9.1 Introduction
The first two decades of the twenty-first century witnessed the emergence and expansion of the shanzhai phenomenon in China.Footnote 1 Originally a term used to describe a fortress in a mountainous region, shanzhai has gained a metaphorical meaning in the country, denoting local factories’ low-cost imitation or copying of a well-known product from an international brand,Footnote 2 a phenomenon specific to China’s labour-intensive, low-value-added economy and top-down imitation strategy at that time. Despite having been massively covered by Western media and thoroughly investigated in economics studies, there is no precise definition of shanzhai, given its dynamic characteristics.Footnote 3 In the fashion world, shanzhai usually refers to fashion items, including outfits, handbags or accessories, pirated from designer brands, typically with an inferior quality and a lower price. In the fashion industry, there are two perceived types of shanzhai: imitation or copying of a brand’s name or trademarks (defined as ‘counterfeit’ items) and imitation or copying of a brand’s designs (defined as ‘knockoffs’). While international brand owners have successfully claimed trademark infringement against makers of ‘Amani’Footnote 4 or ‘Baneberry’ garments,Footnote 5 they are often stymied by cheap knockoffs that merely copy their iconic designs, such as Gucci’s green-red-green stripes or Burberry’s famous check pattern. Although these design elements have a source-identifying function, it is much more challenging for the company to protect them as trademarks due to their lack of distinctiveness.Footnote 6
As one of the largest consumer markets for fashion items, China has also been noted as the major source of fake fashion products in the past few decades.Footnote 7 However, since late 2010s, China has moved aggressively from an imitation economy to an innovation economyFootnote 8 and endeavoured to strengthen its long-criticised lax intellectual property (IP) system. Improving protection for fashion designs is a key aspect of its innovation strategy.Footnote 9 In addition to more active legislation and enforcement pertaining to IP,Footnote 10 recent judicial developments reveal that Chinese courts are more willing to embrace the registration of signature design patterns as non-traditional trademarks, such as three-dimensional (3D) trademarks or colour trademarks. In 2018, the Supreme People’s Court (SPC) of China signalled the possibility of acquiring distinctiveness through use by ordering the Trademark Review and Adjudication Board (TRAB)Footnote 11 to reconsider a decision against Dior’s 3D trademark application for the J’Adore fragrance bottle.Footnote 12 The Beijing High Court similarly ordered the TRAB to re-examine the registrability of Christian Louboutin’s signature red-soled shoe as an non-traditional trademark, and the decision was upheld by the SPC.Footnote 13 Will these new trends help ameliorate luxury houses’ concerns related to shanzhai in China? Are there any alternative solutions for fashion houses to guard their iconic designs? This chapter seeks to answer these questions through a detailed examination of recent court decisions in the country.
This chapter first briefly introduces the piracy ecosystem in fashion, consisting of blatant counterfeits and knockoffs. It then compares brand owners’ different approaches under Chinese law to claim copyright, trademark, design patent and unfair competition protection against imitators. Finally, by examining changing judicial practices, this chapter details China’s changing attitude towards the registration and enforcement of fashion design and design features, which may be a reflection of the country’s policy-level shift to an innovation-driven strategy.Footnote 14
9.2 A Two-Tier Piracy Hierarchy in the Fashion Industry
As has been noted by many indie designers, entrepreneurs and persons immersed in the fashion industry, ‘fashion is a lucrative business’.Footnote 15 According to the career site Zippa, the global fashion industry was valued at US$1.7 trillion as of 2022.Footnote 16 Due to its fast pace, short product life and ever-changing fashion trends,Footnote 17 creativity is the heart of the fashion industry.Footnote 18 Therefore, many believe that IP plays a critical role in the fashion industry, which requires intensive creativity.Footnote 19 However, the existence of ‘piracy paradox’, a theory purporting that design copying does not drive out but rather fuels creativity by accelerating fashion cycles, has constrained IP law’s intervention in fashion to the minimal.Footnote 20 That said, as noted by Kal Raustiala and Christopher Sprigman, it is important to distinguish between the copying of brand names and the copying of designs.Footnote 21 While brand names and logos can undisputedly be protected as trademarks, specific design patterns, elements or features cannot be easily protected by IP law.Footnote 22
