Retail is becoming more and more. Finding the best protection for retail spaces 3D DESIGNS

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1 Finding the best protection for retail spaces Fabio Giacopello and Eric Su of HFG consider the implications of three major cases in terms of how a 3D retail-space can be protected in China Retail is becoming more and more sophisticated. On the one hand, retailers suffer the pressure from e- commerce platforms gaining market shares over traditional bricks-and-mortar stores; on the other hand, the usual suspects: competition from other brands; rental costs; and, human resources costs. Stores become a weapon to boost product sales into consumer hearts, minds and hands. All these pressures amount to increasingly more sophisticated and visible features in retail spaces. The brand identity, values, philosophy, and concept are delivered to consumers through the physical stores. In this scenario of increasing care for store design to identify with and differentiate from competitors companies are demanding superior protection from IP attorneys. What tools are available for 3D design features? According to China s legislation and best practice, design patents, copyright, 3D marks and unfair competition are reliable legal grounds for claim- 2 W W W. M A N A G I N G I P. C O M

2 C H I N A I P F O C U S

3 ing protection over a tri-dimensional design of a store. Among those, the 3D mark is available in theory but difficult in practice, while unfair competition is the most frequently used legal resort for protecting the store s unique decoration. Design patents According to article 2 of the PRC Patent Law 2010, the term design refers to: new designs of the shape, pattern, or the combination thereof, or the combination of the colour with shape and pattern, which are rich in an aesthetic appeal and are fit for industrial application. Therefore it implies that a design shall be the design of product that can be manufactured by industrial means and shall be a separate and complete unit for both use and sale. The 3D layout and decoration of a retail space is not strictly speaking a product. The Judicial Interpretation issued by Beijing Higher Court the competent court for law suits related to the China Patent Office and China Trade Mark Office provides that buildings, bridges and other kinds of engineering and architectonic works that depend on special geographical environments and lack of repeatability and reproducibility, cannot not be patented. The Patent Law 2010 and examination guidelines issued by SIPO (the State Intellectual Property Office) went further, providing that only the architecture that depends on specific geographic conditions and cannot be repeatable through industrialised production means is not patentable. In theory, there is still an open debate on whether architecture work is an industrial product or not. There is a definite class for houses and other architectures (25-03) in the International Classification for Industrial Designs. In practice, we have observed that companies work around such obstacles by obtaining design patent protection in China for certain 3D objects which are used as store decoration. In such circumstances, it is not the store decoration itself to be protected but only the single items (see examples of registered design patents for retail spaces decoration in China). Fabio Giacopello Fabio Giacopello is a partner of HFG Law Firm & IP Practice. He has been nominated as an IP Star by Managing Intellectual Property 2014, a Notable Practitioner by Chamber and Partners (trade mark and patents), Lawyer of the Year (intellectual property in China) by Global 100, an Expert (trade mark category) by Asia IP Expert 2014 and a Recommended Lawyer by Legal 500. Fabio has substantive experience in technology transfer, patent and trade secret litigations and anti-counterfeiting. His practice ranges from chemical patent litigation to luxury goods, and trade mark enforcement, from patent licensing and technology contracts to arbitration in relation to disloyal behaviours of employees. He has also achieved brilliant results in commercial and corporate transactions on behalf of international companies. 4 W W W. M A N A G I N G I P. C O M Restaurant façade Ceramic floor with unique pattern Furniture Tableware with unique pattern or shape Dishes with unique pattern or shape 3D trade marks Several companies have tried to obtain a 3D trade mark for a store decoration. The Chinese Trade Mark Office can accept 3D shapes as trade mark, but in practice very few 3D trade marks have been granted. Article 8 of the Chinese Trade Mark Law (2013) provides that any sign capable of distinguishing the goods or services of one natural person, legal person or any other organisation from those of other persons, including words, devices, letters, numerals, 3D signs, and combinations of colours, sounds (and the combination of such signs) should be eligible for application for registration as a trade mark.

