In the unfair competition dispute brought by Hunan Chayue Cultural Industry Development Group Co., Ltd. against Guangzhou Luoqi Catering Management Co., Ltd. and others, the court found the defendants imitated the 'Cha Yan Yue Se' trade dress and engaged in false advertising, constituting unfair competition, and ordered them to stop the infringement, publicly eliminate the impact, and pay RMB 1.7 million in total. The case was also cited in the Supreme People's Court work report.
Case Overview
Hunan Chayue operates the 'Cha Yan Yue Se' brand, whose store decor and packaging form a stable overall visual style. The defendants—Guangzhou Luoqi Catering Management Co., Ltd., Guangzhou Kaijunshengpin Catering Management Co., Ltd., and Liuqiong Beverage Store in Tianxin District, Changsha—operated tea drink stores under the 'Cha Yan Guan Se' brand with store decor and promotional language highly similar to 'Cha Yan Yue Se', and used 'Cha Yan Yue Se' related information in franchise recruitment advertising, amounting to false advertising. The plaintiff filed an unfair competition suit.
Issues in Dispute
- Whether the 'Cha Yan Yue Se' trade dress constituted an influential trade dress protected by the Anti-Unfair Competition Law;
- Whether the defendants' store decor and advertising constituted confusion and false advertising;
- How to determine the damages amount and liable parties.
Judgments and Case Numbers
- First instance: Tianxin District People's Court of Changsha, Hunan Province, (2020) Xiang 0103 Min Chu No. 8252, announced on April 26, 2021 (World IP Day);
- Second instance: Changsha Intermediate People's Court of Hunan Province, (2021) Xiang 01 Min Zhong No. 7221, dismissing the appeal and affirming the judgment in March 2023;
- Result: the three defendants were ordered to stop nationwide the advertising, franchise recruitment, and false advertising using identical or similar decor; Luoqi and Kaijunshengpin were ordered to jointly pay RMB 1.5 million (including economic losses and reasonable enforcement expenses), and Luoqi and Liuqiong Beverage Store jointly RMB 200,000, totaling RMB 1.7 million; and to publish statements in China Intellectual Property News eliminating the impact;
- Related proceedings: on April 8, 2020, the Yuelu District People's Court of Changsha dismissed Luoqi's own claim of trademark infringement against Cha Yan Yue Se (claiming RMB 210,000) at first instance; on May 14, 2021, the Beijing Higher People's Court vacated on second instance the CNIPA's decision maintaining trademark No. 32204895 'Cha Yan';
- Sources: 'White Paper on IP Judicial Protection (2019–2023)' published on the Tianxin District Court website; Hunan Daily report reposted by the Hunan Market Regulation Bureau ('Cha Yan Yue Se sues Cha Yan Guan Se, wins RMB 1.7 million at first instance'); Hunan Higher People's Court's 'Annual Report on IP Judicial Protection of the Province's Courts 2021'.
Key Takeaways
- Trade dress protection does not require a registered trademark: an influential trade dress can be protected under the Anti-Unfair Competition Law even without registration;
- An overall business image can constitute trade dress: the overall business image formed by store signs, decor style, packaging, and materials, where it serves to distinguish source, can be recognized as protected trade dress;
- Confusion and false advertising can be found in parallel: the defendants' riding on another's goodwill in franchise recruitment constituted false advertising;
- Trademark offense and defense interact with unfair competition suits: the defendants' counterclaims based on squatted trademarks failed on both fronts.
Lessons for Businesses
A brand's distinctive store and packaging design should form a stable, unified identity system, with the design process and investment documentation preserved; franchise recruitment advertising must not ride on others' brands, or it may constitute both false advertising and unfair competition; where others imitate decor, protection can be claimed under the Anti-Unfair Competition Law without being limited by trademark registration; and against counterclaims based on squatted trademarks, invalidation procedures provide a countermeasure.
For the specific procedures above, you may book an invalidation filing on MyTMBee, and a filed trademark agent will provide full assistance.