9.2.1 Counterfeits
Although sometimes used interchangeably, the terms ‘counterfeit’ and ‘knockoff’ are conceptually different in IP literature.Footnote 23 Counterfeit, by definition, refers to a pirated product bearing the trademark of the original brand with the obvious intention to imitate and deceive consumers that this is indeed a genuine product.Footnote 24 Therefore, counterfeits inevitably involve trademark infringement and passing off.Footnote 25 While counterfeit product logos may exhibit similarities to the original trademarks, they are not necessarily exact replicas. These counterfeit items are often indistinguishable from authentic products for Chinese consumers, particularly when the trademarks are in foreign languages. Examples of such counterfeits include ‘Amani’ T-shirts or ‘Baneberry’ trench coats with designs slightly different from the originals, which could easily be mistaken for authentic Armani or Burberry products. Sometimes, the imitators even register trademarks over their counterfeited designs or logos. For example, the defendant in Burberry Limited v Baneberry Trading Co. Ltd. et al had managed to register its ‘Baneberry’ trademark in China in multiple classes.Footnote 26 Amusing as it may seem at first glance, there is actually a fair chance of consumer confusion when such counterfeiting techniques are combined with other imitative tactics (e.g., displaying the counterfeits in a physical or online store whose layout is also confusingly similar to that of the original brand).Footnote 27 Although consumers are aware that they are buying counterfeits, the court held that actionable initial-interest confusion prior to the sale existed when they were attracted to those products. In these scenarios, infringement still exists due to the substantial similarity between the counterfeited trademark and the original mark, alongside the imitator’s intention to free-ride on the original mark’s reputation.Footnote 28 This type of clumsy imitation accounted for a great proportion of shanzhai fashion in China in the 2000s and are still sold today. The following products were found in Manila, Shenzhen and Hong Kong (Figures 9.1–9.4).
Figure 9.1 Shanzhai ‘GUDID’ evocative of ‘GUCCI’.
Figure 9.2 Shanzhai ‘CALVNI KELIN’ evocative of ‘CALVIN KLEIN’.
Figure 9.3 Shanzhai ‘CHAINE’ evocative of ‘CHANEL’.
Figure 9.4 Shanzhai ‘CHRISTAN DORIO’ evocative of ‘CHRISTIAN DIOR’.
Trademark owners’ enforcement options against such blatant counterfeits are straightforward. As long as the original brand owner has secured valid trademark registration for its brand name or logo, it will enjoy a fair chance of success in civil proceedings.Footnote 29 In the Baneberry case mentioned above, Burberry successfully obtained a preliminary injunction enjoining the copyist from selling and marketing the counterfeited garments in a manner that was found to be confusing and deceptive.Footnote 30 When the value of the counterfeited goods meets the criminal threshold, the manufacturer could even be held criminally liable.Footnote 31 The brand owner can also resort to administrative remedies, such as filing complaints with local administration for market supervision or seeking assistance from customs.Footnote 32
9.2.2 Knockoffs
A knockoff is usually labelled with the imitator’s own trademark, which is sometimes completely unrelated to the brand of the original mark owner.Footnote 33 The product’s resemblance to the original comes solely from the imitation of style and design features (Figures 9.5–9.7). There is only a thin line between licit and illicit knockoffs,Footnote 34 since it is hard to discern if a subsequent design is plagiarising a prior work or just treats it as a source of inspiration. Popular fast fashion brands such as H&M, Zara and Forever 21 are frequently accused of knocking off designers.Footnote 35
Figure 9.5 Handbags – knockoffs of FENDI, LOUIS VUITTON and GUCCI.
Figure 9.6 Wallets – knockoff of LOUIS VUITTON with own brand name ‘REVIVALSM’.
Figure 9.7 Handbags – knockoff of LOUIS VUITTON ‘Damier’ but no logo.
