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China Trade Dress and Unfair Competition Law

Thursday, November 17, 2016 5:18
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China Trade Dress Law
Do you know the store? Is it Hong Kong or New York?

Close your eyes, and imagine that when you open them you have been magically transported to another country and you are inside a Starbucks. How do you know you’re in a Starbucks? Even if you’re not this guy, you could probably tell where you are without seeing the word “Starbucks” or the mermaid logo. Would you even know that you were in a different country? Probably not – and that’s exactly how Starbucks wants it. A Starbucks coffee shop has a certain look and feel, a “know it when you see it” gestalt that is easily and immediately identifiable.

The look and feel of products or services – including product packaging and design, the GUI of a website or software application, and the layout and design of a store – generally fall under the rubric of “trade dress.” In the United States, trade dress is considered a symbol or device under trademark law, and can be registered and enforced just like any other trademark. And you better believe Starbucks enforces its trade dress rights.

In China, trade dress is not well defined and not given specific protection as such. Conceptually, trade dress in China incorporates IP elements that don’t fit neatly under the rubric of trademark, copyright, or patent, and to the extent trade dress is protected in China, it is via China’s Anti-Unfair Competition Law (AUCL). However, insofar as it applies to trade dress, the AUCL is not particularly strong, only applies to “famous” products and services, and doesn’t have a mechanism for registration. In other words, you can only enforce trade dress rights by taking administrative or legal action, and if you don’t have a famous product or service you probably shouldn’t bother.

However, a couple recent judicial decisions in China provide a glimmer of hope. In 2015, Stihl, a leading manufacturer of power tools, was deemed to have trade dress protection for its distinctive orange-and-grey color scheme. (A Hangzhou machinery company had made exact copies of several Stihl chainsaws, including the color scheme but excluding the “Stihl” trademark.) And earlier this year, Activision Blizzard was awarded trade dress protection for the look and feel of World of Warcraft, including such elements as character names and designs, equipment icons, maps, and game interface. (An online Chinese game called Everyone WarCraft: War of Draenor had copied much of World of Warcraft’s look and feel.)

A draft amendment to the AUCL was published on February 25, 2016. Most of the commentary to date has focused on the changes that amendment would make to the antitrust and anti-monopoly language, but it also could expand the scope of what could be covered under trade dress. It appears that the trend in China is toward more trade dress protection.

Even with these positive steps, trade dress protection in China should be seen as complementary to the registrable forms of IP protection like trademarks, copyrights, and patents. You may not be able to register the layout of your China retail store, but you can register trademarks in China for color combinations (as Stihl eventually did) and character names and you can register copyrights for product labels, video game characters, icons, and maps and you can register design patents for the outward appearance of products.

Bottom Line: Trade dress protection exists in China, but only sort of. Relying on China trade dress protections is not advised. The way to protect your intellectual property in and from China is by registering trademarks, copyrights and patents there.

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.

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