Mark Bric Display AB (plaintiff) v. Shanghai Himalayas Advertising Company For Unfair Competition

Mark Bric Display AB

Address: Kallbacksrydsgatan 4, 502 47 Boras, Sweden

Legal Representative: Per-Arne Carlsson, chairman of the board

Authorized Attorney: Xu Shiying, attorney-at-law of Shanghai No. 4 Law Firm

 

Shanghai Himalayas Advertising Company

Address: 350 Wuning Road, Shanghai

Legal Representative: Zhou Xuedong, general manager

Autorized Attorney: Ni Peizhong, employee of Shanghai Himalayas Advertising Company

Authorized Attorney: Lin Jianhua, attorney-at-law of Shanghai No. 1 Law Firm

 

Plaintiff Mark Bric Display AB (hereinafter referred to as the "plaintiff") instituted this action at this court on December 2, 1998 against Shanghai Himalayas Advertising Company (the "defendant") for unfair competition. After filing the case, this court duly formed a collegiate panel. After all the exhibits and other evidential materials collected by the plaintiff were either notarized or certified and translated into Chinese, the collegiate panel held a public trial on May 12, 1999. Appearing at the trial for argument were Plaintiff's attorney Xu Shiying, defendant's legal representative Zhou Xuedong and defendant's attorney Ni Peizhong and Lin Jianhua. After the trial, both the plaintiff and the defendant submitted to this court supplementary evidence. The hearing of the case has now come to a close.

Plaintiff contends that it is a Swedish display equipment company duly established under the law of Sweden. The display equpment it manufactured is sold world-wide. In 1997 the products manufactured by the plaintiff entered the Chinese market, and from then on the company has been enjoying a good reputation in China. The name of the plaintiff company is translated as 马克·贝克 or 马克·布里克. Early in 1998, defendant company acquired through purchase products manufactured by the plaintiff from plaintiff's sales agency in Shanghai Luyao Advertising Company ("Luyao"), and thereby procured advertising materials prepared by the plaintiff. Thereafter, the defendant pirated and copied in large amounts these advertising materials, including advertising photographs and color pictures as well as advertising language. Except some captions and the name of the company, the layout of the advertisements and the pictures, drawings and design patterns used, as well the arrangement thereof, were almost identical to those in the plaintiff's advertisements. In addition, the defendant used the trademark Janet, which was similar to plaintiff's registered trademark. The infringing advertisements made by the defendant are basically of two types. One is a one-page advertisement ("Advertisement I") which was widely distributed by the defendants. The other ("Advertisement II") was published on the magazine Stories from Procurators. The pirating and copying of plaintiff's advertisements by the defendant are serious enough to confuse consumers, and have caused damage to the plaintiff in excess of RMB1,000,000, including more than RMB730,000 loss of profit resulting from reduced sales due to defendant's infringement, RMB130,000 spent by the plaintiff on advertising and display, more than RMB120,000 on travel expenses in connection with seminars and training sessions of product promotion in the Chinese market. Besides, the plaintiff also incurred some reasonable expenses in the aggregate of RMB200,000 in connection with investigation of defendant's activities of unfair competition. On these grounds, the plaintiff holds that, in accordance with the Law of the People's Republic of China against Unfair Competition and the Paris Convention for Protection of Industrial Property, defendant's acts constitute unfair competition. The plaintiff seeks a judgment enjoining the defendant 1) to stop its activities of unfair competition, i.e., of copying plaintiff's advertisements; 2) to publicly apologize to the plaintiff; 3) to pay to the plaintiff damages in the amount of RMB1,000,000.

To support its assertions, the plaintiff submitted to this court the following exhibits during trial and thereafter:

Exhibit I: Color Advertisement 1-FLEXIFRAME Basic 8, which specifically states "Mark Bric AB, 1996. All rights reserved".

On the front page of the advertisement are photos of display equipment and some captions and advertising language in English. The photos and words are vertically arranged as follows: (1) Title-FLEXIFRAME Basic 8; Caption-Choose a basic set-up with suitable panels! Add on to it, as the need arises! There are a number of easy-to-handle and effective accessories. (2) A big picture of "Easy-to-Carry Mobile Display Assembly" with captions. The picture shows a set of "Easy-to-Carry Mobile Display Assembly" consisting of eight basic panels for the back wall, four title panels and four lights, two file racks, one display desk with shelves, one base table, one bag for the back wall panels, and one bag for accessories. On the back wall panels there is a picture of food samples, and on the title panel there are words "Company Name, ETC." On the margins of the picture are captions in English. (3) Advertising language: FROM FRAME TO SYSTEM……, WITHOUT TOOLS and four smaller pictures, two of which show how the pieces of display equipment are connected, and the other two show two different styles of display equipment.

The background of the advertisement's front page is in light blue, and the words are in black. The background of the picture "Easy-to-Carry Mobile Display Assembly" is in dark gray. That of the two pictures showing the connection of the pieces is brown, and that of the two showing the two different styles of display equipment, white.

On the back page of the advertisements are captions in Chinese and English, and pictures of four sets of assembled display equipment. The captions and pictures are vertically arranged as follows: (1) the verbal part of the registered trademark Mark Bric, and its advertising language: FLEXIFRAME, Invented and manufactured in Sweden, flexible and simple display equipment, a choice of different set-ups, easy to carry, and made for repeated use. (2) Four sets of pictures showing different setups, each set consisting of two photos of display equipment on top of another two, with a picture of advertising language in between. Clockwise, Set I shows four back wall display shelves with portraits, a hexagonal tower, and some advertising language--INNOVATIVE AND EYE-CATCHING; Set II shows a standing-type display shelf against a background of a supermarket with samples of plants and price tags, together with some advertising language——AN EXCELLENT TOOL FOR COMMUNICATION; Set III shows three rocking display shelves and one hanging display shelf against a background of a shopping center or supermarket, with price tags and pictures showing directions, and some advertising language——GIVE YOUR MESSAGE AN EXTRA TOUCH; Set IV shows four display towers against the background of an exhibition hall displaying television sets, with pictures of samples and some advertising language-HIGHLIGHT YOUR PRESENTATION. (3) Captions——To our customers: FLEXIFRAME display systems are patented products invented and manufactured by Mark Bric AB of Sweden. Its Chinese sales agent is Luyao Advertising Company.

