British automaker Jaguar Land Rover (“Land Rover”) has won a significant case in China on March 13th. The Beijing Chaoyang District Court found Jiangling Holdings Co., Ltd. (“Jiangling”) liable for unfair competition in connection with the sale and manufacture of the LANDWIND X7. It is reported that this is a landmark case for foreign automobile manufacturers challenging alleged IP rights violations in China, which embodies the end of “copycats” in the automotive industry. In this article, we focus on the litigation strategy Land Rover used to protect its automobile design patent.
1. The industrial design of the Range Rover Evoque vehicle finally wins protection under Anti-Unfair Competition Law of the PRC
The Plaintiff Land Rover claimed that, certain design features of the LANDWIND X7 vehicle launched by the Defendant Jiangling are essentially identical to Land Rover’s distinctive design features for the Evoque, including: special designed Evoque sloping roof, floating roof, rising feature line, a clam-shell shaped engine bonnet and the contour of the entire vehicle. These five unique design elements that were essentially duplicated in the LANDWIND X7 will cause a likelihood of confusion by relevant consumers; therefore, the using of the design same or similar to Evoque’s decoration that has a certain degree of influence constitutes unfair competition.
On the issue whether the Evoque’s appearance was a “decoration of certain degree of influence” and whether Jiangling Holding’s accused activities constituted unfair competition, the Court determined that Land Rover had established that each design element had acquired a “decoration of certain degree of influence” among consumers based on extensive advertising and media coverage of the Evoque in the Chinese market. The general population would associate the distinctive design features of the Evoque vehicle with Land Rover vehicle models, therefore able to distinguish the source of goods. The Court found that Land Rover had proved its claim under Article 6.1 of the Anti-Unfair Competition Law with respect to five unique design elements in Evoque. The overall similar visual effect would result in likelihood of confusion in relevant consumers. Therefore, Jiangling’s use of the design same or similar to Evoque’s decoration that has a certain degree of influence constitutes unfair competition.
In fact, the long-standing dispute between Land Rover and Jiangling is only a small part of the wider intellectual property battle:
In December 2010, Land Rover introduced its high-end Range Rover Evoque sports utility vehicle at the Guangzhou International Automotive Exhibition;
In November 2011, Land Rover filed an industrial design patent application over its Evoque vehicle model. The patent was registered in August 2012;
In November 2013, Jiangling filed an industrial design patent application over its LANDWIND X7 vehicle model. The patent was registered in April 2014;
In July 2014, Land Rover filed a request for invalidation of the LANDWIND X7 industrial design patent in Patent Reexamination Board (“PRB”);
In November 2014, the LANDWIND X7 vehicle model was first introduced at the Guangzhou International Automotive Exhibition. The model was widely discussed for its resemblance with Land Rover Evoque;
In February 2015, Jiangling filed a request for invalidation of the Evoque industrial design patent in PRB;
In June 2016, PRB declared the patent rights invalid with respect to both the Evoque industrial design patent and LANDWIND X7 industrial design patent. (Jiangling filed an administrative litigation before the Beijing Higher People’s Court. The Court upheld the invalidation decision in November 2018 );
In the same month, Rand Rover brought the complaint against Jiangling alleging copyright infringement and unfair competition. The Beijing Chaoyang District Court decided in favor of Rand Rover on its unfair competition claims after three years.
With the development of automotive-related mobility technologies, protecting and defending intellectual property rights has become a top priority for automobile manufacturers. However, in practice, the disclosure of the design for commercial purposes before the filing of the design patent application always results in the loss of IP protection. The typical cases include: GM Daewoo v. Chery QQ, German automotive company Neoplan Bus GmbH v. Dazhong Industiral Group, Yancheng Zhongwei Bus Company industrial design patent dispute, Fiat Chrysler Automobiles v. Great Wall, and Honda Motor Co., v. Shuanghuan, which lasted for 10 years. The above-mentioned cases all ended up in failure, which makes the Land Rover decision the first case under China’s 2017 Anti-Unfair Competition Law to find in favor of a foreign company in the automotive industry.
2. Distinguish the unique decoration peculiar to well-known commodity from design patent protection
In the Land Rover dispute as well as other similar cases, the Plaintiff raised claims of unique decoration peculiar to well-known commodity after the design patents expire, which were all supported by the courts. Does this mean that unique decoration peculiar to well-known commodity could be an alternative to design patent protection?
The 1993 Anti-Unfair Competition Law and 2017 Anti-Unfair Competition Law all require that “the similarity with the unique decoration peculiar to well-known commodity should be enough to cause confusion. The Article 4 of the Several Provisions of the Supreme People’s Court on Issues Concerning Application of Laws To The Trial of Civil Cases Involving Unfair Competition stipulates that: In case of any confusion concerning the source of a commodity in the public concerned, including the misapprehension of such a typical relationship as licensed use or affiliation with the business operator of a well-known commodity, it shall be regarded as causing the confusion with the well-known commodity of someone else, and making the consumers mistake it to be a well-known commodity as stipulated in Subparagraph (2) of Article 5 of the Anti-unfair Competition Law…The identity or similarity with the typical name, package or ornament of a well-known commodity may be ascertained with reference to the principles and methods for judging identical or similar trademarks. The Article 9.2 of the Interpretation of the Supreme People’s Court on Some Matters About the Application of Law in the Trial of Civil Cases Involving Trademark stipulates that: The phrase “trademark that is similar” means where the suspected infringing trademark is compared with the plaintiff’s registered trademark…thereby easily leading the relevant public to mistake the source of the products or to believe that their source has a certain connection to products using the plaintiff's registered trademark. Therefore, the likelihood of confusion is the prerequisite for claiming the unique decoration peculiar to well-known commodity. The attention generally applied by the relevant public and the distinctiveness and reputation of the commodity shall be considered when assessing the likelihood of confusion.