One key feature that distinguishes knockoffs from counterfeits is that knockoffs do not aim to create consumer confusion.Footnote 36 An ordinary consumer can easily discern that a bomber jacket she purchases from Forever 21 – although it has similar design features or confusing elements, such as green and red stripes – is not actually a Gucci product, based on its texture, material, price, other design features and, most obviously, the ‘Forever 21’ label inside. In fact, many consumers consciously and actively seek to purchase more affordable knockoffs because the original products from coveted luxury fashion brands are often beyond their financial means. If consumer confusion is eliminated, claims based on trademark infringement or passing off are less likely to succeed.Footnote 37 Therefore, legal actions against the producers of such knockoffs are generally more limited and more challenging than those against the producers of trademark-infringing counterfeits.Footnote 38 Not surprisingly, in recent years, knockoffs have become a major form of shanzhai and a major challenge for fashion companies in China. Section 9.3 focuses on how and to what extent these design elements in fashion products are protected in China.
9.3 Protection of Design Elements under Chinese Law
Design companies have sought to protect their design elements through different categories of IP. This section explains the use of copyright, trademarks, design patents and unfair competition to protect those elements, as well as the limitations of each approach.
9.3.1 Copyright
It is occasionally disputed whether fashion products, such as clothing, shoes and handbags, are subject to copyright protection because their aesthetic value is sometimes built upon their utility function.Footnote 39 For instance, in 2022, the Federal Court of Australia refused to recognise the Neoprene tote bag as a work of artistic craftsmanship.Footnote 40 The court ruled that the subject design was undoubtedly constrained by functional considerations because the designer intended to design a stylish ‘carry all’ bag from the beginning, and in that endeavour, the function and utility of the bag to ‘carry all’ had governed the overall design of it.Footnote 41 In contrast, the design of a pair of sandals was protected in Germany under the category of ‘applied art’ in the same year.Footnote 42 The Regional Court of Cologne, applying the framework established by the Court of Justice of European Union (CJEU), decided that the sandal design ‘went beyond mere functional elements and was not exclusively determined by technical considerations’.Footnote 43 Some commentators observed that this case suggested a lower threshold for applied art that blurred the boundaries between copyright and design systems in the European Union (EU).Footnote 44
This divergence of viewpoints also exists in Chinese judicial practices. In Yunchuang Design v Kashilan Clothing, the plaintiff registered copyright for a sun dress design, while the defendant offered for sale online dresses with a similar design. The court held that the contour of the sun dress together with the black-and-white dots reflected the designer’s personal choice and special arrangement, and thus the garment had the aesthetic value of a ‘work of art’ required by the Copyright Law.Footnote 45 The Chongqing Pilot Free Trade Zone People’s Court explained that if the contour or black-and-white dots were revised or removed, the function of the piece of clothing would be unaffected.Footnote 46 Therefore, the aesthetic value of the dress could be separated from its utility functions.Footnote 47 Notably, the court’s perspective on separability mirrors that of the US Supreme Court’s decision in Varsity Brands, Inc. v Star Athletica, LLC.Footnote 48 The Supreme Court held that the design features of a cheerleading uniform, such as stripes, chevrons, zigzags, and colour-blocking, were ‘wholly unnecessary’ and separable from its ability to cover the body, permit free movement and wick moisture.Footnote 49 Nevertheless, at around the same time of the Chongqing court’s decision, Yunchuang’s action against another knockoff designer in Guangzhou for the same dress was rejected by the Guangzhou Internet Court, which ruled that the design was merely a combination of common design features such as V-neck, short sleeves and invisible zipper, and it fell short of the aesthetic value required by the Copyright Law.Footnote 50 The inconsistent application of the law in different Chinese courts indicates that copyright infringement suits against manufacturers of knockoffs face great uncertainty in terms of success and is dependent on the fora or even views of individual judges.
