TBL Licensing LLC v. Zhongshan Tongye Shoes Co., Ltd. et al.

Docket No.: 4337, second instance (终), civil case (民) , (2019) 01 Hangzhou Intermediate People's Court of Zhejiang Province (浙)

Lower Court Docket No.: 15388, first instance (初), civil case (民), (2018) 0110 the Primary People's Court of Yuhang District, Hangzhou City, Zhejiang Province (浙)

Prefatory Syllabus

"Decoration" itself refers to the modification of the appearance of goods, with the role of beautifying goods. A shape which is necessary only for obtaining a technical effect and a shape which gives goods a practical value cannot be protected as a unique packaging or decoration. However, if the decoration has both decorative role and practical value and it can be distinguished from its function physically or conceptually, it is qualified to be protected as "decoration" within the meaning of Anti Unfair Competition Law.

Basic Facts

TBL LICENSING LLC,

Plaintiff-Appellee

v.

ZHONGSHAN TONGYE SHOES CO., LTD.,

QIAN *,

Defendants-Appellants

ZHEJIANG TAOBAO NETWORK CO., LTD.,

Defendant

TBL Licensing LLC ("TBL") in China is known as "Timberland", "添柏岚", "踢不烂" and other names. It was formally founded in 1973, and based on its unique shoe-making skills, the company has created the world's first pair of waterproof boots, with the "大黄靴" (Yellow Boots) as one of the most popular goods and well-known among consumers. TBL found that Zhongshan Tongye Shoes Co., Ltd. ("Tongye"), and Qian * had used the mark "片" on the heels, soles, insoles and shoe boxes of footwear products and the position was almost the same as that of the trademark "" of TBL, which was very easy to confuse consumers and constituted infringement of the above registered trademark of TBL. Moreover, TBL also found that the "Thesameway踢不烂10061大黄靴" produced and sold by Tongye and Qian * had completely imitated the Yellow Boots of TBL. Tongye and Qian * had also used "踢不烂" to introduce and publicize this product, showing obvious intention in taking advantage of the well-known "Yellow Boots" of TBL and resulting in confusion among consumers from objective point of view. Therefore, the above act had been suspected of constituting unfair competition. TBL then filed a lawsuit with the Primary People's Court of Yuhang District, Hangzhou City, Zhejiang Province.

By first instance, the court held that:

In terms of trademark infringement, the shoe products produced and sold by Tongye and Qian * had infringed the TBL's right to trademark in dispute, and infringed TBL's five exclusive rights to use trademark in dispute.

In terms of unfair competition, the "Yellow Boots" of TBL had gained high awareness among the relevant public through long-term and on-going promotion and advertisement, which should be recognized as goods with certain influence. In particular, although to a certain extent, the unique name "踢不烂" meant solid and durable characteristics of the shoes, in the process of the continuous advertisement by TBL and the continuous use by the relevant public, "踢不烂" had established a corresponding relationship with the products of TBL and achieved distinctiveness. So it should be recognized as TBL's unique name of the product with certain influence. Regarding the decoration part of the product in dispute, the court held that decoration itself was the modification of the goods appearance, with the role of beautifying goods. A shape which was necessary only for obtaining a technical effect and a shape which gave goods a practical value could not be protected as a unique packaging or decoration. However, if the decoration had both decorative role and practical value, which could be distinguished from its function, it is qualified to be protected as "decoration" within the meaning of Anti Unfair Competition Law. After eliminating the parts with only functional role and the parts could not be distinguished from the function in concept, the court was able to determine that the overall color matching of Yellow Boots (including the color matching of vamp, sole and collar, the shape of eyelet, the color combination of shoelaces, the pattern shape and layout of sole) had formed the overall decoration of Yellow Boots. In conclusion, Qian * and Tongye had constituted unfair competition acts by using the unique name, unique packaging and decoration of goods with a certain of influence without authorization by the other party.

In terms of subjective malice in infringement, given the awareness of the Yellow Boots in dispute, especially for the fact that Tongye and Qian * had specially sold Timberland products before, they were very familiar with the Yellow Boots of TBL. They were fully aware of the decoration and name of the Yellow Boots, but still did not avoid by taking reasonable measures, instead, they openly publicized in Baidu Tieba by describing "Thesameway 10061, the reborn of classic Yellow Boots, best seller of Senwei shoes store", so it could be identified that Tongye and Qian * had obvious subjective malice in infringement.

In conclusion, by first instance, the court judged that Tongye and Qian * should compensate RMB 400,000 to the plaintiff TBL for economic losses (including reasonable expenses).

Tongye and Qian * refused to accept the first instance judgment and appealed to Hangzhou Intermediate People's Court of Zhejiang Province. Hangzhou intermediate People's Court ruled in the second instance to reject the appeal and upheld the original judgment.

Typical Significance

This case has clarified how to identify the shape of the goods themselves as special packaging decoration. In particular, for whether the shape designed for technical effect or function could be identified as special decoration for protection, the court had solved this problem by judging whether the shape of the goods could be distinguished from other parts based on concept, which has reference value for similar cases.

Moreover, in this case, for the act of obviously infringing and copying the appearance of well-known goods of other party, although the profit made by the infringer and the loss of the infringed products cannot be determined, which makes it impossible to determine the amount of compensation by directly applying punitive damages, the court pointed out that when considering the compensation through legal compensation, we can treat the situation of malicious infringement as a punitive factor, so as to effectively fight against malicious infringement act.