4 Usually, 3D trade marks are granted only on the experimentation of a long dispute during which the reputation on the market is strictly assessed by vigilant examiners. Moreover, it is worth remembering that article 12 of Chinese Trade Mark Law requires that: where a three-dimensional sign is the subject of an application for registration of a trade mark, the trade mark shall not be registered if it consists exclusively of the shape which results from the nature of the goods themselves, the shape of goods which is necessary to obtain a technical result, or the shape which gives substantial value to the goods. In practice, a 3D design can be registered as a mark if it has been used for a long time and has acquired distinctive features in practical use and become distinguishable. This applies even to a store decoration (such as a restaurant decoration) although it may not distinguish its own service from others, when it has been used for several years or has established several branch stores in different areas, and the relevant public can recognise it by its special decoration, then we can say it has become distinguishable and can be accepted as a 3D registered mark. In 2014, Apple applied in the EU for its store decoration as a 3D mark and was finally approved by the EUCJ (EU Court of Justice), and by the USTPO (US Patent and trademark Office) in However, the Apple store was not so lucky in China, where the 3D trade mark is still pending in front of Trade Mark Review and Adjudication Board (TRAB) in the rejection s review procedure. Eric Su Eric Su was appointed partner at HFG in 2011, after studying law at the East China University of Politics and Law and chemical engineering at the North University of China. He is member of the China Bar Association and the International Trademark Association (INTA), and was named IP Star by Managing Intellectual Property in 2014 and a recommended lawyer by Legal500. He has written articles for the MIP China IP Focus (2013 and 2014), the World Intellectual Property Review (2013), and China Business Law Journal (2012) and others. 5 C H I N A I P F O C U S Copyright law According to article 3 of Chinese Copyright Law: The term works includes, among other things, works of literature, art, natural sciences, social sciences, engineering and technology, which are created in any of the following forms:...works of the fine arts and architecture;...graphic works such as drawings of engineering designs and product designs, maps and sketches, and model works. The store decoration gives customers a coherent visual effect, but what the copyright protects is the expression of the tangible carrier, so different carriers of the decoration will be protected by different kinds of works. For example, the architectural appearance can be protected by works of architecture, other decoration elements can be protected as works of applied art or works of art, and the design paper and model can be protected otherwise. Anti-Unfair Competition Law Last but not least the Anti-Unfair Competition Law provides for protection of 3D shapes. It states in article 5 that An operator may not adopt the following unfair means to carry to transactions in the market and cause damage to competitors:... using, without authorisation, the name, packaging or decoration peculiar to well-known goods or using a name, packaging or decoration similar to that of well-known goods, so that his goods are confused with the well-known goods of another person, causing buyers to mistake them for the wellknown goods of the other person. According to article 3 of the Judicial Interpretation of Anti-unfair Competition Law issued by the Supreme People s Court, decoration of a business place, pattern of business appliances, and clothes of operating personnel for example may be considered as matching the definition of decoration as stipulated in sub-paragraph 2 of article 5 of the Anti-unfair Competition Law. To obtain such protection, the plaintiff has to prove that: (i) the retail store is famous or has a reputation in a territory; (ii) the decoration is

5 special; and (iii) the defendant s use of a similar shape would likely cause confusion among customers. Tao Zhen Xiang v Tao Tao Xiang Liang, owner of a famous dessert brand Tao Zhen Xiang ( 稻珍乡 ) in Zhongshan City sued Qi, the owner of another dessert brand Tao Tao Xiang ( 稻稻乡 / 稻稻香 ), for using its trade mark without authorisation and free-riding its brand to attract consumers by decorating its stores similar to Liang s dessert store. The Zhongshan court held that Qi intentionally highlighted words similar to Liang s trade mark as its brand name and used it as decoration in the stores. Since their scope of services and targeted consumers are the same, Qi s acts were sufficient to cause confusion among the concerned public under the Trade Mark Law. In respect of unfair competition, as Liang s dessert brand had already enjoyed a good reputation in Zhongshan City before Qi started its business, Qi as Liang s direct competitor should reasonably try to avoid imitating Liang s special decoration. The court found that that Qi s was intentionally imitating Liang s special decoration, which illustrates Qi s bad faith; it decided the case in favour of the plaintiff based on article 5(2) of the Unfair Competition Law. The decision recognised that the stampshaped brand used as store decoration is protected under article 5.2. free-riding of the plaintiff s rights constituted unfair competition. Plaintiff s building Defendant s building Guangzhou Yuexiu Dumpling Restaurant v Song Weihe The plaintiff, owner of a dumpling restaurant brand, sued a direct competitor for unfair competition consisting of imitation of the plaintiff s store and service decoration. The court held that, although the decoration of the paintiff s store used many elements typical to the north-eastern Chinese culture, the plaintiff hired a designer to design the entire store and services, including the store s general decorations, staff uniform, slogans, and mascots, which should be considered as the plaintiff s intellectual property. Therefore, based on article 2.1 and article 2.2 of the Unfair Competition Law, the court held that the defendant s act of free-riding was intentional and constituted unfair competition. Zi Feng Mansion v Zi Feng Oasis The plaintiff, owner of Zi Feng Mansion (Nanjing city s landmark building) sued Zi Feng Oasis Hotel Management for trade mark and trade name infringement and unfair competition by free-riding Zi Feng Mansion s name reputation. The defendant built a club named Zi Feng Oasis International Club, whose appearance was similar to Nanjing s landmark building Zi Feng Mansion, just in front of the Mansion, causing confusion among the general public. The court of second instance held that business operators should abide by the principle of voluntary and fair,business ethics undertaken in good faith. Unfair competition acts are not limited to acts that infringe the rights of a legal person, but also business interests. Therefore, the defendant s 6 Plaintiff s store Defendant s store The right protective measure In conclusion, the 3D design of a store can be protected by different kinds of IP rights with different examination criteria. Among them, in practice, the right of specific decoration of famous goods or services as provided by the Anti-Unfair Competition Law is the most popular way. Recently, companies are more actively filing both design patents and copyrights to protect their investment in creating and promoting unique decoration for the retail spaces. W W W. M A N A G I N G I P. C O M

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