Proof of Well-Known Goods in the “Super Girls” Disc Case

2008/2/1Zhou Xiaobing,[Unfair Competition]

I. Briefing of the case

The Entertainment Channel of Hunan TV (EC of Hunan TV)and Shanghai E. E. Media Co. Ltd. (E. E. Media) jointly organized the 2005 Super Girl TV series and national tour. The EC of Hunan TV granted exclusive rights of publication, duplication, distribution, and dissemination to the E. E. Media Company, which in turn authorized the Guangdong Audio Visual Publishing House to publish a VCD of the Super Girls National Tour, and the Kangyi Audio Visual Publishing House of China to publish VCDs of the "Super Girls: PK in Each Song①: Love Songs" and "Super Girls: Final PK①". The names of the three VCDs include the characters of Super Girls, artistically designed fonts and the images of the Super Girls contestants. Pink Media Company was the producer.

On March 24, 2006, a Beijing AV shop sold CD+VCD of "Super Girls: Tour around China (foreshow edition)". The Super Girls label on the package of the discs was, in terms of font, artistic deformation and size, identical with those distributed under the plaintiff's authorization. The images of the Super Girls contestants were used, and their pictures were included in the discs. The name of the involved publishing house in Shandong was printed on the package of the discs. China's standard recording code of the Shandong publishing house is on the discs, and the SID code of a Foshan company was etched on the central part of the discs.

The plaintiff, E. E. Media, claimed that the Shandong publishing house, Foshan company and Beijing AV shop, published, duplicated and sold without the proper authorization from the right owners, the discs of "Super Girls: Tour Around China (foreshow edition") . On the packages, the defendants used the images of the Super Girls contestants, the name of "Super Girls: Tour Around China", and the pictures of the Super Girls contestants, which confuses the public about their discs with those properly authorized. Besides, the defendants' conducts constituted unfair competition. As a result, the plaintiff demanded the three defendants to cease and desist publishing, duplicating and selling the discs of "Super Girls: Tour Around China (foreshow edition)", and the first two to issue their apology in the Legal Daily and to jointly and severally compensate the plaintiff with 100, 000 yuan for economic losses.

The first-instance court found that the 2005 Super Girls series of activities, which were well-known to some degree, were jointly organized by the EC of Hunan TV and the plaintiff. The exclusive right of the plaintiff authorized by the EC of Hunan TV for publication, duplication, distribution and dissemination through an information network of audio/video products of the program was under protection of law. The Plaintiff had authorized other people to distribute audio/video products as the "Super Girls National Tour", and the contents of this series were the Super Girls Concerts which enjoyed a certain degree of popularity. Therefore, this series of audio/video products were well-known goods. The name of the "Super Girls National Tour" used in the audio/video products and the images of the Super Girls contestants used on the packages were those of the well-known goods.

The name of Super Girls was used in both the blamed Tour Around China of the defendants and the plaintiff's "Super Girls National Tour"; the four Chinese characters "超级女声"(Super Girls)used in these two products were identical in font, artistic deformation and size; the images of the Super Girls contestants were used in the package and contents of the defendants' AV products. Therefore, the defendants' products were using the name and package that were similar to those of the well-known goods. The similarity in name and packaging was confusing to the public, and would mislead them to believe that the blamed products were authorized ones from the Plaintiff. In accordance with Articles 5.2 and 20.1 of the Anti-Unfair Competition Law, the court ruled that the Shandong publishing house and the Foshan company were to stop duplicating, publishing and distributing the AV products and compensate the plaintiff 100, 000 yuan for economic losses; and the Beijing AV shop was to cease sales of the discs of "Super Girls: Tour Around China (foreshow edition)". The other claims of the plaintiff were rejected.

Under the mediation of the second-instance court, the two parties entered into an agreement: the first two defendants compensated the Plaintiff for relevant economic losses, and the case was concluded.

II. Case Analysis

A. Judicial Standard for Determining Conduct of Unfair Competition

Among the several laws related to intellectual property, the Anti-Unfair Competition Law may be the most roughly formulated and encounters most problems in practice.

We often say the Anti-Unfair Competition Law is a miscellaneous law, which means that: if we believe that one conduct infringes others' intellectual property right, but we cannot find provisions in the Copyright Law, the Trademark Law and the Patent Law regulating this conduct, we will have to turn to the Anti-Unfair Competition Law for help. This reflects to a certain degree the characteristic and status of the Anti-Unfair Competition Law, but is not very accurate.

As to the determination of unfair competition conduct in judicial practice, we cannot exaggerate the scope of application of the Anti-Unfair Competition Law. Two principles relied on are as follows: judged from the subjective aspect of the actor, whether the conduct violates the good faith principle and; judged from objective aspect, whether the conduct has negative influence on the fair and orderly environment of market competition.

