Decathlon Wins Almost 3 Million RMB in Chinese Trade Dress Dispute for Store Design

As reported by 京法网事 , the Shijingshan People’s Court ruled in favor of Decathlon (Shanghai) Sports Goods Co., Ltd. in a trade dress dispute with a competing unnamed outdoor sports store involving store layout, decoration, logos, props, and other decorative elements.  Decathlon was awarded 2.94 million RMB in damages and 350 thousand RMB for expenses, an injunction to eliminate the impact of the unfair competition, and require the defendant to publish a statement in the China Intellectual Property News for four consecutive weeks.

Decathlon argued that is a transnational company that manufactured and sold sports goods and operated business in more than 20 countries and regions around the world. The plaintiff officially entered the Chinese market in 2003, and by May 2021, the plaintiff had 280 Decathlon stores in China. The plaintiff invested a lot in designing independently the layout, decoration, logo, props, and other decoration elements and styles of its Decathlon store, and popularized the use of such elements in Decathlon stores, which has formed a distinct and uniform business image of Decathlon stores. After a long period of business operation, news reports of various media, and advertisement publicity of the plaintiff, the store has enjoyed a relatively high reputation and prestige among Chinese consumers. The decoration element of the store was closely related to the plaintiff, and could play a role in identifying the source of the service. The plaintiff found that the two defendants opened a sports store whose business image was similar to that of Decathlon, which easily led to confusion among consumers and caused great damage to the legitimate rights and interests of the plaintiff. The aforesaid acts of the two defendants constituted unfair competition.

Upon trial, the People’s Court of Shijingshan City held that the “decoration” protected by the Anti-unfair Competition Law required the following elements: (1) the decoration should have a unique style, i. e. it had a certain distinctiveness, (2) the decoration was known to consumers and had certain influence through continuous use, publicity and promotion by business operators before it was put into use, and (3) the decoration had a stable corresponding relationship with its business operators because the shop’s decoration had both distinctiveness and influence. Specifically, in this case, the plaintiffs claimed that their rights should be based on “overall decoration and decorative style of the storefront” and the overall visual effects formed by 22 store decoration elements in 7 categories. According to the photos of the shop and the comments of the netizens, it can be confirmed that the decoration of the Decathlon shop as a whole presents a very distinctive and minimalist industrial style with prominent product decoration as well as the classification of goods and price indication. The decoration of the Decathlon store was widely and continuously used by the two plaintiffs and accompanied by brand publicity and promotion, and was already known by consumers and had certain influence. Because the Decathlon store decoration has both the distinctiveness and the influence, consumers have formed a relatively unified perception, which has formed a stable correspondence between the store trade dress and the Decathlon brand and its operators. Therefore, the Decathlon store trade dress claimed by the two plaintiffs belongs to the trade dress that should be protected in the sense of the Anti-Unfair Competition Law, and it has the basis to file this lawsuit. 

The Court explained that the commodities sold by both parties concerned are mainly outdoor sports commodities, which obviously is a competitive relationship. The most crucial dispute in the case was whether the décor of the stores operated by both sides was similar. In response to these claims, the two plaintiffs provided a comparison table with more detailed descriptions and pictures of their stores. The photos in the comparison table were from the plaintiff’s notarized evidence collection and timestamp evidence collection, and many of them were taken by ordinary consumers when they came to the stores of both sides for purchasing and uploaded the images to a third-party platform, so the photos used by the plaintiff in comparison were authentic and credible. The two plaintiffs compared the overall decoration style and specific decoration elements of their stores. Even if each shop involved in the case of the defendant did not have all the decoration elements, as long as the overall style and certain amount of decoration details were similar, it did not affect the reasonableness of the comparison method of the plaintiff. Therefore, the comparison method adopted by the two plaintiffs in this case was accurate and reliable. The comparison table showed the overall decoration style of the stores of both parties, the detailed characteristics of the specific decoration elements, the main colors and their combinations, the way of illustrated layout, even a variety of posters, the placement of price tags, etc. were all highly similar, so that many consumers feel that “the style is similar to Decathlon” and “think that they have gone to Decathlon because the style is really similar” and “a bit like Decathlon” even though they know that they entered the defendant’s store and the defendant’s brand is also quite famous, which was sufficient to indicate the extent of similarity between the two. Although the store brands of the plaintiff and the defendant are different, this “deja vu” feeling may still cause consumers to confuse and misunderstand that the plaintiff and the defendant have some kind of connection or business cooperation relationship. The two defendants jointly implemented the behavior involved in the case, and should bear the civil liability for stopping the infringement, eliminating the impact, and compensating for losses according to law.

In response to the relevant defense claims of the defendant, the judgment emphasized that while the Anti-Unfair Competition Law protects innovation, it does not prohibit operators from learning from each other, or even imitating to a certain extent, but if it exceeds a reasonable boundary, it imitated the whole trade dress including packaging, decoration, etc., which have stableness and commercial value. Improper use of the business achievements of others for profits clearly violated the principle of good faith and generally recognized business ethics and constituted unfair competition.

The case is currently under appeal.  The original announcement is available here (Chinese only).

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