The 110 year old fashion house Chanel has lost a trademark infringement suit against a jewelry store in China which was selling jewelry in the shape of Chanel's world-famous double "C" logo. In July 2016, the Administration for Industry and Commerce of Haizhu District (now merged with another organization to form the State Administration for Market Regulation) raided the two year old jewelry store, Zhou-Bai-fu, in Guanzhou, China after receiving a tip off from a third party who remains anonymous. The store was owned by a national of China named Ye Meng-zong. The raid resulted in discovery of goods in the shape of the famous double "C" logo owned by Chanel. Chanel later confirmed that the discovered goods were fake.
The investigation by Administration for Industry and Commerce resulted in a penalty according to which the infringing goods were confiscated by the agency and Ye was instructed to pay RMB 80,000 (approx. $ 12,000) to Chanel. Apart from this penalty, Chanel, famous around the world for its notoriety in being aggressively protective of its brand, decided to pursue this matter further through litigation in the Guanzhou Haizhu District People's Court, wherein they sought an additional damage of RMB 100,000 (approx. $ 15,000).
Ye Meng-zong was accused of trademark counterfeiting and infringement. Ye countered this by saying that the store, which was no longer in operation, was a mere franchise of the Hong Kong based MNC Zhou-Bai-fu Jewelry International Group, and the goods sold at his store were all approved by the franchisor prior to their display and sale, including the infringing goods, which made him the wrong defendant in the case. This argument was not entertained by the court. The court gave a favorable judgement for Chanel, and held that Ye had indeed infringed on the double "C" trademark and ordered him to pay RMB 60,000 (approx. $ 9,000) in damages due to "the level of harm, nature of business, business scope, scale of operation, time of infringement, infringement area, [and] the value of infringing goods,"1 among other factors.
Ye appealed this decision to the Guangzhou Intellectual Property Court, where the primary issue framed by the court was "whether the shape of the (allegedly counterfeit Chanel) products, alone, could be deemed infringing."2 The same could be interpreted as to whether the double "C" logo which was clearly forming the shape of the pieces of the jewelry, was also acting like a trademark, and as a corollary identified the source of the products, or was the double "C" logo merely acting as a decoration. Further, if the double "C" logo was indeed acting in a source-identifying capacity, were the consumers likely to be confused regarding the source of origin of the goods? The court held that "there was no evidence to prove that when Ye's store sold the products in question there was any chance that the shape of products ... was used as a trademark."3 The Court further held that the jewelry was not misleading people with respect to the source of the products, and there was no evidence that "ordinary consumers with a general level of understanding would deem that they were purchasing Chanel products."4 The court stated that Chanel had not built its case for infringement and counterfeiting properly and ordered the lower court's order to be vacated.
Industry insiders have held the decision to be highly erroneous as Ye's goods were not held to be acting as trademark and thus there was no infringement. The Court has seemingly denied the chance of a 2-D trademark (here Chanel's trademark for its double "C" logo) into a 3-D product as trademark infringement. The good news for Indian brand owners is that the definition of a trademark is broad enough to include anything that functions as an indicator of source, which according to Rule 26(3) of the Trade Marks Rules, 2017, includes threedimensional shapes.5
1. 'Chanel Handed an "Unacceptable" Loss in Chinese Counterfeit Jewelry Case — The Fashion Law' (The Fashion Law, 2019) accessed 17 August 2019.
5. 'Chanel Loses Double "C" Trademark Infringement Case In China - Intellectual Property - Canada' (Mondaq.com, 2019) accessed 22 August 2019.
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