First judicial interpretation of Anti-Unfair Competition Law issued

The Supreme Court of the People's Republic of China has issued its first ever judicial interpretation on the Anti-Unfair Competition Law since its enactment in 1993. The law has the aim of curbing unfair or improper trade practices in the Chinese market. It contains provisions which are considered to be close to the common law action of passing off and is often referred to in IP cases, particularly in the absence of a relevant trademark registration.

Those provisions are however drafted in wide terms and the Supreme Court's interpretation seeks to give guidance on the meaning of those terms and provisions which are considered to be ambiguous. The following are a few examples of the Supreme Court's judicial interpretation on the Anti-Unfair Competition Law which are pertinent to IP cases:

• The law prohibits the unauthorized use of the trade name, packaging or trade dress unique to a well-known product. This prohibition extends to the use of trade names, packaging or trade dress which are confusingly similar to those of well-known products.
  
  The interpretation gives guidance on the meaning of the terms 'well-known product' and 'trade dress' which are not defined in the law. The interpretation clarifies that in determining whether a product qualifies as a 'well-known product', the court has to carry out a comprehensive review of the history, quantity and geographical extent of the sale of the product. It is for the claimant to establish the fame of its product, which must subsist among the relevant public in mainland China (not outside that country).
  
  For 'trade dress', the Supreme Court explains that the law does not protect trade names, packaging and trade dress which are non-distinctive or are purely generic or descriptive. These may however be overcome by acquired distinctiveness through use. On the other hand, the shape of a product which is solely dictated by its technical or functional effect falls outside the scope of the law. These considerations are very similar to the ones applicable to the registrability of a trademark or an industrial design both in mainland China and in Hong Kong.
  
  The interpretation also indicates that matters such as decorations, utensils and staff uniforms of a business enterprise, if they constitute an overall business image of a unique style, can fall within the definition of a 'trade dress' under the law.
  
  
• The interpretation also sheds light on what constitutes 'confusion' under the law. The interpretation explains that this concept covers any misunderstanding as to the product source as well as any wrongful association (eg, a licence or affiliate relationship) with a well-known product. Use of trade names, packaging or trade dress which appear to be not fundamentally different from those of a well-known product in respect of an identical class of product will be deemed to be capable of causing confusion.
  
  In determining 'confusion' under the law, the interpretation states that the court may refer to the applicable trademark principles. This presumably includes the principle of imperfect recollection. Overall, in interpreting the concept of 'confusion', the interpretation is very close if not identical to the common law action of passing off.
  
  
• The law prohibits the use of the name of another enterprise or individual which may create confusion. The interpretation makes it clear that this provision protects only an enterprise name which has acquired a certain degree of reputation in the market and is recognized by the relevant public. The same qualifications apply to an individual's name. An individual's name may however be that person's stage name or pseudonym for the purpose of the law. This may prove to be a useful tool for well-known artistes or writers to protect against unauthorized or improper use of their names by unscrupulous parties.

The interpretation is viewed as an ongoing effort of the Chinese government to strengthen the protection of IP rights in mainland China. While it is foreseeable that right owners will continue to resort to the Anti-Unfair Competition Law to enhance their claims, it must be remembered that the law does not confer any IP rights as such and remains an ancillary legislation of IP rights protection. The law is also confined to the protection of 'well-known' products and entities in mainland China. The stringent evidential burden of proving well-known status (especially in the case of a foreign rights holder) further limits the potential application of the law in IP rights cases.

Eugene Low, Johnson Stokes & Master, Hong Kong