Determination of Product Packaging and Decoration that has Certain Influence | Curry Product Packaging Unfair Competition Dispute | Linda Liu & Partners
Judgment Gist
When the text, graphics, colors and arrangement and combinations attached to the goods or their packaging can distinguish the source of the goods, it constitutes the packaging and decoration with certain influence protected by the Anti-Unfair Competition Law. In the long-term operation process, it is very normal for operators to update product packaging, as long as the design of the new and the old packaging and decoration is consistent, which does not break up the identification of the source of goods, the new packaging and decoration can inherit the influence of the old packaging and decoration. Packaging and decoration with certain influence and design patents belong to two different rights, which are regulated by different laws, and their respective legal protection requirements are also different, and the parties have the right to choose the right to apply.
The confusion and misidentification provided for in the Anti-Unfair Competition Law refer to the confusion and misidentification of the source of the goods by the relevant public, including the mistaken belief that there is a specific connection, such as being licensed by or affiliated to the operator using the packaging or decoration. Different operators can learn from each other in the design of commodity packaging and decoration, and carry out innovative design on this basis. However, packaging and decoration that have certain influence and can identify the source of the goods shall not be fully imitated to cause confusion and misidentification in the market.
Case Information
Case Summary
House Foods Group Inc. (hereinafter referred to as “House Company”) was established on June 7, 1947. In 2001, 2004 and 2011, House Company respectively invested and established Dalian House Foods Co., Ltd. (hereinafter referred to as “Dalian House”), Shanghai House Foods Co., Ltd. (hereinafter referred to as “Shanghai House”) and House Foods China Inc. (hereinafter referred to as “House China”) to engage in the production and operation of condiments and other commodities in China.
In March 2018, Dalian House, House China and Shanghai House issued declarations respectively, stating that they produced and sold a number of curry products including “Vermont Curry” and “Javanese flavor curry” bearing “好侍” (“House” in Chinese) and “House” brands, and all the rights and interests related to the packaging and decoration of these products belonged to House Company. House Company has applied for the design patent right for the packaging and decoration of “Vermont Curry” and “Javanese Flavored Curry”.
In August 2016, House Company found that the packaging and decoration of “Desheng Miaoduo Curry” and “Desheng Miaoduo Flavored Curry” (hereinafter referred to as the “accused infringing goods”) produced by Foshan Desheng Xinghuo Food Co., Ltd. (hereinafter referred to as “Foshan Desheng Xinghuo”) and sold and promoted by Guangzhou Desheng Food Co., Ltd. (hereinafter referred to as “Guangzhou Desheng”) were closely similar to the packaging and decoration of “Vermont Curry” and “Javanese Flavored Curry” respectively. House Company then filed a lawsuit with Pudong New Area Primary People’s Court, Shanghai (hereinafter referred to as the court of first instance) in March 2018, requesting to order Foshan Desheng Xinghuo to immediately stop using the product packaging decoration of the accused infringing goods, order Guangzhou Desheng to immediately stop selling and publicizing the accused infringing goods, order Foshan Desheng Xinghuo to compensate House Company for its economic loss of CNY 1 million (approx. USD 145,423), and order Foshan Desheng Xinghuo and Guangzhou Desheng jointly and severally compensate House Company for its reasonable expense of CNY 200,000 (approx. USD 29,085), totaling CNY 1.2 million (approx. USD 174,507).
The court of first instance held that the packaging and decoration of “Vermont Curry” and “Javanese Flavored Curry” that House Company requested to protect consisted of a series of elements. Since entering the Chinese market, “Vermont Curry” and “Javanese Flavored Curry” have maintained their unique packaging style. The packaging and decoration of “Vermont Curry” have been slightly revised, but the overall style was unified. The arrangement and combination of colors, graphics, words and other aspects of the packaging and decoration of “Vermont Curry” and “Javanese Flavored Curry” were unique, forming a distinct overall image, which has nothing to do with the functionality of the goods. After a long time of use and extensive publicity, it has been sufficient for the relevant public to connect the overall image of the above packaging and decoration with the “Vermont Curry” and “Javanese Flavored Curry” goods of House Company, which functioned to identify the source of its goods, and should belong to the packaging and decoration with certain influence protected by the Anti-unfair Competition Law. The packaging and decoration with certain influence and the design patents belong to two different rights, which are regulated by different laws, and their respective legal protection requirements are also different, and the parties have the right to choose the right to apply.
Comparing the “Vermont Curry” of House Company with the “Desheng Miaoduo Curry” of Foshan Desheng Xinghuo, both of them used bright yellow as the background color, the upper left corner was a trademark in red, and there was an inclined ribbon pattern in the middle. The product name was written on the ribbon pattern, and the bottom was a slogan in golden color on a black background. The upper right corner of the package was the pattern of bees and fruits, the lower right corner of the package was the pattern of curry flavoring dishes and rice, and the lower left corner was the sign of the level of spiciness. The package was marked with the net content and the words “Japanese block curry seasoning”. Therefore, the “Desheng Miaoduo Curry” of Foshan Desheng Xinghuo constituted similar to the “Vermont Curry” of House Company.
