Jaguar Files a Copyright Infringement Case in China


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Since 2008, China has held the largest automotive industry in the world in terms of automobile unit production. While this success historically has been due to opportunities for joint ventures with companies such as Volkswagen, Audi, General Motors, and Toyota, recently, local brands have been increasing their role in the automotive market.

Currently, local brands such as BYD, Cherry, Geely, Great Wall, and JMC have successfully developed their presence across China. The increase of the automotive industry is in line with China’s economic goals, as was expressed in China’s 13th Five-Year Plan, where it stated China’s intentions to invest more in the automotive industry in terms of research and development, alternative energy
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vehicles, and the increase of exported vehicles. However, a major issue that has risen along concurrently with the exponential growth of the car industry is the increase in automotive clones in China of foreign brands and their models. A recent case involves Jaguar Land Rover, who is currently suing a Chinese automaker for copying one of its designs, the Land Rover.

In the recent case of Jaguar Land Rover and its lawsuit against Jiangling Motor for the copying of its Range Rover Evoque model to create the Jiangling Motor LandwindX7 SUV, Jaguar Land Rover’s lawsuit will be surrounding issues of copyright and unfair competition. While many have expressed doubts of Jaguar Land Rover’s odds of winning due to a belief in China having weak intellectual property and competition laws or a tendency by local Chinese courts to favour their own, the law in China and similar other cases show there may be hope.

Copyright Law

There are a number of international agreements surrounding the protection of copyright rights. These include the Berne Convention for the Protection of Literary and Artistic Works (the “Berne Convention”), the Universal Copyright Convention Agreement on Trade-Related Aspects of Intellectual Property Rights, and the WIPO Copyright Treaty. Most importantly, under Article 2 (1) of the Berne Convention, the minimum standards of protection relate to the protection of works and rights, as well as to the duration of the protection, stating that protection must include every production in the literary, scientific and artistic domain, whatever the mode or form of its expression. Also, under Article 2 (6) and (7), it effectively provides for the protection of such rights, and requires all countries to recognise any copyrights held by the citizens of the signatory countries.

China is a signatory to the abovementioned treaties, and such accessions indicate China has complied with the necessary regulations and requirements, as well as integrating the relevant provisions in its Copyright Law of the People’s Republic of China. Under Article 1 of the Copyright Law, it states that the law is enacted for the purpose of protecting the copyright of authors in their literary, artistic and scientific words and the rights and interests related to copyright. Furthermore, under Article 2 of the Copyright Law, it states that the copyright enjoyed by foreigners or stateless persons in any of their works under an agreement concluded between China and the country to which they belong or in which they have their habitual residence, or under an international treaty to which both countries are parties, shall be protected by this Law. Therefore, China seeks to protect the rights of foreign companies and individuals if they belong to countries which have signed the same international convention or treaty as China. Specifically, Article 2 of the Copyright Law states that foreigners and stateless persons whose works are first published in the territory of China shall enjoy the copyright. Also, any work of an author, which is first published in a member country of an international treaty to which China is party, such as the Berne Convention, shall be protected by this Law.

Under Article 3 of the Copyright Law, the term ‘works’ includes works of literature, art, natural sciences, social sciences, engineering and technology, which are created under subsection (u) graphically, such as drawings of engineering designs and product designs, maps and sketches, and model works. Therefore, a design of a car is protected under the Copyright Law, and perhaps under the trade dress provisions of the Anti-Unfair Competition Law of the People’s Republic of China, which are currently going through several amendments.

In China, the concept of ‘works of applied art’ is not clearly regulated or provided for under legislation. However, courts across China have consistently held that works of applied art are entitled to legal protection as works of fine art, which is covered by Article 4(8) of the Regulations for the Implementation of the Copyright Law of the People’s Republic of China, where it states works of fine arts to mean two or three-dimensional works of the plastic arts created in lines, colours or other media which impart aesthetic effect, such as paintings, works of calligraphy and sculptures. For example, in Judgment Guangdong Higher Court Civil III Final Instance No. 45, it was held that a work of applied art must qualify as a work of fine art where it meets the artistic and creative requirements for works of fine art, which is therefore protected under the Copyright Law.

Also, in Beijing No.2 Intermediate Court IP First Instance No. 145, it outlined the importance of utilitarian functions in works of applied art, and stated the need for the work to be both useful and artistic. Similarly, in Guangxi Higher Court Civil III Final Instance No.62, it was emphasised that there are two aspects in works of applied arts: the functional aspect, which includes the purpose and the functions, and the artistic aspect, which includes the shape, design, colour, decoration or the aesthetic expression of the design of the work. Therefore, where a work is both functional and artistic, such as a design of a car, it is protected under the Copyright Law for a term of 25 years.

