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Wednesday, 23 December 2015

Patricia Covarrubia

The Protection of Trade Dress Rights in Brazil Prevents Free Riding

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Isn't this 'techno-gym'?
The 7th Civil Court of Rio de Janeiro decided on 28 September 2015 in TECHNOGYM and TECHNOGYM EQUIPAMENTOS LTDA against ATHLETIC WAY LTDA that the commercialization of copies of original fitness equipment products occurred with clear demonstration of improper appropriation of the competitor products’ trade dress, characterizing therefore the practice of unfair competition. The Judge held the defendant practiced unfair competition as described in art. 195, III and granted injunction relief plus monetary damages on the basis of art. 209 of Law 9.279/96.

The claimant is an Italian worldwide manufacturer of fitness equipment known by its trademark TECHNOGYM, and TECHNOGYM EQUIPAMENTOS LTDA is its exclusive representative for distribution and marketing of TECHNOGYM fitness equipment in Brazil. In turn, the defendant ATHLETIC WAY LTDA is a Brazilian company that imports and sells gym equipment of different origins.

Both companies operate in the manufacturing and marketing segment of fitness equipment and the dispute is about comparable products identified by the lines SELECTION / PURESTRENGTH and SENSATION / FUTURE respectively.

TECHNOGYM claimed the practice of improper reproduction, in which, the defendant would buy equipment from China that would be identical copies of its equipment, changing only the label of the trademark, which would be glued to the logo recess of TECHNOGYM, as later confirmed by the nominated technical expert in the case.

In 2013, TECHNOGYM brought a civil action against ATHLETIC WAY seeking a preliminary injunction to forbid the defendant to market, sell and advertise the two lines of gym fitness equipment products – SENSATION / FUTURE, in addition to monetary damages [here in Portuguese].

In response, ATHLETIC WAY contented TECHNOGYM did not protect its products by means of industrial design or patent, and presented other allegations in order to repeal the claimant’s demands. It specifically alleged the design was in the public domain. The Judge rejected ATHLETIC WAY’s arguments. Notably, the right of the claimant “to repress unfair competition of its product is independent of any industrial design registration for the shape of its exercise equipment”, said the Judge.

In Brazil, it is not possible to register as industrial design or trademark shapes determined essentially by technical considerations, or which cannot be dissociated from its technical effect. Besides, there is no ornamental shape protection by means of industrial design. The matter that the design was in the public domain was considered irrelevant by the Judge.

The Judge, however, considered whether ATHLETIC WAY focused on the practice of illicit imitating TECHNOGYM’s products as trade dress and whether this behavior would have characterized unfair competition, to evaluate the defendant’s liability for injunction relief and damages.

As regards the definition of trade dress according to Brazilian Law, the Judge cited a recent judgment as follows:
"[Trade dress is the] [c]ombination of characteristics, which may include, among others, a color or color scheme, shape, packaging, product configuration, signs , phrases , layout, styling and size of letters, graphics, drawings , emblems, coats , textures and embellishments or ornaments generally able to identify particular product and differentiate it from the others" (TJRJ , Ac 0090918-04.2007.8.19.0001. Twelfth Civil Court, Des. Lucia Miguel S. Lima. 27/01/2009).

And commented that:
There is no … specific provision to protect this trade dress or branding of companies. Its protection is based on the repression of unfair competition as foreseen in the Industrial Property Law. Note that this protection afforded by law is not limited to the trademark, reaching also the extrinsic characteristics of the products.
To test unfair competition, for the violation of trade-dress, it suffices the simple external comparison of the ornamental aspects of the product or the form of its presentation, taking into account the potential risk of consumer confusion.

The findings of the technical expert provided sound evidence to typify the practice of unfair competition:
The commercial strategy of the Defendant is not limited to the reproduction of visual forms of devices, but includes a series of acts that, taken together, suggest abuse of rights and unfair competition, in that: a) allow the use of the prestige and the power of attraction stemming from creative and professional effort of others; b) provide an unfair competitive advantage over competitors who bear the cost of the visual identity development; c) cause damage to the company that has its product lines copied since it dilutes the visual identity of its equipment and affects the investment in its creation and; d) empower any customer poaching for a particular kind of consumer.

On the assessment of the imitation of the designs and the characterization of unfair competition in relation to consumer confusion, the Judge referred once again to the technical expertise findings, namely to confirm the imitation of the design shapes in both products, the imitation of the distinctive visual elements in both products, the existence of a logo recess, the indication of “Italian design” displayed on the site of the defendant, and to show the conduct of the defendant’s commercial representatives at fairs, who allocated exhibition booths next to the claimant.

The defendant company did not refute the expert conclusions. However, the decision is under appeal.

Post written by Magda Voltolini.

Patricia Covarrubia

Patricia Covarrubia