Comparing the “Javanese Flavored Curry” of House Company with the “Desheng Miaoduo Flavored Curry” of Foshan Desheng Xinghuo, both adopted white background and dark color as the basic tone, with Chinese and English trademarks in red arranged side by side in the upper left corner, and the product name and trademark of dark characters arranged horizontally in the middle left position of the package, where the two characters “风味” (“flavor” in English) were arranged up and down. There was a row of slogans below, the background color was the same dark color and the text was yellow. At the bottom was a row of Japanese kana and product name. The lower left corner was the net content information. The dark background area on the right side of the package contained the patterns of dishes flavored with curry products and patterns of various spices. Therefore, the “Desheng Miaodao Flavored Curry” of Foshan Desheng Xinghuo constituted similar to the “Javanese Flavored Curry” of House Company.
Since the overall image of the packaging and decoration used by the “Vermont Curry” and the “Javanese Flavored Curry” of House Company had distinctive features of distinguishing the source of goods, the packaging and decoration of the accused infringing goods were visually closely similar to the “Vermont Curry” and the “Javanese Flavored Curry” respectively, which is likely to make the relevant public misunderstand that there is a certain connection between the two. When the packaging and decoration of “Vermont Curry” and “Javanese Flavored Curry” have played a role in distinguishing the source of goods, and the packaging and decoration of the accused infringing goods will lead to confusion or misunderstanding of the relevant public, even if the design patent of House Company has expired, Foshan Desheng Xinghuo cannot use the design that is sufficient to cause confusion or misunderstanding with respect to the source of goods among the relevant public. Such later use will improperly take advantage of the goodwill of the prior user of the design and constitute unfair competition. Considering the degree of influence of the “Vermont Curry” and the “Javanese Flavored Curry” of House Company, the time and scale of unfair competition of Foshan Desheng Xinghuo, Foshan Desheng Xinghuo was determined to compensate House Company for the economic loss of CNY 500,000 (approx. USD 72,670) as appropriate. The sued infringing products were produced by Foshan Desheng Xinghuo and publicized and sold by Guangzhou Desheng, so Guangzhou Desheng and Foshan Desheng Xinghuo should jointly bear the reasonable expenses incurred by House Company to stop the infringement in this case.
Accordingly, the court of first instance ruled that Foshan Desheng Xinghuo immediately stopped using the packaging and decoration of the accused infringing goods; Guangzhou Desheng immediately stopped selling and publicizing the accused infringing goods; Foshan Desheng Xinghuo compensated House Company for its economic loss of CNY 500,000 ( approx. USD 72,670) and jointly with Guangzhou Desheng compensated House Company for the reasonable expense of CNY 100,000 (approx. USD 14,534) for safeguarding its rights.
Unsatisfied with the first instance judgment, Foshan Desheng Xinghuo and Guangzhou Desheng appealed to Shanghai Intellectual Property Court (hereinafter referred to as “the court of second instance”).
The court of second instance held that according to the evidence on the record, it can prove the sales time, sales area and sales situation of the “Vermont Curry” and “Javanese Flavored Curry” involved in the case in China, can prove the publicity and promotion of the two commodities, and whether the packaging and decoration of the two commodities have distinctive characteristics that distinguish the source of the commodities. Therefore, the packaging and decoration constitutes “packaging and decoration with certain influence” protected by the Anti-unfair Competition Law. The court of first instance held that the packaging and decoration of the accused infringing goods were similar to those of “Vermont Curry” and “Javanese Flavored Curry” respectively, which had factual and legal basis. The scope of protection of the design patent right shall be subject to the design of the product shown in the picture or photograph. The protection of “packaging and decoration with certain influence” lies in its function of distinguishing the source of goods and prohibiting others’ acts of confusion. There are differences in the scope of protection and requirements between the two, which are regulated by different laws, and the right holder can choose the right to apply. Although Foshan Desheng Xinghuo requested to reduce the amount of compensation, claiming that the time for it to implement the alleged infringement was very short, the production scale of the accused infringing product was small, and it produced some sample products only for market research purpose. Moreover, during its production and sales of “Desheng Miaodo Curry”, it had a legitimate patent right on the outer packaging of the product and it recalled the products immediately after the patent was declared invalid. However, Foshan Desheng Xinghuo did not provide the relevant evidence of the production and sales of the accused infringing goods held by it in the hearing of this case, nor did it prove the recall of the relevant goods. The design patent it applied for was invalid because it was not obviously different from the design patent of House Company. Therefore, the above claims cannot be the basis for its defense that the compensation amount was obviously too high.
