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Strengthening Trade Dress Protection in China

  • TIME: 2017-06-16 09:32:22
  • HIT: 422

Author: Xuri Bao

While ‘trade dress” has traditionally been defined as the packaging or dressing of a product in commerce, in recent years this definition has been extended to encompass all various elements – individually or in combination – that could be used to promote a product or service in commerce. As with other types of trademark, trade dress indicates or identifies the source of a product or service and distinguishes it from others, and can be protected under law in many ways. As such, ‘trade dress’ refers to the total image and overall appearance of a product or service, including words, colours, graphics, shapes, particular sales styles and any combination thereof.

Legal protection for trade dress is provided under two primary requirements.

First, the trade dress must create an overall impression of the goods or services and is not protectable if the features involved are considered separately. A collection of trade dress elements is not essential to the total image of a product or service, and cannot affect the cost or quality. Only the packaging as a whole can comprise trade dress and is entitled to trade dress protection.

Second, the trade dress must be distinctive (ie, unusual and memorable) so that it can serve primarily as the designator of origin of the product or service. However, trade dress is not inherently distinctive and can acquire distinctiveness only if it has developed secondary meaning. ‘Secondary meaning’ is the association of the mark with the provider of goods or services by the public, which can be achieved through sales or advertising. Whether secondary meaning has been established to develop customer recognition depends on many factors, including:

• the length of time that the trade dress has been in use;
• the volume of sales under the trade dress; and
• the extent of advertising featuring the trade dress.

Legal protection in China

Under the Chinese IP system, there is no specific concept of ‘trade dress’, but trade dress is protectable under multiple laws, including the Patent Law, the Copyright Law, the Trademark Law and the Unfair Competition Law.

Patent protection

Legal protection for trade dress is provided under Article 2(4) of the Patent Law, which states: “designs shall mean, with respect to a product, new designs of the shape, pattern, the combination thereof, or the combination of the color with shape and pattern, which create an aesthetic feeling and are fit for industrial application”.

The owner of a new design which is significantly different from a prior design or a combination of prior design features and is capable of application in the industrial field with effective results can be granted a patent and enjoy the exclusive right for its use and distribution. Further, compared to other IP rights, it is easier for the right holder to prove that the infringer’s trade dress is identical or similar to its design.

Based on these advantages, some foreign entities prefer to register their trade dress as design patents in China. For example, a well-known German manufacturer filed many design applications for its spray gun boxes and in 2016 asserted a design infringement claim against a Chinese competitor for the unauthorised use of one of its boxes for the same products. The court held that the two packages were similar and ordered the defendant to cease the infringing act and remedy the adverse effects.

However, legal protection for trade dress as design is generally limited to 10 years from the filing date. After the design’s expiration, it will fall within the public domain. Further, given that there is no substantive examination for a design application, it may easily be invalid due to lack of novelty or inventiveness.

Copyright protection

According to Article 3 of the Copyright Law, original artistic works can be protected by copyright. Thus, trade dress also enjoys copyright protection where original patterns or labels have aesthetic significance.

The advantage of copyright is that rights can be obtained without registration. China is a member state of the Berne Convention for the Protection of Literary and Artistic Works and, pursuant to the convention, works that are originally created in other member states may enjoy copyright in China. For example, LEGO found that Kego’s toy building blocks were consistent with the shape of its toy and sued Kego for copyright infringement. The court held that LEGO’s toy building blocks met the conditions of use of artistic works and should be protected by law, and thereby determined Kego’s copyright infringement.

However, trade dress protection under the Copyright Law is subject to the following limitations:

• The scope of protection of trade dress afforded by the Copyright Law is limited to the protection of art works that are:

o separable from the trade dress as purely artistic works; or
o considered to be original and acting on the use of utility protection for works of art.

• The duration of copyright protection is limited and trade dress is always accompanied by goods and services – in general, the longer the combination, the greater the value of the trade dress.
• The compensation available for copyright infringement is low and is calculated on the basis of the value of the infringing copy itself; typically, the trade dress will have a high commercial value and compensation will not adequately compensate for the lost commercial interest.

Trademark protection

Article 8 of the Trademark Law provides that any mark that distinguishes the goods of natural persons, legal persons or other organisations from other commodities – including words, figures, letters, numbers, three-dimensional signs, colour combinations, sounds and/or a combination of these elements – may be registered as a trademark.

Since a 3D logo can be protected as a trademark, its trade dress can be protected under the Trademark Law.

The disadvantages of protecting trade dress under the Trademark Law are as follows:

• For registered trademarks, there may be cumbersome administrative approval procedures to overcome in order to obtain trade dress protection; and
• Trademarks cannot be amended once they have been registered; thus, protection of trade dress under the Trademark Law is inflexible and is not conducive to innovation.

Anti-unfair competition protection

Article 5(2) of the Anti-unfair Competition Law provides a catch-all protection measure against passing off trade dress, stating: “[a] business operator using the name, packaging, or decoration unique to a well-known product without authorization, or uses any name, packaging, or decoration similar to that of a well-known product, thereby creating confusion in distinguishing the product concerned from another's well-known product and causing the purchasers to mistake the product for the said well-known product, may be considered as an act of unfair competition.”

In practice, the terms ‘packaging’ and ‘decoration’ are interpreted broad. ‘Packaging’ refers to a container of goods which identifies their origin and makes it easy to transport them; while ‘decoration’ comprises words, patterns, colours or a combination thereof attached to the goods or the packaging in order to identify or enhance the goods. In addition, the Administration for Industry and Commerce has extended the concept of ‘product’ to ‘service’, stating that specific and well-known aesthetics and designs to identify and enhance a service constitute interior decoration, which brings the service under the scope of application of the Anti-unfair Competition Law. Therefore, both packaging and decoration of products and services are protectable under the Anti-unfair Competition Law.

However, protection under the Anti-unfair Competition Law is limited to well-known packaging and decoration which the relevant public associates with a particular manufacturer or supplier. Distinctiveness is another strict condition that must be satisfied: the packaging or decoration must have distinctive characteristics that distinguish it and make it easy to identify, while trade dress which includes service-style and sales technology cannot benefit from protection under the Anti-unfair Competition Law.

Trade dress protection advice in China

Free riding on trade dress through imitation and theft is a common occurrence in China, resulting in original businesses suffering substantial losses. Therefore, awareness of prevention must be improved and reasonable and effective protection strategies must be developed. Enterprises should combine the advantages and disadvantages of various IP systems and protect their trade dress as follows:

• First, apply for trademark protection of the design elements that are regarded as the main logo of the trade dress.
• Second, for industrial products – apply for a design patent for the whole product. For designs with a high degree of aesthetic value that could be considered art, apply for copyright registration.
• Lastly, collect evidence that can prove the visibility of the trade dress on the market (eg, sales contracts, advertising contracts and awards) in order to protect trade dress under the Anti-unfair Competition Law. In case of infringement, enterprises should combine their rights so as to launch a multi-angle attack on infringers to protect their own goodwill.