Watch Shape Design can be Protected by the Anti-unfair Competition Law | “Royal Oak” Trademark Infringement and Unfair Competition Case | Linda Liu & Partners

Judgment Gist

The literal meaning of the decoration of a commodity refers to the ornament of the commodity, which plays a role in beautifying the commodity. Generally speaking, all decorations having the function of beautifying commodity and externally visible are decorations. The decoration of commodities can be generally divided into the following two categories: one is the decoration of words and patterns, that is, the words, patterns, colors and their arrangement and combination thereof on the outside of the goods; the other is the decoration of shape and structure, that is, the overall or partial design and structure of the articles which belong to the articles per se but have decorative function, except shapes that only determined by the nature of the commodity itself, shapes necessary to achieve a certain technical effect and shapes that make goods of substantial value. Since the design of a commodity may constitute the packaging or decoration of the commodity at the same time, it can be protected against confusion according to the provisions of the Anti-unfair Competition Law on the unique packaging and decoration of well-known commodities. At this point, the design should meet the following conditions: 1. The commodity using the design must constitute a well-known commodity; 2. The design has the function of distinguishing the source of the commodity, so it can be used as the unique packaging or decoration of the well-known commodity; 3. The design is neither determined by the nature of the commodity itself, nor is it necessary to achieve a certain technical effect or make goods of substantial value; 4. The use of the design by others will lead to confusion or misunderstanding among the relevant public.

In this case, the plaintiff’s Royal Oak and Royal Oak Offshore watches enjoy relatively high reputation in the wristwatch industry. The outer bezel of the Royal Oak watch dial is surrounded by an octagonal-shaped unitary bezel featuring eight hexagonal-shaped screw heads. The screw heads are parallel to the curves of the corners of the octagonal bezel. The design is very unique and different from the usual watch shape and has the function of distinguishing the source of goods. The defendant’s use of the exact same design as the plaintiff’s Royal Oak watch without authorization, with the purpose of free-riding goodwill of the Royal Oak watch, caused confusion or misunderstanding among the relevant public. The defendant violated the principle of good faith and constituted an act of unfair competition as stipulated in Article 6.1 of the Anti-Unfair Competition Law, and shall bear civil liability for stopping the infringement and compensating for losses.

Case Information

 

Case Summary

The plaintiff’s “ROYAL OAK” series of watches are world-renowned watches. Since their launch in 1972, their groundbreaking design (an octagonal-shaped unitary bezel featuring eight hexagonal-shaped screw heads) has overturned the conventional aesthetic concept of watches and became the plaintiff’s iconic design. The watch is loved and pursued by elites and fashionistas all over the world.

Since 2019, the two defendants had marked “ROYAL ONE” logo on the back of the watch case they produced and operated, and used the same design as “ROYAL OAK” watches. And they have sold the watches wantonly on Taobao, AliExpress, Amazon, eBay and other websites.

The plaintiff brought a lawsuit to the Shenzhen Intermediate People’s Court in 2020, claiming the defendant’s use of “ROYAL ONE” logo infringed the plaintiff’s exclusive right to use the registered trademarks “ROYAL OAK” and “”; meanwhile, given the plaintiff’s “ROYAL OAK” watches have a very high reputation and unique design, which is different from common watch shape and can be functioned to identify the origin of the goods, the defendant’s unauthorized use of the design that is identical with or similar to the plaintiff’s “ROYAL OAK” watch design belongs to unauthorized use of others’ commodity decoration that is of certain influence, which is likely to cause confusion among the consumers, thus constituting unfair competition.

 

Through trial, Shenzhen Intermediate People’s Court (hereafter referred to as “first instance court”) determined in respect to trademark infringement that comparing the “Royal One” logo (standard font) on the back of alleged infringing four-circle perpetual calendar mechanical watch and the three-needle mechanical watch with the plaintiff’s trademark IR No. G387003 for “Royal Oak” (standard font), both of them are composed of two English words with the same overall length, the first words are exactly the same, and the first letter of the second word as well as the overall length of the second word are the same. Under the context of the cognitive ability of the Chinese relevant public to English and carrying average level of attention, in the case of isolated comparison of the two marks, the relevant public is unable to compare the spelling of the word letter by letter, but mainly identify the two through their overall appearance. Given that the overall length of the two marks, the first words and the first letter of the second words are exactly the same, the overall visual effect of the two marks is very similar. Comparing the stylized “Royal One” logo on the back of the alleged infringing product three-circle perpetual calendar mechanical watch and the rubber band mechanical watch with the plaintiff’s trademark IR No. G1313617 “”, both of them are composed of two stylized English words, and are consistent in artistic expression, visual effects, and conceptual design. The infringing logo completely copied the first word of the plaintiff’s trademark “”, and there is no difference between the two. The second part “Oak” and “One” of the two trademarks are identical in the first letter and structure and number of the letters, and moreover the second word has exactly the same design in the way the second letter connects to the first letter. Based on the above, the alleged infringing logo is similar to the plaintiff’s trademarks involved in this case, which can easily lead consumers to mistakenly believe that the products sold under the infringer’s trademark are from the plaintiff or that there is some association between them, which constitutes trademark infringement in accordance with the law.