It should be noted, however, that the aesthetics–utility dichotomy only restrains copyright in three-dimensional articles; therefore, fashion sketches, design features and textile patterns printed on a fashion item are not considered ‘useful’.Footnote 51 In other words, while a bomber jacket itself may be denied copyright, the design patterns (e.g., prints) on it could be eligible for copyright protection. Nevertheless, to be shielded under copyright law, the design pattern needs to demonstrate other requisites of a copyrightable work, such as expression, originality and human authorship.Footnote 52 A simple pattern of dots and stripes that falls under the public domain clearly does not possess sufficient originality for copyright protection.Footnote 53
9.3.2 Trademark
If a certain pattern or print has repetitively occurred on almost every product and therefore been perceived as a symbol of a brand, this particular pattern or print may acquire the status of a trademark.Footnote 54 For example, Louis Vuitton (LV) has successfully trademarked its Toile Monogram, consisting of the entwined ‘LV’ initials in the United States.Footnote 55 The iconic Burberry check and the LV ‘Damier’ check pattern that appear ubiquitously on many of the brands’ products ranging from apparel to accessories have also been trademarked. A trademark, by its statutory definition, is a mark used in trade that identifies the source of goods or services.Footnote 56 In the Gucci–Forever 21 dispute, what gives the Forever 21 knockoff a Gucci-vibe is the pattern of the design, especially the green-red-green stripes on the collar and cuffs of the jacket. If the stripes were removed or appeared in other colours, this fashion piece could hardly be considered piracy, because a bomber jacket is a generic apparel design in the fashion market. After being used by Gucci extensively and continuously for decades, the stripes in this particular configuration of colours are associated with the brand by consumers and have become a representative feature of its style and brand image. Therefore, stripes in these colours have, in essence, functioned as a source-identifying trademark, and Gucci has indeed registered the mark in various jurisdictions, including China.Footnote 57 In Gucci Am., Inc. v Guess Inc., the District Court for the Southern District of New York recognised Gucci’s rights to the green-red-green stripes and imposed a permanent injunction prohibiting Guess from using Gucci’s proprietary stripes without authorisation.Footnote 58
The idea of trademarking an iconic design may be attractive. However, the prosecution process is sometimes challenging. Generally speaking, there are three grounds on which a trademark application can be rejected in China: lack of distinctiveness,Footnote 59 having adverse connotationsFootnote 60 and the existence of prior rights, including similar prior marks.Footnote 61 The distinctiveness ground has two elements: inherent distinctiveness and acquired distinctiveness.Footnote 62 A mark is inherently distinctive when it serves to identify the source of the product or service. An inherently generic mark could acquire a ‘secondary meaning’ and become distinctive when consumers have developed an association between the mark and the source of the product or service.Footnote 63 Some fashion designs fail the distinctiveness test because they are inseparable parts of the underlying products.Footnote 64
In 2014, Van Cleef & Arpels (VCA) applied for registration in China of its signature four-leaf clover–inspired jewellery design as a three-dimensional (3D) trademark, which proceeded to registration in 2016. This line of jewellery is branded under VCA’s ‘Alhambra’ trademark. In 2018, a third party initiated an invalidation proceeding at the TRAB, successfully requesting that the TRAB nullify the registration in 2019. VCA then appealed to the Beijing Intellectual Property Court and then the Beijing High Court. The Beijing High Court, upholding the lower court’s decision, denied the distinctiveness of VCA’s most iconic design.Footnote 65 The court ruled, first, that the four-leaf clover pattern, although originated by VCA, was more likely to be perceived by the relevant public as the shape, appearance or ornament of the product when used on the designated goods, rather than a source identifier, and hence was inherently indistinctive.Footnote 66 Second, although VCA had adduced evidence to show its extensive use of the applied-for mark, such use was, again, found to be the shape, appearance or ornament of the designated goods, diluting its function as a source-identifier.Footnote 67