Exhibit 2 Color Advertisement 2: FLEXIFRAME

On the cover page of the advertisement there are some advertising language: "The easy-to-use frame and display system-with a wide range of attractive applications", and the works "Mark Bric" in the registered trademark. On the back cover of the advertisement there are words "Mark Bric AB, 1996, All rights reserved. The date of printing is 1996. On pages 2, 6, 10, 12, and 14, there is a set of pictures showing photos of display equipment and some advertising language. The set on page 2 shows a rocking display shelf, a back-wall display shelf, a standing display shelf, a display tower and some advertising language: FOCUS ON CREATIVITY. The four sets of pictures are identical with those on the back pages of Exhibit 1.

Exhibit 3 Color Advertisement 3: Mark Bric Jalit

This advertisement features 14 pictures of display equipment. Among them, the picture showing the Easy-to-Carry Mobile Display Assembly on the left of the first row of the front page is identical with that on the front page of Exhibit 1. The picture on the right of the third row is an enlarged version of some of the pictures in Set IV at the back of Exhibit 1.

Exhibit 4 Color Advertisement 4: FLEXIFRAME Jalit

The advertisement carries the words Mark Bric AB, 1996, All rights reserved.

On the frond page of the advertisement is some advertising language: "From separate shelves to display combinations: A flexible display system without need for any tools", and four color pictures, which are enlarged versions of some of the pictures in Exhibit 1.

Exhibit 5 White-and-Black Advertisement 1

At the lower right part of the advertisement is a black-and-white photo, which is an enlarged version of some of the pictures in Set III of Exhibit 1.

Exhibit 6 White-and-Black Advertisement 2

The three black-and-white photos are enlarged versions of the two pictures showing the connection of display equipment on the front page of FLEXIFRAME Basic 8.

Exhibit 7 Some of the negatives of pictures which the plaintiff used in making the above advertisements

Exhibit 8 Certifying documents proving that the plaintiff entrusted Tianse Advertisement Printing Company of Hong Kong with printing some of the advertisements on January 4, 1997.

The plaintiff uses Exhibit 1-8 to prove that the six display equipment advertisements such as FLEXIFRAME basic 8, FLEXIFRAME, Mark Bric Jalit and FLEXIFRAME Jalit are designed and created by the plaintiff.

Exhibit 9 Advertising Brochure created by the plaintiff: "Attention"

As indicated on its cover, the advertising brochure was printed in October 1997. it consists of words in English and Chinese, and photos of display equipment. Several photos show exhibitions of display equipment organized by the plaintiff in China.

Exhibit 10 Advertising Brochure for the 1997 Exhibition in China of Modern Equipment and Operation for International Business: 97 Modernshop

Page 26 of the advertising brochure "Participants in this Exhibition" makes it clear that Shanghai Luyao Advertising company is a distributor of commercial advertisements display equipment such as Mark Bric Easy-to-Carry back walls, display desks, display towers, standing display shelves and rocking display shelves.

Plaintiff uses Exhibit 9 and 10 to prove that its products were sold in the Chinese market in 1997.

Exhibit 11 Receipts for deliveries of plaintiff's display equipment purchased by the defendant from Luyao Advertising Company on November 6, 1997 and December 8 of 1997.

Exhibit 12 Receipt for delivery of display equipment purchased by the defendant from Luyao Advertising Company on April 10, 1998, such as the connecters for the hexagonal tower.

Plaintiff uses Exhibit 11 and 12 to prove that the advertisements made by the plaintiff, such as FLEXIFRAME Basic 8 and FLEXIRAME were known to the defendant.

Exhibit 13 Color Advertisement I made by the defendant ("Advertisement I").

The front page of the advertisement shows photos of display equipment and their trademark as well as advertising language in Chinese and English. The pictures and words are vertically arranged as follows: (1) The registered trademark consisting of the word Janet and the trademark representation; advertising language: A Display of Innovation, Flexible, Easy to carry and Creative; (2) A big photo of Easy-to-Carry Mobile Display Assembly, showing a set of "Easy-to-Carry Mobile Display Assembly" consisting of eight basic panels for the back wall, four title panels and four sets of lights, two file racks, one display desks with shelves, one base table, one bag for the back wall panels, and one bag for accessories. On the back wall panels is a picture of a man on a motorcycle. One the title panels are printed words Janet and a registered trademark; (3) Advertising language "Light, Flexible, Easy-to-Handle, Economical and Gorgeous" and four smaller photos, two of which show how the pieces are connected, and the other two show two different styles of display equipment.

 

The background of the advertisement's front page is in dark blue, and the Janet trademark and the English words are in black. The Chinese words are in yellow and white. The background of the picture "Easy-to-Carry Mobile Display Assembly" is in dark gray. That of the two pictures showing the connection of the pieces is brown, and that of the two showing the two different styles of display equipment is white.

