IP enforcement in China: Be brave
Companies based outside the jurisdiction are often put off making claims to protect their intellectual property rights in China because they fear low chances of success against a local opponent, an unfamiliar legal system, long delays, and inadequate remedies. And reports of difficulties faced by the likes of Fiat and Honda, who have been unsuccessful in attempts to stop alleged copies of their vehicles in China, reinforce these perceptions. Jaguar Land Rover’s story is much more positive.
On 13 March 2019, the Beijing Chaoyang District Court awarded injunctions to stop the manufacture, exhibition, and sale of the Land Wind X7, and awarded damages and reasonable expenses to the British manufacturer.
Five unique features
During the Court case, Jaguar Land Rover claimed that five particular features of the Evoque’s design were distinctive. These were:
1. The sloping roof.
2. The “floating” roof created by coloured glass and pillars separating the body from the roof.
3. The clamshell bonnet shape.
4. Rising features lines, creating a unique shape.
5. The contour of the whole vehicle.
Distinctive features and the battle for IP rights
Jaguar Land Rover argued these features made up the Evoque’s “trade dress” – the visual appearance of a product which signifies to consumers who has produced it – and that Jiangling’s use of these and other features constituted unfair competition.
If a car’s shape decoration is dictated by its function, results from its inherent nature or gives it a utilitarian advantage, such trade dress protection would not be available in China, but Jiangling failed to prove that the product fell within any of these exceptions.
The Court found, amongst other things, that “The two vehicles […] share an essentially identical whole vehicle design and 3D contour”, including the five features highlighted above.
Challenges of the system
In China, evidence collection can be time-consuming and costly, especially as it needs to be notarised to meet the requirements of the Court. Jaguar Land Rover collected a vast amount of notarised evidence to show the Evoque differed from normal vehicles and customers would identify its shape decoration as originating from the company even if there was no trademark or name.
The court case continued…
The company also produced evidence to show it had promoted the Evoque extensively and for a long period of time. On the basis of the evidence, the Court was satisfied that the Evoque’s shape decoration had attained the necessary level of fame and influence.
The Court ordered Jiangling to immediately stop the manufacture, exhibition, and sale of Land Wind X7 and to publish the outcome on its website and in China Automobile News.
In addition, Jaguar Land Rover was entitled to damages, which can be calculated in a number of different ways in China – on the basis of the plaintiff’s loss, the defendant’s gain, a reasonable royalty or statutory damages.
The Court said that the infringer’s gains could be calculated by multiplying the product’s sales volumes by the profit per unit however, the Court is often reluctant to make awards based on a plaintiff’s calculation of the infringer’s gains.
Jaguar Land Rover presented evidence of profit from the National Automobile Market Research Association and of sale volumes from Jiangling’s official website, but then claimed a lower sum from the Court. That sum was awarded, together with reasonable expenses.
The shape of things to come?
We will see whether this decision encourages other foreign businesses who have invested in China to seek to enforce their rights there. Jaguar Land Rover was able to produce a large volume of convincing evidence to satisfy the Court and secure a positive result.
Although this might prove challenging for some smaller businesses with less resource, for now, this is a positive signal from the Chinese Court which is likely to encourage further investment.
Amanda Beaton, Global IP counsel at Jaguar Land Rover comments…“Jaguar Land Rover takes the protection of its intellectual property very seriously. We invest significantly in the design and engineering of our products together with our brand and did not feel that this action by Jiangling could go unchallenged. This was necessary in order to protect our consumers who have already purchased our products and the public as a whole. We are of course pleased with the judgment of the Beijing Chaoyang District Court. The Chinese Court has sent a clear message that unfair competition will not be tolerated. This decision further strengthens our confidence in investing in China and will encourage other businesses like us, to continue investing in this very important market.”
This article was first published in Real Business