In a market economy, the packaging and decoration of goods is no longer just the pursuit of beauty in appearance, but also an important and effective way of commodity competition, and has gradually become an important intangible intellectual property and competitive advantage of enterprises. At the very beginning of using related packaging and decoration, enterprises should begin to pay attention to the intangible asset of commodity packaging and decoration.

The distinction between commodity packaging and decoration

Article 3 of China’s Certain Regulations on Prohibiting Unfair Competition Activity Concerning Imitating Specific Names, Packaging or Decoration of Well-known Commodities stipulates that “packaging as mentioned in these Regulations refers to an auxiliary object or a container for a commodity making the commodity easy to be identified, carried about, stored and transported. Decoration as mentioned in these Regulations refers to the writing, design, color and their combination attached to a commodity or its packaging so as to identify and beautify the commodity.”

Generally speaking, when the decoration is attached to the commodity, it becomes an integral part of the commodity itself; When the decoration is attached to the packaging of goods, it becomes the attachment of goods as an integral part of the packaging. At this time, the packaging and decoration are integrated.

According to China’s intellectual property laws, regulations and judicial precedents, there are four protection modes for commodity packaging and decoration in China. This article will compare the advantages and disadvantages of the four protection modes and put forward legal suggestions for the best protection.

Comparison of legal protection modes and their advantages and disadvantages for commodity packaging and decoration in China

Copyright legal protection mode

Protection method: Claim that packaging and decoration are original works, demand that the infringer stop producing and selling infringing goods and claim damages.

Typical case: A well-known pharmaceutical company in China used the same decoration on their acne gel cosmetics as the influential Tuanhua costume pattern on the Herborist cosmetics brand . Our lawyer Grace Guo was entrusted by the plaintiff, the well-known cosmetics listed company, to represent the Herborist Tuanhua pattern copyright and unfair competition disputes, and won both cases. In response to the infringement of the decoration, not only did she stop the infringement, but also obtained a high compensation of about Rmb1.5 million (US$211,500).

Advantages of the copyright protection mode: There are two main advantages to copyright protection, as detailed below.

1. A work is entitled to copyright as soon as it is created. As China is a member of the Berne Convention, there is no need to obtain prior registration of trademarks and patents in China.
2. Criminal liability protection can be claimed for the reproduction of identical packaging and decoration products, therefore the protection is relatively strong.

Disadvantages of the copyright protection mode: There are three main disadvantages to copyright protection, as detailed below.

1. The court needs to identify the packaging and decoration as works first, and the overall packaging and decoration of a considerable number of products is difficult to have recognized as a work of art by the courts. Hence, it isn’t easy to obtain protection under copyright law.
2. The proof of ownership of works shall be subject to case review, and the enterprise shall have to prove that it is the copyright owner of commodity packaging and decoration.
3. The amount of damages is usually not high, and well-known factors such as product market and sales volume are less considered.

Trademark rights legal protection mode

Protection method: To register the packaging and decoration of goods as a trademark and claim that the subject using the same packaging and decoration infringes its trademark rights, and to demand that the infringer stop the infringement and compensate for damages.

Typical case: The defendant registered the Biosophist trademark, similar to the plaintiff’s graphic combination Herborist trademark and used it in a similar class of goods. Grace Guo was again appointed by the plaintiff, a well-known cosmetic listed company, to act as the litigation agent. In this case, after two trial procedures, it was ruled that the Herborist trademark registered by the plaintiff in the third category cosmetics constituted a well-known trademark, and the defendant’s registered Biosophist trademark infringed the exclusive rights of the plaintiff’s well-known trademark, and its use of the trademark in the enterprise name constituted unfair competition. The defendant was sentenced to compensate the plaintiff for economic losses and reasonable expenses totaling Rmb1 million (US$141,000).

Advantages of the trademark protection mode: There are three main advantages to trademark protection, as detailed below.

1. Once the pattern is registered, it can be protected, and it is forbidden for others to use the same or similar pattern on the same or similar goods.
2. The protection is valid all over the country, without considering the popularity factor.
3. Using the same trademark without permission with a high amount of illegal business may constitute a criminal offense.