On the back page of the advertisements are the trademark representation, some advertising language, and pictures of four sets of assembled display equipment. They are vertically arranged as follows: (1) The trademark representation and advertising language "Flexible and Easy-to-Handle Display Shelves and Display Systems"; (2) Four sets of pictures showing different setups, each set consisting of two photos of display equipment on top of another two, with a picture of advertising language in between. Clockwise, Set 1 shows four back wall display shelves with pictures of a sports car and portraits of human figures, a hexagonal tower, and some advertising language-INNOVTIVE AND EYE-CATCHING. Set II shows a standing type display shelf against a background of a supermarket with pictures of samples such as drinks and lipsticks and price tags, together with some advertising language-NUMEROUS COMMERCIAL USES. Set III shows a rocking display shelf, a standing display shelf, a back wall display shelf, a display tower, together with some portraits and pictures of sample drinks, and some advertising language-VARYING DISPLAY EFFECTS. Picture Set IV shows three types of rocking display shelves and one hanging display shelf against a background of a shopping center or supermarket, with price tags, shopping directions and sample fruits, and some advertising language-GIVE YOUR MESSAGE AN EXTRA TOUCH; (3) Explanation in words such as "General sales agency: Shanghai Himalayas Advertising Company".

The background of the advertisement's back page is in white. The trademark representation on the upper part is blue. The words are black. The photos are in red, yellow, blue or green. The pictures of the words are white against a background of black, framed in blue, purple, pink and cream color. The names of the enterprise and other words on the lower part are in black.

Exhibit 14 Color Advertisement II made by the defendant (Advertisement II)

This advertisement is published on page 25 of the February 1999 magazine Stories from Procurators. The advertisement shows the Janet trademark, words such as "innovative and eye-catching", "varying combinations and effects" and nine color pictures showing exhibition equipment. One of the pictures showing a back wall exhibition shelf and the hexagonal tower on the left of the first row is identical to a picture in Picture Set I of Exhibit 13. The picture in the middle of the first row shows two rocking shelves against a background of a supermarket, with drinks and vegetables. A picture on the right of the first row shows an exhibition tower displaying personal computers with pictures of samples.

Exhibit 15 The English original and the Chinese translation of the certificate provided by Stenkullens Tryckeri AB and dated August 17, 1998.

The certificate sets forth in the main the following contents: In re: the case of trademark infringement by Himalayas Advertising Company, Shanghai. This company has years of cooperation with Mark Bric Display Company. This company has printed over 650 kinds of publications since January 1, 1991. I know every detail of the materials given by Per-Arn Carlsson to Thomas Lagerqvist on May 13, 1998. When I compared Mark Bric AB's original table of contents and sales materials with the materials used by Himalayas Advertising Company, Shanghai, I found that the latter used the illustrations and photos of Mark Bric AB, which we have been printing for them for years. We have a complete record of the Mark Bric materials on file, and we can only use such materials upon written approval by Mark Bric.

The plaintiff uses Exhibits 13 and 14 to prove that the defendant copied and pirated its advertisements.

Exhibit 16 Letter by plaintiff's attorney Thomas Lagerqvist of the Swedish law firm Vinge LLP. To the defendant in June 1998 and defendant's reply made in the same month.

The plaintiff uses Exhibit 16 to prove that the plaintiff approached the defendant to discuss the matter of defendant's copying and pirating plaintiff's advertisements.

Exhibit 17 The Journal of the 98 (the first) Exhibition of China's Exhibition Halls and Exhibition Techniques, Appliances, Equipment and Facilities (November 3-8, 1998).

The plaintiff uses Exhibit 17 to prove that the defendant was still distributing Advertisement I as late as November 1998.

Exhibit 18 Written Statement about Plaintiff's Computation of Losses and Expenses. With Tables Attached.

The written statement and the tables show, in the main, that plaintiff's loss of profit because of reduced sales resulting from defendant's infringement is over RMB730,000. The rent and wages in connection thereto which the plaintiff paid for its warehouse in Hong Kong are over RMB360,000. The expenses of the plaintiff for advertising and exhibiting are over RMB130,000. Travel expenses in connection with seminars and training programs for sales promotion in China are over RMB120,000. The attorney's fees which the plaintiff paid the No.4 Law Firm of Shanghai for representing the plaintiff in this lawsuit are over RMB100,000, and the attorney's fees the plaintiff paid to the Swedish law firm Vinge LLP. For handling and investigating this matter are RMB100,000.

The plaintiff uses Exhibit 18 to prove that its economic loss is in excess of RMB1,000,000, and that the attorney's fees and costs of investigation in connection with this dispute is RMB200,000.

The defendant contends that 1) Printed on defendant's advertisement are the exteriors, structures and shapes of defendant's products, together with the Janet registered trademark; 2) The plaintiff' has not procured a patent of industrial design for its products, and the defendant has the right to produce similar products. Defendant's Janet trademark is registered, and does not infringe on the registered trademark of the plaintiff. Plaintiff's advertisements are not works of art and do not have right of authorship. If the plaintiff holds that its products are well know products and therefore enjoy protection of law, the defendant can also say that it has also won a gold medal because of the international reputation of its products. The defendant is justified in showing the design, structure and shape of its products on its advertisements; 3) In designing and making the advertisements the defendant used the advertisements made by Kangpu Digital Design Company of Guangzhou ("Kangpu") for reference. The arrangements of some sets of the pictures are made with reference to Famous Designs of Arts and Handicrafts. There are marked differences between the pictures, words, trademarks and name of companies in defendant's advertisements and those in the corresponding parts of plaintiff's advertisements, and these differences make confusion to consumers unlikely; 4) The Commission of Foreign Trade and Economic Cooperation has made investigations with respect to the dispute between the plaintiff and the defendant, and has found that the defendant did not copy or pirate plaintiff's advertisements; 5) Advertisement II came out only in the February 1999 issue of Stories from Procurators; Advertisement I had 5000 copies, but only 1500 copies were distributed; 6) Plaintiff's claim for RMB1,000,000 in damages lacks both factual support and legal justification. On these grounds, the defendant requests that the court dismiss plaintiff's complaint.