Accordingly, the court of second instance rejected the appeal and upheld the first instance judgment.
Attorney’s Opinion
The case was selected into the Selected Cases of the People’s Courts in 2019. All parties involved are in the food seasoning industry. Curry products involved in the case are also closely related to the daily life of the public. They are common products in supermarkets, convenience stores or e-commerce platforms, and the “Vermont Curry” and the “Javanese Flavored Curry” products have certain popularity and influence, Therefore, the court of first instance of this case, Pudong New Area Primary People’s Court, Shanghai, and the “Pufa Lecture Hall” column under the court specifically reported and commented on this case in detail, and the Shanghai Legal Daily and other media also reported the results of this case.
As the attorney of House Company, we got involved in this case from the market investigation stage. When we found that the accused infringer publicized the accused infringing goods at the exhibition, we promptly put forward suggestions and preserved the evidence of infringement, continuously collected the evidence of popularity, and subsequently investigated the production and operation of the accused infringer in detail. After the completion of evidence collection, we sent a Cease and Desist Letter to the accused infringer, requesting it to stop the infringement. Under the situation that the accused infringer refused to admit the infringement, we filed a lawsuit on behalf of House Company and finally safeguarded the legitimate rights and interests of House Company.
In this case, the packaging and decoration of House Company’s “Vermont Curry” products have been revised several times, for which the scope of rights protection was challenged by the other party during the trial. Through the description of the overall style of packaging and decoration, as well as the complete chain of popularity and influence evidence, the lawyer in this case convinced the judge that the packaging of “Vermont Curry” and “Javanese Flavored Curry” commodities had distinctive characteristics, constituted packaging and decoration with certain influence, and has formed a stable connection with House Company. Even though “Vermont Curry” has undergone modifications in design, the distinctive features of the new and old packaging were consistent, which did not break the identification relationship with the source of goods. The new packaging and decoration can inherit the influence of the old packaging and decoration.
In addition, although it was clear that the packaging of the accused infringing goods was similar to the packaging of “Vermont Curry” and “Javanese Flavored Curry”, in order to eliminate potential risks and further demonstrate the similarity of packaging and decoration, our patent invalidation team (our lawyers Yu YAN and Xue WANG) filed an invalidation against the later design patent of the accused infringer based on the prior design patent of House Company, and successfully invalidated its patent. The invalidation decision found that the design patent applied by the accused infringer was invalid from the beginning because it was not obviously different from the design patent of House Company. This conclusion also provided good support for the similarity judgment of packing and decoration and brought positive influence to the discretion of the judge.
Moreover, the attorney representing the accused infringer argued in the first instance that under the condition that House Company had design patent, it cannot choose the Anti-unfair Competition Law to sue. In this regard, our lawyers, relying on the theory of intellectual property law, combined with current laws, regulations and judicial interpretations, cited a large number of previous cases, and demonstrated that the conditions and scope of protection of packaging and decoration with certain influence and the design patents are not completely the same. At this point, the Anti-unfair Competition Law and the Patent Law are not the relationship between the general law and the special law, and the parties can choose the right to claim in the case. This conclusion was also adopted by the court.
When exercising rights based on the first paragraph of Article 6 of the Anti-unfair Competition Law, the popularity of the commodity itself should be firstly considered. For this point, the sales volume and market share of the commodity can be used for reference. However, the popularity of goods is not completely equal to the degree of influence of their packaging and decoration. The influence of packaging and decoration is also relevant to whether the packaging and decoration itself can identify the source of goods. Therefore, when adducing evidence, operators should also pay attention to preparing advertising publicity, media reports and other materials with commodity packaging; Secondly, in the long-term business process, it is very common for operators to update product packaging. As long as the design of new and old packaging and decoration is consistent, the new packaging and decoration can inherit the influence of the old packaging and decoration as long as the identification relationship with the source of goods is not broken up. Therefore, operators should also pay attention to the consistency of the overall packaging style when updating their own product packaging and decoration, so as to avoid negative impact on the popularity evaluation of the product due to the change of packaging and decoration. Thirdly, the application for a design patent cannot be used as a defense against whether the packaging and decoration constitute infringement. At present, China does not conduct substantive examination on the design patent, and the design patent and the commodity packaging and decoration belong to different civil rights. If the design patent has the situation of unauthorized use of others’ prior packaging and decoration with certain influence, it may still constitute unfair competition. Finally, for operators, when designing their own commodity packaging and decoration, they need to maintain a balance between protecting their rights and encouraging innovation. Packaging and decoration that have certain influence and can identify the source of the goods shall not be fully imitated that is sufficient to cause confusion and misidentification in the market; otherwise it is possible to infringe upon the legitimate rights and interests of others and the infringer may even pay a high price.
