The Enforcement Plight of a Best-Selling Product: Difficulties in Proving Unfair Competition for Shape- and Structure-Type Trade Dress, and How to Respond

Source:IPRdaily

Author:Yang Luo Bobby Li

Introduction: The Crocs Case, a Reversal from a First-Instance Win to a Second-Instance Loss

In May 2026, a lawsuit concerning Crocs clogs underwent a dramatic reversal. The first-instance judgment, in which Crocs had prevailed, was completely overturned on appeal, and the CNY 2.5 million in damages originally awarded was reduced to zero. The first-instance court had found that the three common distinctive features shared by five of Crocs' clog models constituted trade dress. The second-instance judgment held that the evidence was insufficient to prove that the trade dress had market recognition, and that there was insufficient evidence to show that consumers could rely on it to distinguish the source of the goods.

This case is not an isolated example. Multiple decisions show that, in unfair competition cases involving shape- and structure-type trade dress, rights holders face a widespread difficulty of proof. Through an analysis of the core legal standards and a review of the practical difficulties, the authors, attorneys Yang Luo and Jingwei Li of Chang Tsi & Partners, propose targeted response strategies.

I. Legal Standard: Elements of Unfair Competition Involving Shape- and Structure-Type Trade Dress

(1) Core Provision: Article 7(1) of the Anti-Unfair Competition Law (Article 6(1) of the Former Law)

A business operator shall not engage in the following acts of confusion that mislead others into believing that its goods are those of another person or have a particular connection with another person:

(1) Using, without authorization, a label identical or similar to another person's product name, packaging, trade dress, or the like that has a certain influence; ...

(2) Breakdown of the Elements

* "Judicial Interpretation" refers to the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Anti-Unfair Competition Law of the People's Republic of China.

 (3) Special Requirements for Protecting Shape- and Structure-Type Trade Dress

In Civil Ruling No. (2010) Min Ti Zi No. 16, the Supreme People's Court set out a fairly detailed discussion of issues relating to the determination of "trade dress of goods", which this article summarizes as follows:

(4) The Two-Layered Requirement of the Standard

The standard appears clear: both market recognition and source-identifying capability are required. In practice, however, courts differ markedly in how these two requirements are measured and proven.

On closer analysis, the courts' core concern is to prevent the improper monopolization of the functional features of a product's shape and structure. For example, the hole design of Crocs clogs has an obvious functionality (ventilation, drainage, light weight). If such a functional design were recognized as Crocs' exclusive trade dress merely because Crocs adopted it earlier and achieved market success, it would inevitably constrain the space for other competitors to innovate. This reflects differing understandings in current judicial practice regarding the scope of trade dress protection: should the emphasis be on protecting innovative brands, or on preserving the free space for market competition?

II. The Multiple Difficulties Rights Holders Face in Meeting Their Burden of Proof

(1) How to Prove "a Certain Influence"? Brand Promotion Does Not Equal Trade Dress Promotion

Take the Crocs clog case as an example. Crocs' sales in China exceeded CNY 159 million, and its promotional investment was quite substantial. The second-instance court, however, held that this evidence was insufficient to establish that its trade dress had market recognition. The crux of the problem is that rights holders usually promote the brand rather than the trade dress itself.

Drawing on this decision and several comparable cases, the authors summarize this point as follows:

(2) How to Prove "Distinctive Features Capable of Distinguishing the Source of Goods"? The Question of Consumer Identifiability

In practice, many rights holders overlook the role of consumer-perception surveys. Brand recognition alone is not enough. The relevant perception evidence should include: whether consumers treat the design feature as a key element of brand identification, and whether the relevant public actively identifies the trade dress when purchasing.

(3) How to Prove "Identical or Similar" + "Likelihood of Confusion"?

Cases of complete identity are relatively easy to find. In shape- and structure-type trade dress, however, partial copying often takes the form of detailed modifications, making comparison difficult. The court must assess the similarity between the accused product and the rights holder's product in terms of overall visual effect.

In addition, the court must consider the degree of attention exercised by consumers. If consumers exercise a higher degree of attention to distinguish products at the time of purchase, the likelihood of confusion is correspondingly reduced. If there is an obvious difference in the packaging of the two products, the court may also find that it is insufficient to cause confusion.

(4) The Issue of Standing to Sue

In unfair competition cases, whether the plaintiff has standing is a procedural issue that the court must examine first. Some cases show that standing issues may still arise in practice, especially where a foreign brand uses its Chinese subsidiary to sue and it is unclear whether the Chinese subsidiary holds the right of action. Under the Anti-Unfair Competition Law and its Judicial Interpretation, parties entitled to bring an unfair competition action include: business operators whose legitimate rights and interests have been harmed, and licensees who have obtained lawful authorization from the rights holder (including exclusive licensees and sole licensees, who may sue independently where they have obtained clear authorization).

III. Practical Response: Finding a Way Out of the Difficulties

(1) Front-Loaded Evidence Collection: Starting from the First Day the Product Launches

The most effective approach is to consciously build a strong association between the trade dress and the brand from the moment the product launches, and to leave behind provable evidence. Key measures include: emphasizing the uniqueness of the design features and their brand association in official promotion, advertising, and product descriptions; collecting content on social media and e-commerce platforms that references the design features; regularly conducting professional consumer-perception surveys to form a continuous chain of data; and establishing a complete chain of trade dress promotion, with regular evidence preservation through a notary office.