To support its contentions, the defendant produced the following exhibits during the trial and thereafter:

Exhibit I The Value Added Tax Invoice, dated March 31, 1998, for the Printing of 5000 copies of advertisement by Shanghai Gangxin Printing Company.

The defendant uses this exhibit to prove the time its advertisement were printed, the printer, and the number of copies printed.

Exhibit II The two advertisements made by the defendant.

The exhibit is identical to Exhibits 13 and 14 submitted by the plaintiff.

The defendant uses this exhibit to show the styles and contents of its advertisements.

Exhibit III The color photo plates for making defendant's advertisements.

The defendant uses this exhibit to prove that it made the two advertisements on its own, and it did not copy or pirate the advertisements of the plaintiff.

Exhibit IV A Set of Color Photos taken by the defendant

This set of photos shows the connection of the exhibition equipment, the components of the Easy-to-Carry Mobile Display Assembly (except the display desk with shelves and the base table) and some connecting materials of display equipment.

Exhibit V Defendant's Statement

The defendant states in the statement that two of defendant's employees saw the letter by the Commission of Foreign Trade and Economic Cooperation of Shanghai to the Chinese Consulate in Stockholm, Sweden with respect to the dispute between the plaintiff and the defendant. As they recall, the letter states to the effect that Himalayas Advertising Company, Shanghai, did not pirate the advertisements made by Mark Bric Display AB of Sweden.

The defendant uses this exhibit to prove that the Commission of Foreign Trade and Economic Cooperation of Shanghai has investigated the dispute between the plaintiff and the defendant.

Exhibit VI Certificate of the Gold Medal for defendant's Janet display equipment, awarded in December 1998 at the Second International Fair of Innovative Advertisements and Trademarks by the jury panel formed by the American Research Center of International Advertising, the American Juyixing Advertising Group, and the Joint Committee of International Honors of the European Community.

The defendant uses this exhibit to prove that its Janet display equipment is not "of poor quality", as described by the plaintiff.

Exhibit VII Color advertisements made by Kangpu.

The four sets of pictures on the front page of the advertisements are substantially the same with those in Advertisement I. The only difference is in the pictures of samples on the display equipment. These advertisements are not dated.

Exhibit VIII Advertisements made by Levox Industrial Ltd. And photos of advertisements from Famous Works of the Arts and Handicrafts in the World.

Some of these advertisements and the advertisements from Famous Works of the Arts and Handicrafts in the World are shown in picture sets consisting of two vertically arranged pairs of photos with some advertising language in between.

The defendant uses Exhibits 7 and 8 to prove that in making its advertisement it used for reference the advertisements made by Kangpu and Hong Kong Levox Industrial Ltd. As well as the pictures in Famous Works of the Arts and Handicrafts in the World.

Exhibit IX The Journal of the 1997 (the first) International Display Techniques and Equipment Exhibition.

In the Journal, Kangpu is listed as one of the exhibitors in the Products Catalogue.

The defendant uses this exhibit to prove that the advertisements made by Kangpu were distributed in the 1997 International Display Techniques and Equipment Exhibition.

In the course of our adjudication, this court served inquires with respect to relevant matters on the legal representative of Luyao Advertising Company Qin Huidong, who testified as follows: Luyao became the sales agent of the plaintiff in July 1997 and started to distribute the display equipment manufactured by the plaintiff. At the same time Luyao started to distribute advertisements for the FLEXIFRAME Basic 8 equipment. Thereafter, the defendant purchased from Luyao the display equipment made by the plaintiff and procured the advertisements for such display equipment made by the plaintiff. In April 1998, after receiving Advertisement I mailed by the defendant, Shanghai Xike Advertisement and Media Company, mistaking the advertisement for one made by the plaintiff, asked Luyao whether it has moved to 350 Wuning Road, Room 2206 of Union Building (the address of the defendant given in Advertisement I). From this inquiry Luyao came to know that the defendant was making and distributing Advertisement I. Thereafter, another three advertising companies in Shanghai, mistaing Advertisement I for one made by the plaintiff, made the same inquiries. After investigation on another ten or so advertising companies in Shanghai, Luyao got to know that the defendant also sent Advertisement I to these companies by mail. In addition, the defendant distributed in large numbers Advertisement I at the June 1998 Exhibition in Shanghai of International Advertisements. The number of copies distributed greatly exceeded 1,500.

After the trial, the plaintiff submitted to this court a letter of Kangpu to the plaintiff's attorney Thomas Lagerqvist of the Swedish law firm Vinge LLP dated June 8, 1998, which states in the main that "we have received unexpectedly your letter sent to us the other day. In the letter you allege that some of the pictures in our sales promoting materials are identical to the copyrighted advertising materials of your client Mark Bric AB, and request that we stop distributing any sales promoting materials having the copyrighted pictures in a spirit of cooperation. We understand your position, and will render our assistance in connection therewith. As a measure of caution and to avoid any unnecessary controversies, we have decided not to use any advertising materials to which Mark Bric AB may own copyrights. Nor will we assist or cooperate with any person in doing so."

In the course of our adjudication, the defendant submitted to this court a copy of its Business License As An Enterprise Legal Person, Trademark Registration Certificate (No. 1280357) for the Janet trademark, and more than 3400 copies of Advertisement I.

During the trial, bothparties examined the exhibits produced by the opposing party and the testimony of Qin Huidong. The defendant made the following comments:

⒈ The defendant challenges the authenticity and validity of plaintiff's Exhibit 15 (certificate provided by Stemli;;ems Truslero AB of Sweden. It holds that the certificate is not properly notarized, nor is it supported by opinions of an expert witness. It is a false statement.

