China Court Delivers First Judgment in Favor of a Foreign Company Under Anti-Unfair Competition Law

By Kristin Murphy
March 28, 2019

“This is the first case under China’s 2017 Anti-Unfair Competition Law to find in favor of a foreign company in the auto industry and demonstrates the country’s commitment to foreign investment.”

British automaker Jaguar Land Rover (JLR) has been engaged in a multi-jurisdiction battle against Chinese automaker Jiangling Motors (Jiangling) over JLR’s assertions that Jiangling copied distinctive design features of JLR’s RANGE ROVER Evoque (EVOQUE) in the LANDWIND X7 vehicle. JLR previously successfully took action in Brazil and the European Union, resulting in injunctions against the sale of Jiangling’s LANDWIND vehicle in those jurisdictions. JLR’s latest efforts has yielded additional success against Jiangling’s sale and production of the LANDWIND X7 in China, Jiangling’s home base.

On March 13, the Beijing Chaoyang District Court in China found Jiangling liable for unfair competition in connection with the sale and manufacturing of the LANDWIND X7, finding that certain design features of the LANDWIND vehicle are “essentially identical” to JLR’s distinctive design features for the EVOQUE. This decision is the first case under China’s 2017 Anti-Unfair Competition Law to find in favor of a foreign company in the auto industry.

JLR launched its EVOQUE vehicle in China in December 2010 at the China International Automobile Exhibition. After the launch, the EVOQUE received a number of awards, such as the Most Watched SUV Model 2011 selected by China’s “New Express” magazine, the 2011 BBC “Top Gear” magazine’s Best Model of the Year, the 2012 Best Auto Design Worldwide, and 2013 Best Luxury Car of UK, among many others.

Jiangling launched the LANDWIND X7 in 2014. From the start of its introduction, the LANDWIND X7 drew heavy criticism for its striking resemblance to JLR’s EVOQUE, with multiple media outlets reporting on the similarity of the two vehicles, as shown by the number of articles put into evidence by JLR during the case. For example, the “People’s Network” reported: “Since its debut, because the configuration is too similar to that of JLR’s EVOQUE, it is called ‘the strongest clone version of EVOQUE.’” Another publication, “Suche.com” referred to the similarity of the LANDWIND X7 to the EVOQUE as “almost premediated plagiarism.”  The noted similarities between the vehicle body design elements were compounded by available conversion kits that allowed purchasers of the X7 to “upgrade” the LANDWIND X7 with a Range Rover grille, logo and Land Rover badges.

Taking the Fight to China

JLR decided to take the brave step of bringing the fight to Jiangling’s home territory of China, which appears to have paid off. JLR brought an unfair competition action based on Article 6.1 of China’s 2017 Anti-Unfair Competition Law. Article 6.1 prohibits a business operator from engaging in confusion behavior if it is likely to cause another to misidentify the source of the goods or to mistakenly believe that there exists some sort of connection between the goods and brand owner. To establish trade dress infringement under Article 6.1, the plaintiff must show:

  1. Its decoration is “distinctive” and has gained a certain degree of influence in the relevant consumers;
  2. The defendant used an identical or similar decoration on identical or similar goods; and
  3. The defendant’ trade dress creates a likelihood of confusion among relevant customers.

In ruling in favor of JLR, the Court found several features of JLR’s Evoque unique “decoration of certain fame” including, for example, its sloping car roof, floating car roof and the contour of the whole vehicle. While Jiangling submitted evidence arguing that JLR’s design features were functional, the Court found that the evidence could not provide the that the EVOQUE “’shape decoration’ was designed solely by functionality” . . . “or is a shape resulting from the inherent nature of the car or giving the car utilitarian advantage.”   Based on the extensive media coverage in China, JLR’s own advertising efforts and costs, as well as its extensive sales, and the number of awards JLR received, both in China and abroad, the Court also found that the design features of the EVOQUE were associated with JLR and served as a source identifier for JLR in China.

JLR purchased and made available to the Court a LANDWIND X7 vehicle and an EVOQUE vehicle during the course of the case. Based on the visual comparison to the two vehicles, the Court found that the two vehicles “are essentially identical” and include EVOQUE distinctive design elements.  As such, “Jiangling’s LANDWIND X7 copied the trade dress of JLR’s EVOQUE.”

Because the “EVOQUE ‘shape decoration’ was found to be similar in the overall visual effect, identical in the five unique design features” the Court found relevant customers were likely to be confused as to the origin of the car. This finding was further supported by the evidence from Internet users’ reviews and notarized news reports regarding the comparison. Thus, the Court concluded that Jiangling “accused activities constituted unfair competition . . . caused market confusion and harmed JLR’s legal interests and goodwill.”

Jiangling was ordered to “bear liabilities for its unfair competition acts” and the Court imposed an injunction against Jiangling manufacturing, displaying and selling the LANDWIND X7. Jiangling was also ordered to issue a public announcement on its official website and the China Automobile News to eliminate the negative influence caused to JLR by Jiangling’s acts. In addition, Jiangling was ordered to pay JLR damages.

A Good Sign

Amanda Beaton, Global IP Counsel at JLR, said that the company brought the case to protect its significant investment in the design and engineering of its products, as well as to protect consumers and the public as a whole. “We are of course pleased with the decision,” Ms. Beaton added. “We had confidence in the Chinese judicial system and this decision strengthens JLR’s confidence in investing in China [and] illustrates the effective implementation of the Chinese Government policy decision to uphold intellectual property rights in China.”

Thus, while China has been criticized in the past with respect to enforcement efforts concerning infringement of intellectual property, the decision demonstrates the country’s commitment to foreign investment in China by enabling IP owners to effectively enforce their rights.

 

The Author

Kristin Murphy

Kristin Murphy is an intellectual property attorney with wide-ranging experience in domestic and foreign patent prosecution, including strategic patent portfolio development and management. Her practice also focuses on patent opinions, intellectual property valuations/due diligence, analyzing potential infringement/validity issues, and drafting and negotiating agreements relating to technology and intellectual property. Kristin has extensive experience with trademark, unfair competition, and patent litigation through trial and appeal. She also has experience in
administrative contested matters, such as oppositions and cancellation
practice before the Trademark Trial and Appeal Board, and Inter Partes
Review proceedings before the Patent Trial and Appeal Board.

For more information or to contact Kristin, please visit her Firm Profile Page.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

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