However, the standard for design patent infringement does not include the requirement of “the likelihood of confusion”. Article 11 of the Several Provisions of the Supreme People’s Court on Issues Concerning Applicable Laws to the Trial of Patent Infringement Controversies stipulates that: For design patents, identicalness or similarity of designs shall be determined in accordance with the patented design, the design features of the alleged infringing design and the overall visual effect of the design…the court shall determine that the designs are identical when there are no differences in overall visual effect; and the designs are similar when there are no substantial differences. The Beijing High People’s Court clearly pointed out that: The determination of infringement of a patent for design shall be based on identicalness and similarity, rather than on whether causing confusion and mistakes in recognition in the sense of the Trademark Law.
The reason for this difference lies in the specific subject matter of the rights. A design patent protects the aesthetic or ornamental features of a new product or article of manufacture. The design is objective in general opinions. However, the trademark or the unique decoration peculiar to well-known commodity protects the business reputation. The subjectiveness of the reputation requires the “likelihood of confusion” element. This also explains why the distinctiveness and reputation of the commodity or trademark shall be considered when deciding if the trademarks or decorations are same or similar.
In this case, Land Rover had established that each design element had acquired a “decoration of certain degree of influence” among consumers based on extensive advertising and media coverage of the Evoque in the Chinese market. The general population would associate the distinctive design features of Evoque vehicle with Land Rover vehicle models, therefore they are able to distinguish the source of goods. The Court would not support Land Rover’s claims if the Evoque has not acquired a certain degree of influence among consumers. Therefore, the “same or similar design” requirement should be combined with “likelihood of confusion” to acquire the protection of the unique decoration peculiar to well-known commodity.
Thus, the protection of the unique decoration peculiar to well-known commodity is not the substitute for patent rights. However, the former can be applied as supplementary protection to the latter when the requirement of “likelihood of confusion” is met.
3. What automotive manufacturers need to learn from Land Rover v. Jiangling
a. Automotive companies may need strategies to protect their valuable design patents
Both the Evoque industrial design patent and LANDWIND X7 industrial design patent were all declared invalid by PRB in this case. Land Rover first introduced its high-end Range Rover Evoque sports utility vehicle at the Guangzhou International Automotive Exhibition in December 2010; however, Land Rover submitted the patent application nearly 1 year later in November 2011, which exceeds the 6 months grace period stipulated in the Patent Law. It is worth noting that the failure to timely file a patent application resulted in the loss of the protection, also the loss of effective ways to protect the company’s legitimate rights. Similarly, the design infringed in Neoplan Bus GmbH v. Dazhong Industiral Group and Yancheng Zhongwei Bus Company industrial design patent dispute was also first published by Neoplan company itself in a press conference.
Patent Law provides a first legal protection for automobile designs. However, the design patent does not go through substantial examination, which may result in inadequate protection of the designs. Therefore, how to protect the recognized automobile designs has become an important issue for automotive manufactures to consider.
b. China’s commitment to end “copycat”
Chinese government is committed to IP rights protection. President Xi Jinping made a keynote speech at the opening ceremony of the China International Import Expo, pledging that China will protect the legitimate rights and interests of foreign companies, step up crackdown on infringement upon intellectual property rights and introduce a punitive damage system to increase the cost of conducting illegal activities. During the opening of the Boao Forum for Asia Annual Conference 2019, premier Li Keqiang pointed out that “We treat domestic and foreign-funded enterprises equally and protect the rights and interests of all types of businesses with concrete measures," he said. "It is the consistent stance of the Chinese government to strengthen intellectual property right protection.”
In February 2019, the Shanghai Intellectual Property Court (“SIPC”) rendered a so-called partial or interlocutory judgment during a patent infringement lawsuit filed by the French automotive parts manufacturer Valeo against three Chinese defendants over “connectors for wipers of motor vehicles and corresponding connecting devices” invention patent. The SIPC found that the defendant’s products have indeed fallen into the scope of claims of Valeo’s patent in question and hence should immediately stop the infringement while the damages can be determined later. The Supreme People’s court upheld the first-instance decision. The partial judgement can quickly deter the manufacture and sale of the infringing products, which we believe can be a useful tool for patentees, especially automotive manufactures like Land Rover.
In conclusion, the Land Rover Evoque decision demonstrated the country’s commitment to protect intellectual property. The automotive manufacturers may learn from the Evoque decision to protect their legitimate rights.