⒉ The defendant did not see the advertisement in Exhibit 3 produced by the plaintiff (the Mark Bric Jalit Advertisement) until 1998. Therefore it cannot prove that the defendant copied or pirated the advertisement in such exhibits.

⒊ The dedendant never saw the advertisements in plaintiff's Exhibits 2, 4, 5, and 6 (FLEXIFRAME, FLEXIFRAME JALIT, etc.), therefore such exhibits can not prove that the defendant copied or pirated the advertisement therein.

⒋ The defendant never used what is in Exhibit 7 (the negatives for the above advertisements made by the plaintiff) and therefore such exhibit cannot be used as evidence.

⒌ Plaintiff's Exhibits 11 and 12 (receipts for delivery of display equipment dated Nov. 6, Dec. 8, 1997 and April 10, 1998) cannot prove that the dedendant obtained from Luyao the said advertisements made by the plaintiff.

⒍ A comparison of plaintiff's Exhibits 1-6 (advertisements made by the plaintiff) and plaintiff's Exhibits 13 and 14 (advertisements made by the defendant) fails to prove that the defendant copied or pirated the advertisements of the plaintiff.

⒎ Plaintiff's Exhibit 18 (statement of plaintiff's economic loss and investigation expenses, together with attached tables) lacks supporting evidence and does not constitute valid evidence.

The plaintiff has the following comments with respect to the evidence:

⒈ The plaintiff challenges the authenticity and validity of defendant's Exhibit V (defendant's statement), which does not satisfy the formal requirements for evidence, and contains false information.

⒉ For making infringing advertisements by means of copying and pirating, the defendant also needs printed plates. Therefore defendant's Exhibit III cannot prove that it did not copy or pirate plaintiff's advertisements.

⒊ A comparison of defendant's Exhibit IV (a set of color photos shot by the defendant) and Advertisements I and II fails to show any similarity or relevance between corresponding parts therein. So Exhibit 4 of the defendant cannot prove that the defendant used what is shown in Exhibit 4 in making advertisements I and II.

⒋ The plaintiff does not allege that defendant's display equipment is of poor quality. Therefore defendant's Exhibit VI (the certificate of defendant's award) is not relevant to the issue in question or the claims of the plaintiff.

⒌ A comparison of defendant's advertisements and the advertisements shown in Exhibit VII (advertisements made by Kangpu) and Exhibit VIII (advertisements made by Hong Kong Levox Industrial Ltd. And photos from Famous Works of the Arts and Handicrafts of the World) show that the two are not completely identical, while defendant's advertisements are identical with plaintiff's advertisements in many details. For these reasons defendant's Exhibits VII and VIII cannot prove that the defendant did not copy or pirate plaintiff's advertisements.

⒍ Exhibit IX of the defendant, the Journal of the 1997 (the first) International Display Techniques and Equipment Exhibition, cannot prove that Kangpu made and distributed the advertisements of the company at the time.

The plaintiff does not challenge the testimony of Qin Huidong. The defendant, however, contends that Qin's statement that the defendant profusely distributed Advertisement I is not true. The defendant never procured from Luyao any of the six advertisements made by the plaintiff.

On the basis of the exhibits produced by the two parties and the testimony of relevant witnesses, and in consideration of the comments made by the two parties, this court makes the following findings of fact:

⒈ Both the plaintiff and the defendant produced display equipment for sale in the Chinese market.

This finding is supported by the statements of both parties, plaintiff's exhibits 1-9, testimony of witness Qin Huidong, defendant's exhibits II and VI, a copy of defendant's business license as an enterprise legal person submitted by the defendant in the course of our adjudication.

⒉ From July 1997, Luyao acted as the agent for the sale of plaintiff's display equipment and distributed display equipment advertisements designed and made by the plaintiff, such as FLEXIFRAME Basic 8, FLEXIFRAME, Mark Bric Jalit, FLEXIFRAME Jalit, etc.

Evidence supporting such finding includes plaintiff's Exhibits 1-9 and testimony of Qin Huidong.

⒊ The defendant made Advertisement I in March 1998. and Advertisement II thereafter. Before making such advertisement, the defendant had at least seen the FLEXIFRAME Basic 8 and FLEXIFRAME advertisements made by the plaintiff.

Evidence supporting such finding includes plaintiff's Exhibit 1, 2, 10, 11, 12, 13, and 14, defendant's Exhibits I and II, and testimony by witness Qin Huidong.

The defendant argued that it only saw the FLEXIFRAME Basic 8 advertisement and not FLEXIFRAME before making its own advertisement. The fact we fond is that picture set 3 in Advertisement I is substantially identical with picture set 2 of plaintiff's FLEXIFRAME advertisement, and traces of copying and pirating are obvious. Plaintiff made FLEXIFRAME as early as 1996, before defendant made Advertisement I. It is obvious that defendant saw the FLEXIFRAME advertisement before it made Advertisement I. The arguments and comments made by the defendant in connection with this fact are without merit.

⒋ The unrestrained copying and pirating in defendant's Advertisement I of the FLEXIFRAME Basic 8 and FLEXFRAME advertisements made by the plaintiff is sufficient to cause confusion among ordinary consumers who exercise ordinary care. The confusion results not only in the mistaken notion that the advertisements made by the plaintiff and by the defendant are the same advertisement, it also results in the notion that the plaintiff and the defendant are the same business entity or are affiliated business entities. Defendant's Advertisement II copied part of plaintiff's FLEXIFRAME Basic 8. More specifically,

1)       The page layout, trademark, language, as well as the arrangement and colors of the photos and pictures on the front and back pages of defendant's Advertisement I are substantially identical with corresponding parts in plaintiff's FLEXFRAME Basic 8, and traces of copying and pirating are obvious;

2)       The photo of the Easy-to-Carry Mobile Display Assembly on the front page of defendant's Advertisement I is substantially identical with corresponding part in plaintiff's FLEXIFRAME Basic 8, and traces of copying and pirating are obvious. The only differences between the two are 1) pictures of samples on the basic back wall and contents of the caption board, and 2) there is no words in Advertisement I.