Furthermore, applying for protection under the Copyright Law may provide for better protection due to the longer term it provides, as the Patent Law of the People’s Republic of China allows for the protection of design patents to be only 10 years. However, dual protection exists under the Copyright Law and the Patent Law, which was confirmed in the case No.279 (INTERLEGO AG), where the Beijing Higher Court held that the better interpretation was that there is no evidence showing China prohibits dual protection to works of applied art, therefore there is nothing preventing a work of applied art to acquiring protection under the Patent Law and the Copyright Law simultaneously and successively. It is thought that such protection will be granted for a period of 25 years.

Therefore, the laws surrounding the issue of copyright in relation to the design of a car are quite solid in China, and should offer adequate protection. However, it is the practical application of such laws that cause complications and uncertainty. In an alleged copyright infringement situation, the burden of proof is on the company alleging copyright infringement to prove a copying has resulted by assessing any objective similarities, and deciding whether they are the result of independent creation, or whether they were derived from the original design. Therefore, there must be a causal connection between the two works, which can be difficult to prove.

There have been a number of cases in China by foreign automakers alleging copyright infringement against local Chinese automakers. They include the following:
• In 2007 the China’s State Intellectual Property Office made a decision regarding Honda’s accusation of copyright infringement against Shuanghuan’sLaibao SRV of its CR-V, holding Honda’s patent was invalid, and therefore the Honda’s accusation had no merit;
• In 2007 in the Shanghai No. 2 Intermediate People’s Court in China, Honda Motor Co. won its copyright and patent infringement lawsuit againstLifanIndustry (Group) Co., with an award of RMB 300,000 in damages; and
• In 2008 in the Shijiazhuang Intermediate People’s Court of China, Fiat Chrysler Automobiles lost a case against Great Wall Motors for failing to prove the Great Wall’s GWPeri was a copy of their Panda, as the court found the exterior design of the GWPeri was easily distinguishable from that of Panda’s.

The above cases show there are a variety of decisions in China, with many depending on the circumstances of the case, such as whether the parties have valid patent or design rights, and a thorough examination of the cars to determine if there has been a copyright infringement. However, due to the difficulties of proving a car has been copied, many cases result in a loss for the foreign automaker.Also, a decision by the court of copyright infringement in favour of a foreign automaker may still result in an unsatisfactory outcome, for example, recently, Honda Motor Co. won a 12-year battle against a Chinese automaker in a lawsuit alleging the Chinese automaker violated Honda’s design rights in relation to its CR-V sport utility model. However, Hondo, having claimed $45 million in damages, only received an award of $2.4 million.

Therefore, as a way to secure their rights and prevent further losses, foreign automakers have instigated similar lawsuits against Chinese automakers for copyright infringement in foreign countries, with many cases including the following:
• In 2008 in Turin, Italy, the Great Wall was banned from selling its model GWPeriin the EU, as the court found the GWPeri was an exact copy of Fiat’s Panda model, but with a different front component;
• In 2008 in Bologna, Italy, in Daimler A.G.’s lawsuit against Shanghuan (China Automobile) Co. where they alleged Shuanghuan Noble (Bubble) was a copy, the court found Shuanghuan guilty and prohibited them from attending the Bologna Auto Show; and
• In 2009 in Munich, Germany, BMW won its lawsuit against Shuanghuan (China Automobile) Co. when the court prohibited the Chinese automaker from selling its SCEO SUV model in Germany and to destroy any already imported models due to its blatant copy of the BMW XS.

Therefore, in the current case of Jaguar Land Rover against Jiangling Motor for the alleged copyright infringement of its Range Rover Evoque model to create the Jiangling Motor Landwind X7 SUV, there are many factors to take into account in speculating the potential outcome of the case. Provided the courts in China strictly abide by the Copyright Law and the international treaties they have been assigned to uphold, Jaguar Land Rover has a strong case due to the Landwind X7 SUV containing many of the same features, which can be analysed objectively.

Conclusion

China, as the second largest economy in the world, has seen many of its industries grow at an alarming rate. Its automotive industry, now the world’s largest, is one of them. However, despite China’s constant updating and improvement of its intellectual property laws to ensure a strong intellectual protection rights regime, the automotive industry suffers extensively from allegations of copyright infringement. In the upcoming lawsuit of copyright infringement by Jaguar Land Rover against Jiangling Motor, it is hoped that the Chinese courts will reveal further in their reasoning of the factors and principles they rely upon in determining their decision.

ABOUT THE AUTHOR: Matthew Murphy
Matthew Murphy is a Partner in the MMLC Group.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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