(2) A Combined Strategy of Multi-Channel Evidence

The evidence system a rights holder should prepare includes: sales data (with particular emphasis on matters relating to the trade dress); advertising and promotion (highlighting the introduction of the trade dress design); media reports (professional coverage addressing the product's design features); consumer evidence (questionnaire surveys, interview records); competitor imitation (which conversely demonstrates the trade dress's identifying value); rights certificates (trademark registrations, design patents, copyright certificates, etc.); and time-based evidence (the product's launch date and history of market presence).

(3) Attention to the Time Cost

The recognition of trade dress often requires a relatively long process of market accumulation. It is advisable to plan by phases: early groundwork (year 0 to year 2), promoting through various channels; mid-term accumulation (years 2 to 5), deepening consumer perception; later reinforcement (5 years and beyond), emphasizing long-term brand position; and pre-litigation preparation (the 6 months before suit), completing the concentrated presentation of evidence.

IV. Industry Insights: Recommendations for Brand Owners and Enterprises

First, trade dress protection cannot be an afterthought. From the very outset of product design, there should be an awareness of protection, a strong association built between the trade dress and the brand, and a conscious accumulation of evidence.

Second, brand recognition does not equal trade dress recognition. No matter how successful the brand, dedicated, repeated, and clear promotion is still needed before consumers will associate the specific design features with the brand.

Third, striking a balance between functional innovation and trade dress protection is key. Over-promoting functionality may weaken the identifiability of the trade dress; over-downplaying functionality may invite an accusation of monopolizing a function.

Fourth, when trade dress protection faces difficulties, rights holders should consider a multi-pronged approach: applying for design patents, building a trademark system, accumulating sufficient evidence, and, where necessary, conducting consumer-perception surveys.

Conclusion

Although trade dress is an important form of intellectual property, the road to its protection is not smooth. The shift from being protectable to being difficult to protect reflects both a more cautious and rational judicial practice and the immense challenge rights holders face in meeting their burden of proof. Yet this difficulty is not insurmountable.

Through early, planned, and multi-dimensional accumulation of evidence, through tightly binding design features to the brand, and through sufficient consumer-perception surveys, rights holders can still win legal protection for their innovative products. The key is to recognize that trade dress protection is not achieved overnight; it is a long-term process requiring time, investment, and strategy. In this process, every sales invoice, every piece of advertising copy, every consumer comment, and every media report may become key evidence in court. The best protection often comes from the most thorough preparation.

Author

Yang Luo

Chang Tsi Partners, Counsel丨Attorney at Law

YangLuo@changtsi.com

+86 10 88369999

Yang Luo has been dedicated to providing legal services in the field of intellectual property since 2016. Her practice encompasses intellectual property prosecution, trademark and copyright protection, as well as related infringement litigation and dispute resolution. Yang Luo excels at devising and implementing comprehensive rights protection strategies for domestic and international clients facing intellectual property infringement issues in the Chinese market. Her strategies have proven highly effective and have earned widespread recognition from clients.

Bobby Li

Chang Tsi Partners, Attorney at Law

BobbyLi@changtsi.com

+86 10 88369999

Graduated from Boston University School of Law, Bobby Li has over five years of extensive case-handling experience in China. With her familiarity with both the common law and civil law systems, she provides professional and comprehensive legal services to numerous large enterprises from the United States and Europe. Her exceptional case-handling abilities have earned recognition and praise from multiple clients.

Notes

[1] Crocs Trading (Shanghai) Co., Ltd. v. Ningbo Refeng Enterprise Management Co., Ltd. et al., unfair competition dispute, Jiangsu High People's Court, Civil Judgment No. (2024) Su Min Zhong No. 665.

[2] Electrical Appliance Company A v. Electrical Appliance Company B et al., unfair competition dispute, Henan High People's Court, Civil Judgment No. (2025) Yu Zhi Min Zhong No. 28.

[3] Company A v. Company B et al., unfair competition dispute, Guangzhou Intellectual Property Court, Civil Judgment No. (2024) Yue 73 Min Zhong No. 821.

[4] The "Balun" Company v. the "Bailun" Company, unfair competition dispute, Shanghai High People's Court, Civil Judgment No. (2020) Hu 73 Min Zhong No. 327.

[5] The "Lin" Company v. the "Le" Company et al., unfair competition dispute, Sichuan High People's Court, Civil Judgment No. (2020) Chuan Zhi Min Zhong No. 177.

[6] The "Jie" Company et al. v. the "Hua" Appliance Mall, unfair competition dispute, Henan High People's Court, Civil Judgment No. (2022) Yu Zhi Min Zhong No. 525.

[7] The Luggage Company v. the Luggage Co., Ltd., unfair competition dispute, Shanghai Minhang District People's Court, Civil Judgment No. (2016) Hu 0112 Min Chu No. 697.[8] The "Si" Company v. the "Na" Children's Products Company et al., unfair competition dispute, Jiangsu High People's Court, Civil Judgment No. (2023) Su Min Zhong No. 678.

Source:IPRdaily

Author:Yang Luo Bobby Li