3)       The two pictures showing the connection of the equipment on the front page of defendant's Advertisement I are substantially identical with the corresponding parts in plaintiff's FLEXIFRAME Basic 8, and traces of copying and pirating are obvious. The only differences between the two are in the arrangement of the two pictures and in shades of color.

4)       The page layout, arrangement, color and words of the four picture sets on the back page of defendant's Advertisement I are substantially identical with corresponding parts in plaintiff's FLEXIFRAME Basic 8 and FLEXIFRAME. Traces of copying and pirating are obvious. Among them, (1) Picture sets 1, 2, and 4 of the defendant are substantially identical with picture sets 1, 2, and 3 of plaintiff's FLEXIFRAME Basic 8, and traces of copying and pirating are obvious. And (2) Defendant's picture set 3 is substantially identical with the picture set on page 2 of plaintiff's advertisement FLEXIFRAME and traces of copying and pirating are obvious. The only differences between the plaintiff's and defendant's four picture sets are differences of advertising words, and different colors of the frames of the advertising words, and different pictures of samples on the display equipment.

5)       The three photos of display equipment on the first row of defendant's Advertisement II is the result of copying or pirating of corresponding parts in plaintiff's FLEXIFRAME Basic 8.
    Evidence supporting the finding of this fact includes plaintiff's Exhibits 1, 2, 3, 13, and 14, and defendant's Exhibit II, as well as testimony by witness Qin Huidong.
    The defendant contends that it used the advertisements made by Kangpu for reference in designing and making its advertisements, and in designing some of the picture sets it also used for reference the advertisements made by Hong Kong Levox Industrial Ltd. And Famous Works of the Arts and Handicrafts of the World. The fact we find is: Only the back page of Advertisement I is substantially identical with an advertisement made by Kangpu, and both the front and back page of Advertisement I are substantially identical with an advertisement made by Kangpu, and both the front and back page of Advertisement I are substantially identical with plaintiff's FLEXIFRAME Basic 8 and FLEXIFRAME. In view of the fact that defendant saw plaintiff's FLEXIFRAME Basic 8 and FLEXIFRAME before it made Advertisement I, it is evident that the defendant copied and pirated plaintiff's FLEXIFRAME Basic 8 and FLEXIFRAME. As to the advertisements made by Hong Kong Levox Industrial Ltd. and in Famous Works of the Arts and Handicrafts of the World, none of them is an advertisement for display equipment, and none of them is comparable to the above display equipment advertisements made by the defendant. There are marked differences between them in page layout and the arrangement of words and pictures as well as in color. The traces of defendant's copying and pirating plaintiff's FLEXIFRAME Basic 8 and FLEXIFRAME advertisements are sufficient to exclude the possibility of defendant's using for reference the advertisements made by Hong Kong Levox Industrial Ltd. and in Famous Works of the Arts and Handicrafts of the World. The defendant's statement that it used for reference advertisements made by Hong Kong Levox Industrial Ltd and in Famous Works of the Arts and Handicrafts of the World can not stand.
    The defendant also contends that the illustrations, words, trademark and name of business it used in its advertisements are markedly different from those in the plaintiff's advertisements, and therefore they are unlikely to cause any confusion among consumers. The facts, however, show otherwise. There are indeed some differences in the trademarks, pictures of samples, and words used by the two parties in their advertisements. However, (1) Plaintiff's name Jalit itself is not easily distinguishable from defendant's Janet trademark, and, the trademark or name used by the two parties occupies a very small and inconspicuous place in the advertisements and are not brightly colored. They can hardly serve the purpose of distinguishing one from the other. (2) The advertisements of both the plaintiff and the defendant advertise display equipment and not the sample products placed on such display equipment. Therefore the sample products do not have the function of distinguishing one type of display equipment from the other. As is stated above, the defendant copied and pirated the page layout, the arrangement of pictures and words, and the use of colors, as well as photos, pictures and words of plaintiff's advertisement to such an extent that the two advertisements have confusing similarities. Under such circumstances, the mere difference in the pictures of samples on the display equipment can by no means sere to distinguish one advertisement from the other. (3) It is true that some of the advertising words in the advertisements of the two parties appear in different languages (English and Chinese), but the means of expression (the use of words and photos and their contents and arrangement) in both advertisements are substantially identical. In particular, the page layout, the main colors used, and the pictures and photos of display equipment are substantially identical. Under such circumstances, the different languages used also fail to distinguish the two advertisements.
    On these grounds, we hold that the defendant's contentions and comments with respect to this finding of ours cannot stand.

⒌ Defendants profusely distributed its display equipment advertisements (Advertisements I and II), and by its own admission, the number of copies of Advertisement I it distributed reaches 1,500.
    Evidence supporting this finding includes plaintiff's Exhibits 13, and 14, Exhibit 2 of the defendant, the more than 3,400 copies of Advertisement I submitted by the defendant to this court after trial, the statement by the defendant, and the testimony of witness Qin Huidong.

⒍ During the period in which the defendant profusely distributed its advertisements, the profits of the plaintiff fell as a result of reduced sales. However, the loss of the plaintiff is difficult to compute. The expenses the plaintiff incurred in investigating the infringement is about RMB200,000. The defendant has not stated its profit, not has it given any supporting evidence in this connection.
    Evidence supporting these findings includes the statements by the two parties during the trial, and plaintiff's Exhibit 18.