VCA was not the first company to lose a case because of inadequate distinctiveness. Hermès encountered a similar setback a few years before the VCA decision when attempting to trademark the design of its world-renowned Kelly bag as a 3D symbol. The SPC, in dismissing Hermès’ petition for a retrial against a Beijing High Court decision, reasoned that when a 3D symbol cannot be separated from the product, consumers are more likely to view it as a component of the product rather than a trademark, unless the unique features make the symbol distinguishable from those on similar products or there is sufficient evidence to prove that the relevant public associates the symbol with the brand. The SPC ruled against both the inherent and acquired distinctiveness of the design features of the Kelly bag.Footnote 68
It is worth mentioning that the disputed marks in both cases are 3D marks. While Chinese Trademark Law acknowledges 3D marks,Footnote 69 two-dimensional (2D) marks, such as words, devices, letters and numbers, constitute the majority of marks in the country. These 2D marks are typically considered as traditional trademarks, whereas marks incorporating other elements such as colour configurations or shapes are generally viewed as less conventional.Footnote 70 For instance, the ‘BOTTEGA VENETA’ logo is what one typically associates with a mark; the intrecciato weave ranging from 8–12 mm in width – registered as a mark in many jurisdictions – would be an unconventional one. Trademark examination and judicial practices have set a higher bar for 3D and other non-traditional trademarks in the determination of distinctiveness. Although VCA’s above-mentioned 3D mark was declared invalid by the court, its registration and enforcement of the 2D device trademark over the same four-leaf clover design has been successful.Footnote 71 In another invalidation case brought against this 2D trademark, both the China National Intellectual Property Administration (CNIPA) and the Beijing Intellectual Property Court recognised the 2D mark’s inherent distinctiveness.Footnote 72 In reaching that decision, the Beijing Intellectual Property Court explicitly stated that the standards to determine distinctiveness for a 3D trademark and those for a 2D trademark should be differentiated.Footnote 73 While the court did not explicitly specify these standards, it is reasonable to assume that the threshold for a 3D trademark to be considered ‘distinctive’ should be higher than that for a 2D trademark.
9.3.3 Design Patent
There are many examples of registering a novel design of apparel, shoes or watch as a design patent in China. For example, Nike has various design patent registrations in China for its footwear designs.Footnote 74 In one case, a domestic brand successfully enforced its design patent rights against an online store selling garments with similar designs and obtained damages of RMB 420,000 (US$57,600), in addition to an injunction.Footnote 75 However, design patents have their limitations. First and foremost, the Patent Law requires novelty, which means that the design is not known by the public before the application.Footnote 76 This requirement contradicts with the promotional nature of the fashion industry, which frequently built consumer excitement by showcasing new designs and products long before their official launch dates.Footnote 77 To illustrate, LV filed a design patent for its Archlight sneaker in China in 2017. In December 2020, upon the application of a third party, the CNIPA invalidated the said patent. The reason is simple and somehow ironic: The design had been disclosed to the public by the photos and videos featuring the Archlight sneaker posted on Chinese social media platforms Tencent and Sohu before the application date as a result of LV’s promotional activities.Footnote 78
Second, the filing and examination procedure associated with patent application is incompatible with the fast-paced nature of the fashion industry.Footnote 79 In contrast, the EU regime allows an unregistered community design (UCD) to be enforced without prior registration, which entails no acquisition fees.Footnote 80 This is why the EU is usually viewed as being more designer friendly.Footnote 81 Compared to design patents, copyright is sometimes a more efficient option because it does not require filing and examination. Trademarks also have the advantage of being renewable every 10 years hence conferring a perpetual monopoly,Footnote 82 whereas the duration of design patents in China is 15 years.Footnote 83
9.3.4 Unfair Competition
The Anti-Unfair Competition Law (AUCL) provides fashion companies with another option to protect their designs. Specifically, Article 6.1 of the AUCL prohibits business operators from using without authorisation ‘product names, packages, decorations and other identical or similar symbols with certain influence’ in a way that would mislead the public to associate the product with others.Footnote 84 Although VCA was not able to claim a 3D trademark over its above-mentioned four-leaf clover jewellery design, it successfully relied on Article 6.1 to protect the design against a knockoff manufactured by Shanghai Aijing Jewellery Co., Ltd. (SAJC), which brought an invalidation action against VCA’s 3D trademark to the CNIPA.Footnote 85 After VCA’s 3D trademark was declared invalid by the CNIPA, the Beijing Chaoyang District Court nonetheless accepted VCA’s claims based on the AUCL and granted VCA damages of RMB 1.5 million (US$215,000).Footnote 86
