RIMOWA Wins Unfair Competition Cases in China
RIMOWA, the premium luggage brand leader, won two favorable rulings in the latter half of 2016. One of those two judgements was released by the Zhongshan First People’s Court (“Court”) in Guangdong, on October 28 of 2016 (No.296-ZhongFirstCourtIPCivilLitigation-2015). The judgement unprecedentedly marked RIMOWA’s grooved design as an unique ornament of a famous commodity , placing it in protection under the Anti-Unfair Competition Law (“AUCL”) in China, one of the world’s largest single market for travel gear and accessories.
The Anti-Unfair Competition Law (“AUCL”) in China dictates in §5.1(2) that an act of “[using] the unique name, package, or ornament of the famous commodities, or [using] a similar name, package, or ornament of the famous commodities” is a means of manipulating commercial transactions to economically impair other market participant(s). Such an act is considered unfair, as it confuses consumer’s ability to distinguish the famous merchandise from the copies. Infringement which engages in unfair competition is in violation of the §5.1(2) of AUCL, and will be liable for monetary damages and injunctions.
On November 2, 2015, RIMOWA filed three complaints against Aimowa, a sole proprietorship luggage products manufacturer, respectively accused of unfair competition, trademark infringement, and utility model infringement. In the unfair competition claim, RIMOWA’s argument was centered on the well-known, worldwide status of its signature groove design. It alleged that the debut of the RIMOWA brand, along with the signature groove design, could be traced back to 1950. Before it entered the Chinese market many local customers had already been aware of this signature design from various sorts of media coverage. Over time, RIMOWA has gradually opened more than thirty boutique stores throughout Chinese cities. It enjoys a significant market share and has been awarded recognition and numerous awards domestically and internationally.
The defendant countered by discrediting RIMOWA’s groove design as not being a “unique ornament of a famous commodity” due to the disputed design’s stress-resistant functionality and ubiquitous availability. The defendant also tried to explain that its luggage products were made per Aimowa’s own design patents.
The Court reviewed the relevant facts and then developed reasoning as follows.
The first question presented before the Court was whether the RIMOWA luggage was a famous commodity protectable under the AUCL. As stipulated, “famous” commodities are those having certain market popularity within the territory of China and known to the relevant consumers.1 Considering the time span, geographical areas, marketing figures, and targeted consumers of RIMOWA luggage’s sales and advertising activities, without particularly excluding the fact of being well-known in foreign countries, the Court believed that RIMOWA should be entitled to the “famous” status in China.
Next, the Court addressed the question whether RIMOWA’s asserted ornament was distinctive. An ornament shall be one bearing notable characteristics which is able to be distinguished from the other common merchandise, except that in this case, the ornament is the product’s shape, achieving a technical effect and creating substantive value to the product.2 Although the defendant argued that the groove design on luggage having no notable characteristics due to that the grooves fortify resistance against physical stress and thus increase durability, the Court found the defendant’s exhibits as being circumstantial and thus failed to directly support its own functionality argument. The fact is, RIMOWA did not claim for all kinds of groove designs but only those, with equal spacing and uniformed width and height of grooves, being employed comprehensively on the entirety of a luggage piece. In other words, while different sizes, graphic patterns, or compositions of the grooves are available to improve luggage’s durability, any manufacturer has alternative options to freely choose its desired design. RIMOWA’s groove design is not an indispensable or absolute shape to achieve a given technical effect. Therefore, it should be able to acquire distinctiveness through the course of commercial use.3
Moreover, no evidence indicated that, prior to RIMOWA’s Chinese market entry, similar products were ever sold or available. The presence of several luggage products with grooves on the exterior was not sufficient to dilute RIMOWA’s signature design to become a generic pattern in the market. Affirmatively speaking in short, via consistent use and countless promotional events, RIMOWA has successfully enabled relevant consumers to associate the overall idea of RIMOWA’s groove design with its luggage products. The signature groove design can be recognized as distinctive characteristics identifying the genuine source of a particular sort of luggage commodity.
After establishing distinctiveness, the Court continued to analyze if any confusion as to the genuine source of RIMOWA’s products would arise and if defendant’s sales is an act of unfair competition. It was prescribed that an occasion of confusion includes a situation where the relevant consumers erroneously acknowledge the existence of a license agreement or of an affiliation relationship with the genuine product provider.4 Considering the high degree of similarity between two product series, although the price and market strategy may differ, it was found that the defendant’s products inevitably create a likelihood of confusion among luggage buyers as to some sort of economical affiliation between the two suppliers. Even though the defendant owns some enforceable design patents where one of which is identical to RIMOWA’s groove design, the patent right does not bar against RIMOWA’s priorly established rights. The defendant’s unlawful use of RIMOWA’s signature design constitutes unfair competition.
About the clause of damage calculation pursuant to the Trademark Law, the Court concluded to grant injunctive relief and awarded statutory damage to the amount of RMB 100,000 and reimbursements of RMB 50,000 for costs incurred during the enforcement.
On December 2, 2016 in a different case where RIMOWA sued another defendant based on the same ground under AUCL, the Beijing Dongcheng District People’s Court’s decision also favored RIMOWA (No.04248-DongCivil IPLitigation-2015). In the ruling, the Beijing court not merely recognized RIMOWA’s groove design as an unique ornament of the well-known commodity, but broadly acknowledged the entire “groove design set” of the suitcase as the unique ornament. The claimed “groove design set” encompassed five elements including the grooves, the protective corners, locks, metal strips and rivets, which is much broader than just the “groove design” itself. We believe the two Chinese court judgments shine a remarkable twilight to the enforceability of well-known products that possess an unregistered but “unique” ornament.
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