Sweet victory for Ferrero Rocher in unfair competition case

The Supreme People's Court has held that the packaging of the Trésor Doré Jin Sha sweets was confusingly similar to that of Ferrero SpA's Ferrero Rocher chocolates, in violation of the Anti-unfair Competition Law (April 7 2008).

Ferrero registered the Chinese name Jin Sha (金莎) for its chocolates in Taiwan and Hong Kong in 1990 and 1993 respectively. Ferrero has sold Ferrero Rocher chocolates in China under the trademarks FERRERO ROCHER and 金莎 since 1984, but did not register the Chinese name in China.

In 2002 Montresor (Zhangjiagang) Food acquired the trademark rights in the name Jin Sha from a third party. It started manufacturing and selling sweets under the brand Trésor Doré Jin Sha using packaging similar to that of Ferrero Rocher chocolates.

Ferrero sued Montresor in the Tianjin Second Intermediate Court, alleging that Montresor's use of confusingly similar packaging constituted unfair competition under the Anti-unfair Competition Law. The court ruled against Ferrero, finding that:

• the decorative features of the Trésor Doré packaging were distinctive;
  
  
• Montresor had started marketing its goods in China before Ferrero;
  
  
• the Trésor Doré sweets were more famous than Ferrero's chocolates; and
  
  
• there was no likelihood of confusion between the goods, as they bore different trademarks.

Ferrero appealed to the Tianjin Higher People's Court in 2003. On January 9 2006 the court ruled in favour of Ferrero. It held that, based on the reputation of the FERRERO ROCHER mark in China and abroad, the trademark had been well known in China since 1984. Therefore, the court awarded damages of Rmb700,000 to Ferrero (approximately $100,000).

Montresor appealed to the Supreme People's Court and obtained a stay of the Tianjin Higher People's Court decision. However, the Supreme People's Court subsequently affirmed the lower court's decision based on the following grounds:

• The Ferrero Rocher chocolates became famous before the Trésor Doré sweets due to Ferrero's marketing campaign in China. The court stated that the reputation of a trademark abroad may be taken into consideration in assessing the reputation of the mark in China.
  
  
• Although certain elements of the Ferrero Rocher packaging were not distinctive (eg, the transparent plastic box and the foil wrapping), the packaging as a whole was clearly distinctive.
  
  
• Even though there were differences between the goods (eg, they bore different trademarks), the Trésor Doré packaging was confusingly similar to the Ferrero Rocher packaging.
  

Finally, the court considered whether damages of Rmb700,000 were appropriate. The court reduced the amount to Rmb500,000 (the maximum statutory amount for trademark infringement) on the grounds that Ferrero had failed to provide any evidence of losses suffered as a result of the infringement. The court reasoned that it could draw inferences from the Trademark Law in determining the amount of damages.

Although court decisions are not binding in China, it is hoped that the Ferrero decision will provide guidance on the application of the Anti-unfair Competition Law in future cases.

Benjamin Qiu, Lovells, Hong Kong