In 2015 Chinese Automotive Manufacturer Jiangling Motors Corp Limited (“JMC”) showed their new vehicle, the Land Wind X7. Even from a short distance this vehicle looked very similar to Jaguar Land Rover’s (“JLR”) Evoque and a ready market arose quickly in counterfeit Land Rover branding to apply to the Land Wind product, to make it look even more like the JLR product.
In 2016, JLR sued JMC for design patent infringement. Unfortunately, however, JLR’s design patent was declared invalid in April 2016 because “the design had been displayed or published elsewhere before a patent application was filed”. Apparently, the following month, Land Wind’s design patent for the X7 was also invalidated on the grounds that it looked too much like the Evoque!
This left JLR with no option but to pursue a copyright and unfair competition action against JMC’s Land Wind, which most commentators expected to fail. One particular problem with this action was that there was no real evidence of confusion, since buyers of the Land Wind product were very clear that they were not buying the Evoque product, not least because the Evoque costs approximately three times as much as the Land Wind X7, in the Chinese market.
However, last Friday (22nd March 2019) the Beijing Chaoyang District Court ruled that five major features of the car were copied and ordered JMC to cease production, sales and marketing of the Land Wind vehicle. JMC has fifteen days to appeal against the decision and the company has so far not made a public comment. Apparently, the five major similar features included the Evoque’s side body design, window outlines and the front and rear lights. As of Sunday 24th March 2019, distributors of the Land Wind X7 apparently had yet to be told to cease sales.
JMC have Joint Venture Agreements, for example with Ford, but their direct products such as the X7 have been selling poorly in recent years, with a 76% decline in sales over the last year (equating to approximately half the number of Evoques sold by JLR in the same period). This judgement will be a further blow to JMC.
This appears to be a landmark case for foreign car makers in China, which is particularly useful following the April 2018 removal of trade barriers, such as the requirement to form Joint Venture Agreements with local car manufacturers. Other manufacturers such as Honda have tried and failed in the past to prevent sales of “copycat models”. However, it is important to recognise that some of these earlier cases were based on weak registrations, or indeed involved no registrations at all, and thus relied heavily on un-registered rights, which are always harder to enforce. Tesla and Honda are still in the process of suing local companies under IP rights and it will be interesting to see how successful those cases are.
Many foreign companies have historically taken the view that it was not worth making applications for registered Intellectual Property rights in China. This is an outdated view and this new case shows that, even without registered rights, it is possible to win even on the much harder grounds of copyright and unfair competition. This appears to clearly demonstrate the Chinese nation’s willingness to move towards a level playing field for national and foreign companies alike.