Product/customer experience and the evolution of trade dress protection in Brazil

The Internet is a new frontier that is, gradually, opening up to all businesses and users alike, and when the Internet of Things (IoT) allows objects to be sensed and/or controlled remotely across existing network infrastructure, a completely new string of products and services, focused on providing unique customer experience, will surface. As in any competitive market, original and innovative products or services, if successful, will attract unwanted attention from “copycats”, and better understanding how these can be subject to trade dress protection can be a huge differential to one’s business.

Traditionally, the protection of trade dress applies to more readily recognizable objects, such as products or product packaging. This is in line with the fact that trade dress must be distinctive – there is no news here.

It is also not new to observe that, over the years, the scope of trade dress protection has expanded, and given that the concept itself is rather open, it is possible that further applications are yet to be better addressed and understood. For instance, from its original definition trade dress has already branched out to cover product shape/configuration, color combination, external and interior building designs and more recently website layout, but it is still little used in connection with services.

Very briefly, trade dress is describable as the overall commercial image (“look and feel”) of a product, which can consist of various elements such as size, shape, color and texture. To receive protection the trade dress must be inherently distinctive, unless it has acquired secondary meaning, and serve as a designator of origin.

These elements are better associated with products, but trade dress protection has expanded to cover services as well. For example, sales techniques, the décor or environment in which a service is provided can also be subject to protection, as long as these have the ability of being perceived by customers and, in a more strict sense, is considered distinctive and indicates or identifies its source.

This shows how the adaptability of trade dress as a means to preserve innovative forms to do business makes it an incredibly interesting concept – at least for practitioners in the IP field – especially for signs and concepts that do not fit the limits imposed by standard ways of protection, such as trademarks, designs and copyrights.

Trade dress protection is considered a “Jack of all trades” – mostly in a positive way – given it pervades different industrial property rights (such as figurative and 3D trademarks and industrial designs) and can be used by right holders as a tool to curb unfair competition acts. Even more so in first-to-file countries, such as Brazil, where as a rule the attributive system for the acquisition of rights would not take into account the circumstances and facts predating the filing of a trademark application. The enforcement of traditional IP rights can also be a challenge due to the backlog of work the Brazilian Patent and Trademark Office (BPTO) is currently suffering from, given one would need to wait in line for years to secure a registration before taking action against infringers.

In such a scenario, it is useful to note that trade dress is one of the few alternatives one has for enforcing unregistered rights in Brazil, what is possible given the Brazilian Industrial Property Law (Act No. 9,279/96) provides that the protection of IP rights can be effected by combating unfair competition. Section 195, item III, of the Law states that unfair competition is committed by whoever “uses fraudulent means to divert another person’s clientele, for his own benefit or for the benefit of someone else”. This permits the applicability of trade dress protection to unregistered rights.

With that said, there is certainly no reason to believe trade dress protection will be limited to the products and services available to customers today, and will be extended to the new experiences that will be made available through the IoT. It is only natural that competition will move more strongly to the virtual world, where there is without a doubt room to creating unusual and memorable experiences in products or services, and as such susceptible to being copied and, in turn, protected.

However, it will be necessary to determine if the unusual and memorable experience can be considered distinctive because they derive from something added by the business, or if it only derives merely from the innovative nature of the product or service (the experience by itself). In case of the latter, as a mere experience conceptionally unseparable from the product or service, trade dress protection will not be affordable.

The Brazilian landscape

In Brazil, the discussions concerning loT and its legal protection, specifically the interface with IP rights, are new and yet inconclusive. The precedents are in great part related to the protection over the visual identity of product packaging or stores in the real world, either combined or not with registered rights, such as trademarks and designs. In cases where claims of infringement of registered rights are raised in combination with unfair competition claims, the latter usually come in second. However, these precedents set interesting and rather important standards that could be equally applied to any case involving the infringement of trade dresses in both real and virtual worlds and for services.

In the lawsuit moved by Duvel Moortgat against Cervio Comercio e indústroa de Bebidas Ltda. based on the infringement of the trade dress of the famous beer ‘duvel’, the 7th Trial Court of the city of Rio de Janeiro based its decision on a set of criteria to establish infringement, namely (1) the degree of distinctiveness of the sign being infringed (inherent distinctiveness); (2) the degree of resemblance between the signs in conflict (products side-by-side); (3) legitimacy and expertise of the infringer (awareness of the original product and assessment of the risks involved in reproducing the trade dress); (4) assessment of the time of coexistence of the brands and products in the relevant market; (5) quality and nature of the products; (6) public awareness and skill in the ‘art’; (7) potential to make undue profits from the use of a similar design and/or risk of dilution of the brand or trade dress.

In that particular case, the Court understood that even considering that some features used in the product packaging and label were not eligible to protection with exclusivity, the combination of the features as adopted by Cervio in their beer ‘deuce’ clearly reproduced the packaging and label adopted by Duvel, which caused undue association even to a skilled consumer. All the standards of analysis of confusion above were met in this particular case and trade dress infringement ended up being duly characterized. The Court determined the infringer to adopt a different and distinctive trade dress in their beer ‘deuce’. There was no technical opinion and it has been a pioneer decision concerning trade dress infringement based on the set of requirements above.

Recently, the 22nd Court of Appeals of Rio de Janeiro confirmed a lower court decision, which had considered trade dress infringement the reproduction by Athletic Way Comércio de Equipamentos para Ginástica e Fisioterapia Ltda. of a line of workout machines called ‘sensation / future’ and ‘selection / purestrenght’ produced and commercialized by Technogym Equipamentos de Ginástica e Solução para o Bem Estar Ltda. and Technogym SPA.

According to the ruling, the defendant uses the same visual standards adopted in the original workout machines, such as colors and shapes. As such, the defendant competes unfairly with the owner of the original products, creating confusion and undue association not specifically amongst business managers in the workout segment, who are highly skilled, but in parallel segments such as hotels, resorts and clubs, among which the risk of undue association by using a misleading visual presentation of the product would be higher. According to the decision, the repression against unfair competition should be sought “regardless of the registration of an industrial design”. Damages were deemed presumable and derived from the mere infringement of the trade dress.

In both cases, the plaintiffs were able to establish that they owned rights over a certain combination of elements that were unique and distinctive, deserving the protection as trade dress, irrespective of any prior registered right.

The courts took into consideration not only the distinctiveness of the trade dress alone but most importantly weighted the consumers’ perspective towards the risk of confusion and undue association to determine infringement. Risk of dilution and the undue profits made out of the commercialization of products bearing similar trade dresses led the courts to fix the right to receive an award of material damages.

The future

Brazilian courts are constantly challenged to decide trade dress infringement cases and have fairly evolved in the establishment of objective requirements to afford protection over a certain product or service. These criteria are flexible enough to be applied to different scenarios in both real and virtual worlds

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