture designers to launch "鑠(铄)" and "蔓" series of furniture products, while the website is also using identical names to name their furniture. It would be easy for consumers to make confusion, mistakenly consider they are the products of the Plaintiff or having certain connection with the plaintiff, which is contrary to the principle of good faith and business ethics, its behavior is improper, constituting unfair competition.
The court quoted Art. 6 of AUCL in making this analysis.
The court confirmed the market awareness of the brand TURRI, however did not make analysis on the products itself. It merely said the products and the series names are highly similar, and avoiding the issue on whether the products themselves are distinctive and having certain influence.
Currently the case is pending appeal at Hangzhou City Intermediate Court, and we wait to see how the final decision comes out.
1 Art. 29 of the Interpretation stipulated that The Interpretation shall apply to the cases that have not been finalized after the effectiveness hereof; and the cases that have been finalized before the effectiveness hereof shall not be governed by the Interpretation.
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.