Whether the conduct has negative influence should be judged from two aspects. First, from the perspective of the market players, whether this kind of conduct changes the market evaluation of the actor and his competitors, and the transaction costs, status and opportunities of the two sides of a deal. Second, from the perspective of consumers, whether this kind of conduct changes their understanding of the products and services provided by the actor and his competitors, or changes (including possibility of change) the judgment and free choice of consumers in selecting goods and services.  

B. Proof of Well-Known Goods

The Interpretation of the Supreme People's Court on the Application of Law in the Trial of Unfair Competition Civil Cases (Interpretation) issued on January 12, 2007 explains the elements that need to be considered in determining well-known goods or services by the courts, and makes clear that "the plaintiff should bear the burden of proof for the market popularity of his goods." In judicial practice, it is a complex issue for the plaintiff to prove the popularity of his goods or services. The following kinds of proof have a certain probative value and can be admitted:

a) statistics about the market share of a good provided by an authoritative agency. As there is no scientific and normative management of industries in China, this kind of proof is in fact very hard to be obtained. But this kind of proof is a direct and strong in showing the popularity of goods or services:

b) sales time of the goods;

c) the investment on advertisement, sales promotion and commonwealth activities related to goods;

d) the sales volume, profits and the sales territories of goods, including those of chains and franchise operation; and

e) favorable feedback of consumers and awards issued by authoritative organs.

In many cases, the obligee submits survey reports in order to prove the popularity of goods, but they are rarely admitted by the court. In fact, the industry of social investigation is not mature, and the reports provided by the businesses engaging in social investigation lack higher public credibility although they are relatively neutral third parties. The main reasons are tendentiousness resulting from the economic relations between the investigation company and its client, unreasonable selection of samples for investigation, leading questionnaires and unscientific analysis of samples.

In the process of producing evidence, the plaintiff should pay attention to two points. One is impartial source of evidence. For instance, if the evidence concerning sales volume and advertisement investment is produced by one side alone, it lacks probative force even if it has been audited by a third party. The other is that evidence must be presented for goods and services involved in the case. In most cases, the well-known product claimed by the plaintiff is only one kind of his many products although it might be his main good. In fact, all the evidence must be presented for this product. If the plaintiff presents evidence for proving the history, scale, returns and even the awards the business has received, he is doomed to miss the point.

What needs explanation in judgment of well-known goods or services listed in the Interpretation do not require the plaintiff to produce forceful evidence in every aspect. The plaintiff does not need to present all the aforementioned evidence listed by this author in proving that his goods are well known. In judicial practice, two problems must be clarified: one is that well-known goods are known only in certain regions. In determining whether goods are well known or not, it does not require very high popularity in the entire Chinese market. As far as a specific case is concerned, as long as the goods are well known in the same market in which the actor's alleged fraudulent goods are also sold, then the goods can be determined as well-known goods. The other problem is that the "relevant public" of the goods and services must be judged. Here, the "relevant public" should include at least:

a) actual purchasers and users of the goods or services;

b) potential purchasers and users of the goods or services;

c) raw material providers and cooperators of the providers of the goods or services;

d) relevant persons involved in the process of research and development, production, circulation of the product and the after-sale maintenance and services, esp. the wholesalers, retailers and conveyancers involved in the process of circulation of goods; and

e) relevant persons engaged in the same industry and related industry.

C. Determination of Imitation Conduct

We often name the conduct of "using, without authorization, the names, packaging or decoration peculiar to well-known goods or using names, packaging or decoration similar to those of well-known goods" provided by the Anti-Unfair Competition Law as "sticking to famous brand". Actually, this saying is relatively suitable to explain the standard of determination of this kind of conduct. "Famous brand" requires that the goods and services provided by the competitors be "well-known". The words "sticking to" means "drawing support from", indicating the subjective ill will, while requiring the commission of the conduct of "imitation".

The provisions of the Interpretation on such issues as judgment of well-known goods, "peculiar names, packaging or decoration" and "mistaken recognizance and confusion" have positive significance to the clarification of judgment standards and unification of judicial measures.

As to the determination of imitation conduct, the following standards are required:

a) the goods and services provided by the competitors are well-known, which is the basis of possible unjust enrichment from imitation, and also a standard in judging whether the actor's conduct of imitation is illicit;

b) the popularity of the goods and services provided by the obligee can be embodied on the "peculiar names, packaging, or decoration". This standard clarifies the object of imitation, and decides the specific infringing manner. Why we emphasize here "the popularity of the goods and services provided by the obligee can be embodied on the ‘peculiar names, packaging or decoration'", rather than follow the wordings of "the names, packaging or decoration peculiar to well-known goods" used in the Anti-Unfair Competition Law? We want to emphasize that this kind of "name, packaging and decoration" must be a kind of symbol of the popularity of the goods and services, which plays a role in distinguishing the sources of the well-known products and services and indicating their quality. Meanwhile, this kind of "peculiarity" also excludes the names, packaging and decorations of goods which are generic, indistinctive and indistinguishable;

c) the conduct of imitation is committed, i.e., the actor uses the name, packaging and decoration that are identical with or similar to the aforementioned "peculiar names, packaging or decoration".

d) the conduct of actor indicates connection between his products and services and the obligee's well-known goods or services, and makes consumers confused and mistake the sources and quality of the products and services provided by the actor (including the possibility of causing confusion or mistake) for those of the obligee.