The Beijing Chaoyang District Court reasoned that, first, although a ‘decoration’ in the AUCL typically requires the separability of functionality and artistic values, the nature and features of the jewellery meant that the whole piece had no function other than being ornamental.Footnote 87 As such, it was fair to recognise the whole piece of jewellery as a decoration.Footnote 88 Second, the four-leaf clover pattern was uniquely developed by VCA and was not generic in jewellery design.Footnote 89 No other firm had used similar designs before VCA, and any subsequent use could not directly deprive the design of its distinctiveness.Footnote 90 Third, VCA had adduced evidence to show that the relevant public would associate the decoration with the brand, establishing itself as a ‘decoration with certain influence’ as stipulated by the AUCL.Footnote 91
VCA’s successful enforcement of the AUCL against the knockoff manufacturer has provided an important precedent for itself, as well as for other fashion design companies. Subsequently, VCA embarked on more anti-piracy enforcement projects in China based on unfair competition claims.Footnote 92 Apart from the traditional copyright, trademark and design patent approaches, designs now have the potential to be protected as a ‘decoration with certain influence’ under the AUCL. Compared to trademark and design patent claims, a claim made under the AUCL does not require ex ante prosecution. This protection of design elements resembles trade dress protection in the United States.Footnote 93 First, they both entail a lower degree of market recognition than what is required under trademark laws. In Two Pesos, Inc. v Taco Cabana, Inc., the US Supreme Court expressly ruled that a trade dress could be inherently distinctive and therefore acquiring secondary meaning was not necessary.Footnote 94 Second, aligned with the US Supreme Court’s refusal to extend trade dress protection to a functional design that was the subject of an expired patent,Footnote 95 the Beijing court’s decision in VCA v Shanghai Aijing seems to suggest a similar approach, requiring a finding of an absence of functionality to obtain protection under the AUCL.Footnote 96 Since a separate protection for fashion works is currently unavailable, a trade dress protection or its equivalent may be the best alternative.Footnote 97 The shortcoming, however, lies in the claim’s dependence on the owner’s market reputation, which is a relatively vague concept.Footnote 98
9.4 Accepting Design Elements as Non-traditional Trademarks
When comparing the prosecution and enforcement histories of VCA’s 2D and 3D trademarks, one can observe that while a 3D trademark typically offers broader protection than a 2D trademark for the same design in litigation, obtaining a 3D trademark is also more challenging due to its higher distinctiveness threshold. This is illustrated by the fact that, while the 3D registration for the ‘Alhambra’ design was invalidated, the attempt to invalidate the 2D registration ultimately failed. The same is true for the pairing of a colour trademark and a regular trademark applied to particular colours. Although colour trademarks are usually harder to acquire, they could have a larger protection scope than a regular trademark designated to particular colours, as they are not confined by the shape of the specimen. For example, should Gucci have registered its green-red-green stripes as a colour trademark instead of a device mark, it would not be confined by the specimen filed in the application, which would allow greater flexibility in enforcement actions.Footnote 99 However, recent judicial practicesFootnote 100 and the revision of trademark examination standards in 2021Footnote 101 have sent a positive signal to fashion companies regarding the use of non-traditional trademarks to protect their designs.
9.4.1 3D Trademark
In 2021, a 400-page review and examination guideline was issued by the CNIPA, replacing the previous version and elaborating in great detail examination standards under the 2019 Trademark Law.Footnote 102 According to this guideline, a 3D trademark refers to a trademark consisting of a stand-alone 3D symbol or a 3D symbol containing other elements.Footnote 103 When determining the distinctiveness of a 3D symbol, the examiner should also look into the way in which it is used before drawing conclusions about its source-identifying role.Footnote 104 An inherently indistinctive 3D symbol may acquire distinctiveness through use.Footnote 105 However, if a 3D symbol is considered ‘functional’, it cannot be registered, even with extensive evidence of use.Footnote 106 The ability to register 3D marks is important especially for luxury fashion brands whose iconic products in fact comprise widely recognisable features that are then replicated by a shanzhai manufacturer such as the Bottega Veneta’s intrecciato weave and Hermes’ Birkin and Kelly bags.