This court holds that, (1) Article 2 of the Law of the People's Republic of China against Unfair Competition provides that business operators shall adhere to the principles of free will, quality, fairness and good faith as well as generally accepted commercial standards. Under this law, unfair competition means acts of the business operator infringing upon the legitimate rights and interests of other business operators and interfering with the economic order of the society in violation of any of the provisions therein.

Article 9 of the Law of the People's Republic of China against Unfair Competition provides that business operators shall not make misleading or false representations with respect to the quality, ingredients, function, use, manufacturer, date of expiration, and place of production of a commodity.

Articles 3 and 4 of the Law of the People's Republic of China against Unfair Competition provide that advertisements shall be truthful, lawful and shall be in conformity with the requirements for the spiritual aspects of socialist civilization. Advertisements shall not contain false contents, and shall not deceive and mislead the consumers.

Article 10(2) of the Paris Convention for Protection of Industrial Property provides that

(1) All member countries shall extend effective protection against unfair competition for citizens of each of the member countries; (2) Competitions in industrial and commercial activities in violation of the accepted standards of honesty constitute unfair competition; (3) The following activities are to be prohibited in particular: (i) all activities, no matter by what means, that have the propensity to confuse the public with respect to the business site, products or commercial or industrial activities of one's competitor, (ii) false statements made in one's business operations that have the propensity to damage the reputation of the business site, products or commercial or industrial activities of one's competitor, (iii) expressions and statements used in one's business operations that tend to mislead the public with respect to the quality, method of manufacture, special features, uses and quantity of one's products.

Plaintiff Mark Bric Display AB and defendant Shanghai Himalayas Advertising Company both sell display equipment in China. As business operators both the plaintiff and the defendant should comply with the provisions in the Law of the People's Republic of China against Unfair Competition. Both the plaintiff and defendant are registered in countries that are members to the Paris Convention for Protection of Industrial Property. In industrial property right disputes that arise in the course of their business operations, relevant provisions in the Paris Convention for Protection of Industrial Property shall apply.

(2) Advertisement is the means by which the business operator distributes information regarding the business and its products and services. The design, creation and distribution of the business operator's advertisements are important industrial and commercial activities in its business operations. Particular advertisements represent particular businesses, and particular commodities and services. An advertisement that is innovative, distinctive and markedly different, in particular, serves to enhance the reputation of the product and that of the manufacturer, thus giving a competitive edge to the business operator. Besides, as a commercial form of art that combines a number of artistic features, it has its cultural and artistic functions in addition to its economic and commercial function. There is no doubt that advertisements that are innovative, distinctive and markedly different contain the intellectual labor of the business operator in designing and creating such advertisements, and are the fruit of its wisdom. While enjoying the copyright to its innovative, distinctive and markedly different advertisements it designed, created and distributed, the business operator also has the right to prohibit others from copying and pirating such advertisements, and from engaging in activities of unfair competition by using copied and pirated advertisements.

Copying and pirating advertisement of one's competitors are acts of unfair use and enjoyment of the commercial reputation and product reputation of one's competitor by means of which one gains an unfair advantage over one's competitors. Its consequence is making the advertisements of the two different business operators sufficiently confusing to consumers. And the confusion is not just a mistaken notion that the two advertisements are the same, but also the notion that the two different businesses are the same one or are affiliated businesses. Copying and pirating the advertisement of one's competitor may also lead to misunderstanding by the public of the nature, method of manufacture, and features of the product of the business operator. In this sense, advertisements that contain copied and pirated contents are false advertisements, and do not have the required legal features of truthfulness, legitimacy and good faith representation. In addition, copying and pirating advertisements of one's competitor are acts of unfair use and enjoyment of a competitor's intellectual efforts in designing and creating an advertisement, and acts of unfair use and enjoyment of the fruits of has creative talents. From the legal point of view, an act of copying or pirating advertisements of one's competitors is a multiple infringement in violation of the General Principles of Civil Law of the People's Republic of China, the Law of the People's Republic of China against Unfair Competition, and the Advertising Law of the People's Republic of China. As far as the victims of the infringing acts are concerned, copying and pirating advertisements of one's competitor in appearance are infringements upon the copyright of the advertisements which the victim of the infringement lawfully enjoys. But in effect it disrupts the industrial and commercial activities of the victim. Therefore, copying and pirating advertisements of one's competitor are acts of unfair competition prohibited by the Law of the People's Republic of China against Unfair Competition and the Pairs convention for Protection of Industrial Property.

(3) The display equipment advertisements designed and made by the plaintiff FLEXIFRAME Basic 8, FLEXIFRAME, Mark Bric Jalit, and FLEXIFRAME Jalit are innovative, distinctive and distinguishable. These advertisements are for promoting the sale of display equipment designed and manufactured by the plaintiff and for enhancing the prestige of the plaintiff as a unique business. They reflect the commercial reputation of the plaintiff and the reputation of its products, and give the plaintiff a competitive edge. These advertisements contain the intellectual efforts made by the plaintiff in the course of their design and creation and are the fruits of plaintiff's creativity. The plaintiff not only has the copyright to these advertisements, but also has the right to prohibit others from copying and pirating such advertisements, and from engaging in activities of unfair competition by using copied and pirated advertisements. The advertisement designed and made by the defendant by copying and pirating plaintiff's advertisements are in appearance infringements upon the advertisements' copyright which the plaintiff enjoys under the law. But in effect it disrupts plaintiff's industrial and commercial activities. Such copying and pirating are acts of unfair competition which tend to cause misunderstanding on the part of the public with respect to the quality, method of production and features of the defendant's products. Judging by the standard of the Law of the People's Republic of China against Unfair Competition and the Pairs convention for Protection of Industrial Property, such acts on the part of the defendant constitute acts of unfair competition. The plaintiff's allegation of defendant's infringement is based on sound legal ground, and we hereby give our support to it. What is worth noting in particular is that the defendant copied and pirated the advertisements with knowledge that the plaintiff is the owner of the rights with respect thereto. So the defendant's acts are intentional tortuous acts.

