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Do Pharmaceuticals of Similar Appearance Constitute Counterfeit of Trade Dress under the Fair Trade Act?
Active ingredients, mechanism, clinical efficacy, dosing methods, side effects, and appearance are all critical characteristics of a pharmaceutical. In most cases, due to a lack of clinical expertise, packaging of the pharmaceutical may constitute the most important means by which consumers identify them. If pharmaceutical competitors use similar shape and color designs in products for the same indication, can a NADA pharma defend its rights by claiming that a competitor's conduct constitutes an act of "counterfeiting of the symbol representing the goods commonly known to the public" (Article 22, Paragraph 1 of the Fair Trade Act) or involves "deceptive or obviously unfair conduct" (Article 25 of the Fair Trade Act)? In this regard, the 2019 Ming Zhuan Su Zi No. 72 judgement, issued by the Intellectual Property Court on August 2nd, 2019, negates this point of view.
In this case, the plaintiff claimed that it owns a pharmaceutical X, a monopoly of the market for the specific indication. The plaintiff also further emphasizes that the "orange text on white background" of the capsule's appearance is particularly familiar to consumers. Further, this design is frequently displayed in most clinical institutions' introductory publications or webpage information for the plaintiff's brand. The defendant, however, as a generic pharmaceutical provider, has used the same or similar visual design with the orange text on white background capsule for its pharmaceutical Y, which comprises the same active ingredient and indications as pharmaceutical X. Accordingly, the plaintiff sued the defendant, claiming the defendant intentionally adopted a same or highly similar appearance as that of the plaintiff's pharmaceutical, intending to create the same visual effect as a way to enhance its competitive advantage and market position so as to promote its generic products. As a result, this allusion or plagiarism may confuse consumers and mislead them into considering these two products to be of the same source, and further damage to the plaintiff's market share. Hence, the act of the defendant violated the provisions of Article 22, Paragraph 1, Subparagraph 1 and Article 25 of the Fair Trade Act.
However, the court dismissed the plaintiff's complaint in this case, and the main points of reasoning are summarized as follows:
1. The feature of "orange text on white background" capsule appearance of pharmaceutical X is not a “trade dress commonly known to the public" that can enjoy the protection provided in Article 22, Paragraph 1 of the Fair Trade Act:
As stipulated in the above quoted Article of the Fair Trade Act, “no enterprise shall conduct any of the following acts with respect to the goods or services it supplies: (1) using the personal name, business or corporate name, trademark, container, packaging, appearance of another's goods, or any other commonly known trade dress that represents such person's goods in the same or similar manner and in the same or similar category of merchandise so as to cause confusion with such person's goods; or selling, transporting, exporting or importing goods bearing such trade dress; or (2) using a celebrated name of another person, business or corporate name, service mark of another, or any other commonly known trade dress that represents such person's business or services, in the same or similar manner and in the same or similar category of services so as to cause confusion regarding the facilities or activities of the business or service of such person.” The term "commonly known" herein refers to the circumstance where there is objective proof of a sign capable of being commonly recognized by the relevant enterprises or consumers, to which the reasons for the amendment of this Article in 2015 and Article 31 of the Enforcement Rules of the Trademark Act can be referred.
However, as the subject pharmaceuticals X and Y are both prescription pharmaceuticals, patients can only acquire these pharmaceuticals after receiving a doctor's prescription and pharmacist's dispensation; in other words, these pharmaceuticals cannot be traded freely in the market. Therefore, the appearances of the said pharmaceuticals cannot constitute trading information for patients to purchase pharmaceuticals. Further, doctors and pharmacists do not prescribe nor dispense according to the appearance of pharmaceuticals. In view of the above, it is difficult to agree that the feature of "the orange text on a white background" of pharmaceutical X is the commonly known trade dress representing the goods.
2. Using similar appearance of pharmaceuticals should not be construed as an act of deceptive or an unfair conduct to affect trading order.
While the subject pharmaceuticals both feature a visual design of the orange text on a white background, they are both prescription pharmaceuticals and must be dispensed by pharmacists. Meanwhile, physicians normally prescribe pharmaceutical products based on ingredients, indications, health insurance payments, methods of administration, contraindications, pharmacological characteristics, side effects, and others, rather than considering the appearance of the individual product. Accordingly, similar appearance of pharmaceuticals is insufficient to deceive or confuse patients nor deceive or mislead the prescribing physician's decision. In this case, it is difficult to consider that the defendant's use of similar visual design for pharmaceutical Y has affected trading order of the aforesaid pharmaceuticals. There is no deceptive or obviously unfair conduct which is able to affect the trading order, as stipulated in Article 25 of the Fair Trade Act.
This case considered that pharmaceuticals with similar appearance will neither confuse other parties, nor to affect trading order of the market because the trading habits of the prescription pharmaceuticals are not solely based on the appearance of pharmaceuticals. It remains to be observed whether the opinion becomes a steady point of view under local practice.