The section focusing on 3D symbols in the guideline was largely derived from the SPC’s 2018 decision in Christian Dior v China National Intellectual Property Administration (hereinafter Dior).Footnote 107 In this case, Dior sought to extend its international 3D trademark registration of the J’Adore fragrance bottle to China through the Madrid Protocol, but the extension application was rejected by the China Trademark Office,Footnote 108 and Dior’s appeals were denied all the way up to the Beijing High Court.Footnote 109
Dior then petitioned the SPC based on two grounds: (1) the Trademark Office and the TRAB had mistakenly examined the application as a regular device trademark instead of a 3D trademark; and (2) the J’Adore fragrance bottle was uniquely devised and not a generic design for perfume bottles (and therefore possessed inherent distinctiveness); the design had also been extensively used and promoted in China and generated considerable market reputation and public association (and therefore acquired distinctiveness).Footnote 110 The SPC acknowledged the procedural error in not properly identifying the application as a 3D trademark and ordered the TRAB to re-examine the registrability of the applied-for mark. Nonetheless, the SPC did not comment on the distinctiveness issue but only named a few factors that the TRAB should take into consideration before reaching a decision, including the time when the applied-for mark entered the Chinese market, the evidence supporting the use and promotion of the concerned trademark, the possibility of acquiring source-identifying function and the consistency of examination standards.Footnote 111 The SPC seemed to imply that these are the factors to be considered in the determination of acquired distinctiveness.
Pursuant to the SPC’s order, the TRAB reissued a decision in 2019, allowing the registration of the J’Adore fragrance bottle as a 3D trademark designated on ‘perfumes’ in class 3, while rejecting the application on all other goods applied for.Footnote 112 The reason was that, while the TRAB still found the bottle inherently indistinctive, it accepted Dior’s evidence of use and made a finding of acquired distinctiveness.Footnote 113 However, the evidence of use could only justify public association when used on perfumes; therefore, the application related to all other goods was rejected.Footnote 114
Considering the difficulties in protecting fashion design with 3D trademarks, Dior’s victory in China is commendable. Examples in other jurisdictions include the European Intellectual Property Office’s (EUIPO) partial refusal in 2022 to grant a 3D trademark to another example of Dior’s famous designs – the design of its Saddle Bag – based on a lack of distinctiveness.Footnote 115 Hermès also encountered failure in Italy when trying to enforce its EU-registered 3D trademarks on the shape of their Kelly and Birkin bags against a competitor, when both the Court of Florence and the Florence Court of Appeal upheld the defendant’s invalidity counterclaim.Footnote 116 However, following the instruction of the Italian Supreme Court, this case will soon go through a second appeal, and some practitioners have predicted a favourable result for Hermès.Footnote 117
9.4.2 Colour Trademark
China currently does not accept the registration of single-colour trademarks because of the monopoly power this may create,Footnote 118 nor does it generally accept registration of a colour-combination mark because a colour-combination mark is presumed to be inherently indistinctive. According to the examination standards,Footnote 119 the owner must submit evidence to prove that the colour combination mark has acquired sufficient distinctiveness through use to get it registered.Footnote 120 Again here, the fashion brands that use specific colours as emblematic of their products – such as Christian Louboutin’s lacquered red sole or Gucci’s red-and-green stripes – would desire to secure trademark registration so that they may more easily enforce their rights against shanzhai manufacturers as well as knockoffs by fast fashion brands.
In fact, there have been debates within China on the registrability of a single colour. The Draft Amendment of the Trademark Law, published in 2012, included a paragraph stating that ‘a single colour used on a product or package of a product, which has acquired distinctiveness and can distinguish the product from others, can be registered as a trademark’.Footnote 121 However, this sentence was deleted in the final version.Footnote 122 China decided to take a rather conservative approach to recognising and protecting single colours as trademarks.
