Automotive energy, particularly when involving new energy, is an IP-intensive industry. Effective management and use of IP are indispensable to China’s automotive energy companies. Protected trademarks, patents, copyrights, domain names, trade secrets and right to use give their owners an edge in technology or branding.
In disputes, accurate and precise judgments on issues related to intellectual property can help companies reach settlements in a timely fashion, help avoid massive compensation, potential loss of reputation, and the expense of vast amounts of energy and time in pursuing cases.
Companies gain the legal right to use IP by independently or jointly developing the IP, obtaining a licence, or buying the IP or its owner. The accumulation, registration, management and protection of IP is a mighty tool for companies in their global expansion and competition. This article introduces China’s IP legal system, and analyses several key IP cases involving automotive exterior design, and the opinions of the courts.
Q: How is IP legally protected in China?
A: China’s IP protection legal system consists of the Constitution, the Patent Law, the Trademark Law, the Copyright Law and the Anti-unfair Competition Law, along with many other laws, rules, regulations and normative legal documents. Amendment (XI) to the Criminal Law, effective from 2021, contained stipulations on criminal offences infringing trademark rights, copyright and trade secrets.
In addition, the Civil Code, also effective from 2021, and the Supreme People’s Court’s interpretations on IP made further provisions and clarifications on the subject, as well as on punitive damages and other such issues, strengthening China’s capacity to protect IP.
Q: What are some high-profile disputes over automotive exterior design, and what core opinions derive from them?
A: The following is a brief case analysis of how exterior design of vehicles could be protected from the angles of patent, copyright and anti-unfair competition.
Dispute: Honda holds the patent for the disputed automotive exterior design, and it remained valid throughout the proceedings. Honda claimed that the LAIBAOS-RV model, jointly manufactured and sold by Shuanghuan Motors and Shuanghuan Auto in Shijiazhuang, fell within the protective scope of their patent, and the companies should be liable for patent infringement.
Honda subsequently filed a lawsuit in the High People’s Court of Hebei province against the two companies and Shuanghuan NEV, requesting an order to cease infringement and compensate for losses.
Summary of judgment: the lawsuit was dismissed.
Opinion of the Supreme People’s Court: Whether the defendants’ automotive exterior design violated the Patent Law primarily depends on the visual difference, represented in the design characteristics and their combined effect, between the allegedly infringing product and the disputed patent, and whether such differences are sufficient to distinguish the two among common consumers. If sufficiently distinguishable, the patent was not infringed upon.
Dispute: British automobile manufacturer and distributor Jaguar Land Rover finished the exterior design of its Range Rover Evoque model in February 2009, and subsequently revealed it at the eighth Guangzhou International Automobile Exhibition in December 2010. In 2014, Jiangling Motors Corp launched their Landwind X7 model, which was marketed to the public in co-operation with Dachang Landwind.
Jaguar Land Rover filed a lawsuit claiming that Jiangling Motors infringed upon the copyright of the exterior design of the Range Rover Evoque model.
Summary of judgment: The first instance judgment of Chaoyang District People’s Court of Beijing municipality was to dismiss the lawsuit, subsequently upheld by the Beijing Intellectual Property Court (Beijing IP court).
Opinion of the Beijing IP court: Whether the defendant’s automotive exterior design violated the Copyright Law primarily depends on whether the design met the minimum requirement for being an original work of art. In other words, is it acknowledged by the general public as a work of art instead of an industrial product? Only a work of art can be protected by the Copyright Law.
Dispute: Jaguar Land Rover alleged that its Range Rover Evoque model had garnered considerable market awareness and familiarity in China. It is uniquely designed and decorated in terms of roof, outline, hood and silhouette. Having been marketed and sold, the design is able to differentiate the source of goods, which puts it under the “decoration with certain influence” category in the Anti-unfair Competition Law.
By producing, promoting and selling the Landwind X7 model, Jiangling Motors and Dachang Landwind confused the customers by adopting the identical or similar decoration of Jaguar Land Rover, constituting unfair competition.
Summary of judgment: The defendants were ordered to immediately cease any unfair competition, including the production, display, pre-sale and sale of certain vehicles of designated models. In addition, an announcement shall be published on a designated official website and China Automotive News – for no less than seven days for online media – to eliminate the adverse effects caused to Jaguar Land Rover.
Jiangling Motors was further ordered to compensate Jaguar Land Rover with RMB1.27 billion (about USD197 million) for economic losses and RMB227,000 for reasonable expenses within 10 days from the effective date of the judgment.
Opinion of the Beijing IP court:
(1) If the infringed design constitutes decoration with certain significance and influence;
(2) if the allegedly infringing design used such decoration;
(3) if the use of such design creates any general confusion or mix-up among the public.
If the answers are all “yes”, it is considered an act of confusion violating the Anti-unfair Competition Law.
Nancy Nan is a partner at AnJie Law Firm
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