Wei He Wen Cui April 4 2022 Chinese courts penalise copycat fragrance using iconic trade dress of CHANEL N°5 Wanhuida Intellectual Property | Intellectual Property - China Wei He, Wen Cui Intellectual Property FactsXi'an Intermediate CourtShaanxi High CourtCommentFactsChanel is a premier French luxury fashion house. Its century-old CHANEL N°5 perfume is perhaps the most recognised and revered fragrance of all time. Created in 1921, CHANEL N°5 has been known for its aesthetic design, featuring simple lines, a plain white label and a chiselled stopper, which is cut like a diamond.In 2019, Chanel found that a Chinese company, Yiwu Ai Zhi Yu Cosmetics Ltd (Ai Zhi Yu), was manufacturing a perfume called "N°9 Flower of Story", which was a slavish copy of the unique trade dress of the CHANEL N°5 perfume (Figures 1 and 2).Figure 1: CHANEL N°5 trade dressFigure 2: N°9 Flower of Story trade dressIn November 2019, Chanel conducted a notarised purchase of the copycat product and later sued Ai Zhi Yu and its distributor, an e-commerce company based in Xi'an, before the Xi'an Intermediate Court, on the ground of unfair competition arising from trade dress infringement.Xi'an Intermediate CourtOn 23 December 2020, the Xi'an Intermediate Court found that:The evidence Chanel had furnished could corroborate the fact that the CHANEL N°5 perfume, which entered the Chinese market approximately 20 years ago, was known by the relevant public in China.The bottle and packaging served as a key source identifier of perfume. The CHANEL N°5 perfume bottle had been used for a century and was known for its distinctive contours among Chinese consumers through continuous and extensive use.The shape of CHANEL N°5 bottle, as well as the layout and colour of the characters on the front label, was distinctive. Such trade dress had formed a stable relationship with Chanel, and could thus function as a source identifier of the products.The shape, material and design of the bottle and the stopper, as well as the colour scheme, character arrangement, size, proportion and position of the white label of the accused infringing product was highly similar to that of CHANEL N°5, which was likely to cause misidentification among the relevant public.The Court therefore found that the defendants' act constituted unfair competition and ordered cessation and damages (to be borne by Ai Zhi Yu).In January 2021, Ai Zhi Yu filed an appeal before the Shaanxi High Court. Ai Zhi Yu (the appellant) challenged the distinctiveness of the trade dress of the CHANEL N°5 perfume, asserting that the trademarks "N°5" and "CHANEL", rather than the bottle itself (ie, trade dress), functioned as the source identifier of the products. The appellant adduced an administrative judgment rendered by the Beijing High Court, which rejected Chanel's application for a 3D trademark based on the bottle of the CHANEL N°5 perfume, to back up its argument.Shaanxi High CourtThe Shaanxi High Court dismissed the Beijing High Court administrative judgment. The Shaanxi High Court noted that the result of the 3D trademark application was irrelevant to this case. It considered the following:First, the applied-for 3D trademark was a mere bottle design. The trade dress seeking protection in this case was the design comprising various elements, including the graphics, colour, shape, size and font employed by Chanel in its entirety. They were different subjects.More importantly, the registrability of a 3D trademark application and the prerequisite for invoking trade dress protection are different matters governed by different laws. The rejection of a 3D trademark application does not necessarily deprive the related trade dress of being protected under the framework of the Anti-Unfair Competition Law.On 24 August 2021, the Shaanxi High Court maintained the Xi'an Intermediate Court's decision.CommentThe registration of a 3D trademark has become an uphill battle in China. Brand owners hoping to protect the design of their iconic products are increasingly shifting to alternative remedies, such as seeking trade dress protection on an unfair competition basis.The courts in this case offered some interesting insights into the assessment of the distinctiveness of trade dress involving a product shape. They also clarified that whether a trade dress may be protected by the Anti-Unfair Competition Law has no bearing on the assessment of the registrability of the 3D trademark application incorporating the same product shape.For further information on this topic please contact Wen Cui or Wei He at Wanhuida Intellectual Property by telephone (+86 10 6892 1000) or email ([email protected] or [email protected]). The Wanhuida Intellectual Property website can be accessed at www.wanhuida.com.