Nevertheless, there have been some encouraging developments for fashion design companies interested in obtaining 3D trademarks in China. Christian Louboutin has faced defeats in several countries, including Japan, France and Switzerland, in trademarking its famous high-end women’s high-heeled shoes with a red-lacquered outsole design,Footnote 123 but succeeded in the United States. In 2010, Louboutin filed an international registration for its red sole under the Madrid Protocol and sought to extend the registration to several member states, including China.Footnote 124 The TRAB rejected registration because the mark lacked distinctiveness. The TRAB first identified the mark as a combination of a high-heeled device and a single colour applied to the sole, which was inherently indistinctive.Footnote 125 The TRAB also held that the evidence submitted by Louboutin did not meet the threshold for acquired distinctiveness.Footnote 126 The case then went to the Beijing High Court. Eventually, the SPC upheld the Beijing High Court’s decision recognising Louboutin’s design as ‘a single-colour trademark designated to a particular position’, although it was not listed in Article 8 of the Trademark Law.Footnote 127 This categorisation is consistent with Louboutin’s filing strategy in the EU, which was accepted by the CJEU.Footnote 128
Louboutin’s trademark application strategy in the United States might have valuable implications for China as well. The Court of Appeals for the Second Circuit instructed the United States Patent and Trademark Office (USPTO) that the registration of the red-sole mark could be approved for ‘only those situations in which the red lacquered outsole contrasts in colour with the adjoining “upper” of the shoe’.Footnote 129 In other words, Louboutin could only obtain a trademark for the red sole with a contrasting upper colour (i.e., non-red). Since defendant Yves Saint Laurent’s (YSL) outsole and the adjoining upper of the shoe were both red, its design did not infringe Louboutin’s red-sole mark;Footnote 130 it was also worth noting that the YSL range of monochromatic high-heeled shoes all featured soles in the same colour as the adjoining upper of the shoe (e.g., red-red, blue-blue, green-green). The concept of a red sole with a contrasting upper colour is similar to the colour-combination trademark, but the former provides trademark owners with broader protection because there is no need to identify the exact contrasting upper colour.
9.5 Conclusion
In the fashion world, shanzhai has been a concern for both high-end luxury brands and indie designers for many years. While it is easier to report to local authorities or claim trademark infringement in legal proceedings against manufacturers of counterfeits, the most effective action against knockoffs remains ambiguous. Design elements may be protected by laws governing copyright, trademarks, design patents and unfair competition, but each of these laws has some limitations. Just like the originality requirement for copyright and the novelty requirement for design patents, the distinctiveness requirement has prevented numerous fashion designs from being registered as trademarks.
Although the SPC’s decision in Dior suggests that it is possible for a sign that was not inherently distinctive to acquire distinctiveness through use, and ultimately qualify for registration as a trademark, the standard for achieving that is extremely high and almost equal to that for a ‘well-known trademark’. Alternatively, VCA has provided the fashion industry with a rather innovative approach based on the protection of ‘decoration with certain influence’ in the AUCL. It is easier for design companies like VCA to prove that their design elements have ‘certain influence’ under AUCL than that they have ‘acquired distinctiveness’ under the Trademark Law. Notably, Louboutin has also successfully enforced its rights against a knockoff designer of similar red-sole heels in China under the AUCL,Footnote 131 while the status of its trademark application is still uncertain. Chanel also protected the shape of its signature No.5 fragrance bottle under the AUCL against a perfume brand in China.Footnote 132 The series of cases revealed that there is huge potential for fashion companies to use the AUCL to protect their designs in China.
Nevertheless, the legal standards with respect to the application of the AUCL need to be further clarified by the judiciary. The current law does not clearly distinguish between ‘certain influence’ and ‘acquired distinctiveness’. Moreover, while the AUCL stipulates that a symbol possesses ‘certain influence’ when it exhibits a specific level of market recognition and distinctive attributes that can identify the product’s source,Footnote 133 the statutory wording is remarkably similar to the definition of distinctiveness in the Trademark Law.Footnote 134 This similarity could lead to confusion regarding the legal treatment of a symbol under the AUCL and a mark under the Trademark Law. It is also unclear whether the standard used to determine the separability of aesthetic value and functionality in the AUCL is the same as that used in copyright law. If they are different, a clear explanation regarding how, why and to what extent they differ is desirable. If these issues are resolved, the AUCL is anticipated to become the most potent tool for fashion designers in the fight against knockoffs. This, in turn, would address fashion houses’ enduring concerns about investing in creativity and expanding in the Chinese market.
Open access