There was a case where the "product license number" of health products of others was used by an unauthorized user. The court finally found that, as far as the consumers were concerned, the "product license number" could not play an important role in distinguishing the source of the products and services and indicating the quality of the products and services. Therefore, it did not fall into the scope of "peculiar names, packaging or decoration", and the conduct of the actor did not constitute a conduct of imitation.

D. Judicial Determination of the Case

In determining the case, the plaintiff must be required to answer the following questions: What are the well-known goods claimed by the plaintiff? What is the peculiar name and decoration of the well-known goods? In this case, the well-known goods claimed by the plaintiff should be the VCD of "Super Girls National Tour" published by the Guangdong Audio Visual Publishing House under authorization, while the peculiar name of the well-known goods should be "Super Girls National Tour", and the peculiar decoration of the well-known goods should be the artistic design of the Super Girls and the image design of the contestants.

To prove that the VCD of Super Girls National Tour is a well-known product, the plaintiff should bear the burden of proof by presenting the evidence that may include the favorable marketing records of the discs, the ranking in the selling charts of the records, awards the discs have received, and favorable feedback by the consumers, etc.. Evidence of the popularity of the Super Girls show and "Super Girls National Tour" can also prove indirectly the popularity of the goods VCD of "Super Girls National Tour", because there exists a close connection between the three. However, it lacks persuasion if the popularity of the activity of "Super Girls National Tour" is purely deduced from the popularity of the activity of the Super Girls shows, and the conclusion that the VCD of "Super Girls National Tour" is a well-known product is further deduced. In other words, the evidence proving the popularity of goods should be directly aimed at the goods, and it is inappropriate to be deduced from the popularity of relevant goods or services.

As to the determination of the peculiar name of the well-known goods, apart from the standard concerning the "peculiarity" mentioned above, two other issues must also be considered. One is whether the name is a registered trademark. If the name has been approved and registered as a trademark, it can no longer obtain the protection for the peculiar name of the well-known goods under the Anti-Unfair Competition Law, and the Trademark Law should directly regulate the infringing conduct on the name; also, the owner of the name should be determined. As far as the case is concerned, if the Super Girls shows and tour are well-known services, in determining the peculiar name of the well-known services, the fact that the Super Girls activities are jointly organized by the EC of Hunan TV and the plaintiff must be considered. The right of name of Super Girls should be jointly owned by Hunan TV and the plaintiff. As a result, from the legal proceedings, the plaintiff cannot file the lawsuit alone and seek to have the name determined as the peculiar name of a well-known service.

As to the peculiar decoration of the well-known goods claimed by the plaintiff in this case, i. e., the artistic design of the Super Girls and the image design of the contestants, this author takes the view that: first, the owner of the name of Super Girls and the artistic design should be Hunan TV and the plaintiff, and the plaintiff cannot claim the right alone; second, the images of the Super Girls contestants do not possess the "peculiarity" that indicates the goods. Therefore, the plaintiff's claim concerning the peculiar decoration of the well-known goods should not be supported. 

As the VCD of "Super Girls National Tour" was determined as a well-known commodity and "Super Girls National Tour" was determined as its peculiar name, it could be determined that the discs of the "Super Girls: Tour Around China (foreshow edition)" published and distributed by the Shandong publishing house used a name similar to the above-mentioned "peculiar name". By this conduct, a connection between its goods and the obligee's well-known goods was established, and thus caused confusion among the consumers on the sources and quality of the products and services provided by the actor (including the possibility of causing confusion or mistaken). In accordance with the principles discussed above, it can be determined that the conduct of the Shandong publishing house constitutes imitation of well-known goods.

From the above standard for determining unfair competition conduct, we can see the Shandong publishing house subjectively breached the basic principle of good faith and its conduct had objectively negative influence on the environment of fair and orderly market competition. Therefore, it is correct to decide that its conduct constitutes unfair competition.

As to the liability of the Foshan company, it is inappropriate to find that it, joined by the Shandong publishing house, had unfair competition conducts since it was only involved in the duplication of discs of the "Super Girls: Tour Around China (foreshow edition)" and played no part in the printing and manufacturing of the disc jackets with the peculiar name of the well-known goods. In other words, cases of unfair competition are different from those of infringement on copyright and sound or visual recording producers' rights. Whether the publishing house and the unit duplicating discs should bear joint and several liabilities should be determined in accordance with specific situations.

About the author:

Zhou Xiaobing is a Judge from the Division of Intellectual Property, Beijing No. 2 Intermediate People's Court.

 

                                                                                            (Translated by Ma Jing)

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