Disadvantages of the trademark protection mode: There are two main disadvantages to trademark protection, as detailed below.

1. The trademark is stable, while the packaging and decoration of goods are easy to change, and the modified new packaging can no longer be protected by trademark law.
2. Trademark registration requires a search to determine whether a similar pattern has been registered as a trademark in this country, and it cannot be registered if there is a similar trademark on the same or similar goods and services.

Design patent legal protection mode

Protection method: Apply for design patent registration for the packaging and decoration of goods, and claim that the products with the same packaging and decoration infringe the patent right.

Typical case: The defendant, a company in Guangdong, copied the outer packaging of skin care products for which the plaintiff applied for design patent registration on its own similar skin care products without permission. Entrusted by a well-known cosmetic listed company of the plaintiff, Grace Guo successfully helped the plaintiff win the lawsuit and get Rmb1.2 million (US$169,000) damages by collecting evidence of the plaintiff’s commodity’s popularity and evidence of the defendant’s infringement in various ways and counting the amount of infringement damages in detail.

Advantages of the design patent protection mode: There are two main advantages to design patent protection, as detailed below.

1. 1. The registration and application procedures for design patents are convenient, and the time for obtaining certificates is faster than it is for trademarks.
   2. If an infringement dispute arises, the design patent certificate eases the right holder’s burden of proof.

Disadvantages of the design patent protection mode: There are two main disadvantages to design patent protection, as detailed below.

1. 1. The term of protection for a design is relatively short, only 15 years. After the expiration of the protection period, the design enters the public domain and can be used by anyone without compensation.
   2. The filing and maintenance of a design patent may require high fees, especially in view of international protection.

Anti-unfair competition law legal protection mode

Protection method: Claims that the packaging and decoration of goods have a certain impact and that the use of the same packaging and decoration constitutes unfair competition, prohibiting others from using them and compensating for damages.

Typical case: A company in Fujian used the same decoration as the plaintiff’s baby cream on its children’s moisturizing cream. Grace Guo accepted the entrustment of the plaintiff, a well-known cosmetic listed company, through careful litigation preparation, the case of the first trial judgment to stop the infringement, and settled for Rmb1.06 million (US$150,000), which fully safeguarded the rights and interests of the company’s customers.

Advantages of the anti-unfair competition protection mode: There are three main advantages to anti-unfair competition protection, as detailed below.

1. No additional registration procedures are required, and protection is automatically granted as long as the packaging and decoration of the goods are recognizable.
2. Even if the packaging and decoration are changed, they can still be protected as long as the stable design characteristics and unified design style are continued.
3. Broader channels of defense, not only through judicial protection, but also through the administration for market regulation to make complaints.

Disadvantages of the anti-unfair competition protection mode: There are three main disadvantages to anti-unfair competition protection, as detailed below.

1. Enterprises need to provide evidence of product popularity to get protection, such as evidence of product sales and advertising campaigns.
2. The evidence collecting and legal analysis is more complicated, the litigation trial period is longer, and the cost of enterprise rights protection is higher.
3. Whether or not protection can be obtained requires a case-by-case review, which is different from trademark rights or design patents that can be protected within the protection period.

Our legal advice

It is suggested to give priority to the trademark application and use trademark law to protect repeated graphic and text combinations in packaging and decoration.

If new packaging and decoration can apply for design patents, it is suggested to give priority to applying for design patents, which can protect the overall appearance of goods.

Packaging and decorations with a certain degree of popularity in the Chinese market, generally at least three years of continuous use, are recommended to be protected by the unfair competition law. Packaging and decorations that have just entered the China market or have not accumulated market popularity can claim copyright protection.

In summary, the packaging and decoration of products is a sharp weapon for enterprises to explore the market, participate in fierce competition, and improve their popularity. Enterprises should be ready to use all available legal weapons, choose protection methods suitable for packaging and decoration of specific commodities, attach importance to intangible assets of enterprises, and safeguard the legitimate rights and interests of enterprises.