The defendant contends that what it has done does not constitute unfair competition, and argues that plaintiff's advertisements have not procured design patents and are not works of art. What it means is that the plaintiff does not own any right with respect to its advertisements such as FLEXIFRAME Basic 8. Plainly, the defendant chooses to disregard the innovativeness, distinctiveness and distinguishableness of plaintiff's advertisements, and ignores the intellectual efforts the plaintiff made for the design and creation of its advertisements as well as the fruits of its creative talents. However, these facts, which the defendant chooses to ignore, are precisely the key facts on the basis of which this court finds that the plaintiff has the right to prohibit the defendant from copying and pirating its advertisements, and that copying and pirating such advertisements constitute unfair competition on the part of the defendant. The defendant argues that plaintiff's products are not well known commodities, and that the defendant's products are awarded an international gold medal. However, this court's finding that the plaintiff enjoys the rights to its advertisements is not conditioned on whether plaintiff's display equipment is a well-known product or not. Nor does the fact that defendant's products are awarded an international gold medal adequately justify defendant's copying and pirating plaintiff's advertisements. Plainly, this latter argument on the part of the defendant is of no relevance to the dispute in this case. The defendant also contends that it is legitimate for it to show the exteriors, structures and shapes of its own products in its own advertisements. True, the defendant has the right to show the exteriors, structures and shapes of its own products in its own advertisements. However, the defendant did not use a correct advertising method to show these features of its products. Instead, it used such wrongful advertising methods as copying and pirating plaintiff's advertisements for promoting the sale of its own products. In addition, in defendant's advertisements, quite a few types and specifications of display equipment are designed and made by the plaintiff instead of the defendant. This is to say, what the defendant showed in its advertisements is not the exteriors, structures and shapes of its own products but those of the plaintiff's. For this reason, it goes without saying that the defendant had the intention to mislead the consumers and to give itself an unfair competitive edge, and that defendant's acts are not lawful. As to its defenses that it made its advertisements by using other's advertisements for reference, and that the advertisements of the plaintiff and the defendant have some marked differences, they are obviously at variance with facts, and for the reasons stated above, this court refuses to admit them into evidence. Hence, the arguments and defenses of the defendant to the effect that its acts do not constitute infringement cannot stand.

(4) The Law of the People's Republic of China against Unfair Competition provides that for violation of this law resulting in damage to the victim, the business operator shall be held liable for damages. When it is difficult to compute the loss of the victim, the damages shall be the profit of the infringer during the period of infringement. In addition, the infringer shall pay the reasonable expenses which the victim incurs in connection with investigating the infringer's acts of unfair competition.

The General Principles of Civil Law of the People's Republic of China provides that when the copying of private citizens and legal persons are infringed upon by means of plagiarism, usurpation and forgery, they have the right to seek a judgment for the infringer to stop such infringements, eliminate undesirable consequences, and pay damages.

In accordance with the law, for its infringing acts, the defendant shall have the civil liability to stop its infringing acts, eliminate undesirable consequences, and pay damages.

The plaintiff requests that the defendant make public apologies to it. This request is not without reason. However, such request is not equivalent to defendant's liability to eliminate undesirable consequences, as is defined by the law. Hence, we think it more appropriate legally to have the defendant publish a statement of apology to eliminate the undesirable consequences.

The plaintiff claims damages from the defendant, and mentioned four losses in specific amounts. Three of the claims for loss, however, do not appear to be reasonable. These are, the RMB360,000 rent and wage payment in connection with warehousing in Hong Kong, the RMB130,000 spent on advertising and exhibiting its products, the RMB120,000 expenses in connection with Chinese market sales promotion seminars and traveling for training purposes. These three losses, RMB610,000 in the aggregate, are not losses caused by defendant's infringements, and we do not sustain claims for losses on these accounts. As to the RMB730,000 claim resulting from the reduced sale of plaintiff's products due to defendant's infringements, we will use it for reference in our calculation of damages, but not as legal basis for our judgment, because the plaintiff fails to provide us with supporting evidence in this connection. In view of the fact that it is difficult to give an accurate assessment of both the plaintiff's actual loss and defendant's profit from its infringements, this court will use its own discretion in arriving at the amount of damages by taking into consideration a number of factors, such as the social ramifications of the infringements, the means, details, duration and scope of the infringements, defendant's degree of fault, and the damage to the commercial reputation of the plaintiff.

In addition to the above damages, the plaintiff also seeks to have the defendant pay the attorney fees the plaintiff spent in connection with investigating this case. In accordance with the the Law of the People's Republic of China against Unfair Competition, the plaintiff may claim compensation for a reasonable amount of expenses which it incurred in connection with investigating defendant's infringements. As we have stated, defendant's acts constitute unfair infringements, and therefore the defendant should be held liable for the reasonable expenses the plaintiff paid in connection with investigation of defendant's infringements. This reasonable expense, however, is limited to the attorney fees for representing the plaintiff in this law suit and relevant expenses of investigation at the rate stipulated by relevant authorities.

To conclude, in accordance with Article 10(2) of the Pairs convention for Protection of Industrial Property, Articles 2(1), (2) 9(1), and 20 of the Law of the People's Republic of China against Unfair Competition, Articles 3 and 4 of the Advertising Law of the People's Republic of China, and Articles 118. 134(1)(i), (vii) and (ix) of the General Principles of Civil Law of the People's Republic of China, we hereby decide as follows:

 

 

 

                                       December 21, 1999