In respect to unfair competition, the first instance court held that the literal meaning of the decoration of a commodity refers to the ornament of the commodity, which plays a role in beautifying the commodity. Generally speaking, all ornaments having the function of beautifying goods and externally visible are all decorations. The decoration of commodities can be generally divided into the following two types: one is the decoration of words and patterns, that is, the words, patterns, colors and their arrangement and combination thereof independent from the goods; the other is the decoration of shape and structure, that is, the overall or partial design and structure of the articles which belong to the articles per se but have decorative function, however the shapes that is determined by the nature of the commodity itself alone, shapes necessary to achieve a certain technical effect and shapes that make goods of substantial value should be excluded. Since the design of a commodity may constitute the packaging or decoration of the commodity at the same time, it can be protected against confusion according to the provisions of the Anti-unfair Competition Law on the special packaging and decoration of well-known commodities. Under such circumstance, the design should meet the following conditions: 1. The commodity using the design must constitute a well-known commodity; 2. The design has the function of distinguishing the source of the commodity, so it can be used as the special packaging or decoration of the well-known commodity; 3. The design is neither determined by the nature of the commodity itself, nor is it necessary to achieve a certain technical effect or make goods of substantial value; 4. The use of the design by others will lead to confusion or misunderstanding among the relevant public. In this case, the plaintiff’s Royal Oak and Royal Oak Offshore watches enjoy relatively high reputation in the wristwatch industry. The outer bezel of the Royal Oak watch dial is surrounded by an octagonal-shaped unitary bezel featuring eight hexagonal-shaped screw heads. The screw heads are parallel to the curves of the corners of the octagonal bezel. The design is very unique and different from the usual watch shape and has the function of distinguishing the source of goods. The defendant’s use of the exact same design as the plaintiff’s Royal Oak watch without authorization, with the purpose of free-riding goodwill of the Royal Oak watch, caused confusion or misunderstanding among the relevant public. The defendant violated the principle of good faith and constituted an act of unfair competition as stipulated in Article 6.1 of the Anti-Unfair Competition Law, and shall bear civil liability for stopping the infringement and compensating for losses.

The defendant was not satisfied with the judgment of first instance and appealed to Guangdong High People’s Court (hereinafter referred to as “the court of second instance”). During the second instance, both parties reached a settlement, and the defendant agreed to immediately stop trademark infringement and unfair competition, make compensation, promise not to conduct infringement in the future, and withdraw the appeal. The first instance judgment has come into force.

Attorney’s Opinion

This case involved claims that the product shape constitutes the product packaging and decoration with certain influence prescribed in Item 1, Paragraph 1, Article 6 of the Anti-unfair Competition Law. Unlike trademark right and patent right which is generated through registration, there is no specific certificate of rights for “commodity packaging and decoration with a certain influence” in the sense of the Anti-Unfair Competition Law, and it is more difficult to protect such rights in practice. In particular, the standard for determination is stricter for the commodity shape itself being considered constituting commodity decoration with a certain influence. In judicial practice, there are only a handful of successful cases.

The four conditions mentioned by the court of first instance in this case for obtaining the protection of design as a commodity decoration with certain influence were first put forward by the Supreme People’s Court in the Civil Ruling (2010) Civil Retrial No. 16. Among the four conditions, the second one is the most difficult to prove. As in this case, the defendant argued that the shape and structural characteristics of the watch in question mainly played a functional role, and did not belong to the decoration and ornament added to the product, and introductions of several different watch brands with similar case shapes, claiming that the shape of the watch in question was a common design, and even if it had an aesthetic sense, it did not belong to the packaging and decoration of certain influence specified in Article 6 of the Anti-unfair Competition Law.

With the cooperation of client, our lawyers collected much evidence and demonstrated that the appearance and shape of the plaintiff’s watch constitutes commodity decoration of certain influence in the sense of the Anti-unfair Competition Law from a number of aspects, such as the popularity of the plaintiff’s products, the diversity of the shape and design of the watch bezels, the uniqueness of the plaintiff’s watch design and the degree of public awareness, etc. In particular, we emphasized to the court the publicity articles of the plaintiff’s Royal Oak Series in combination with the evidence, which is basically inseparable from the introduction of the design of octagonal watch bezel and hexagonal screw with distinctive characteristics. This can fully prove that the plaintiff’s Royal Oak watch has a unique shape, which is different from the common watch shape, and has a high degree of recognition among the relevant public. In fact, it plays a role in distinguishing the source of goods. In addition, in combination with the consumer evaluation of the defendant’s products, we argued that the defendant’s use of extremely similar watch shape design would lead to confusion and misunderstanding among the consumers, which was finally supported by the court of first instance.

The value of the anti-unfair law judicial protection of the appearance of the product is not only the success of safeguarding rights in a specific case, the distinctive characteristics of the product design recognized by the court as distinguishing the source of the product is also important in obtaining three-dimensional trademark protection. For classic products, if their appearance and design are approved to be registered as three-dimensional trademarks, their protection strength and convenience will be significantly improved.

Link of the Case Judgement:

First instance:

https://www.iphouse.cn/cases/detail/9rq3nxd0gz7869wnpmel5m12pvew4oyk.html?keyword=%282020%29%E7%B2%A403%E6%B0%91%E5%88%9D3331%E5%8F%B7

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