Case Summary:

Plaintiff: INTERLEGO AG (Interlego)Defendant: Coko (Tianjian) Toy Co. Ltd Coko
Defendant: Beijing Fuxing Market (Fuxing Market)

On July 6, 1999, Interlego filed an action with Beijing No. 1 People's Intermediate Court claiming copyright infringement. Interlego claimed that, with the authorization of Lego Company (a Danish company), owns all intellectual property rights related to Lego’s product, including the copyright of Lego’s toy blocks as works of applied art. China has joined the “Berne Convention for The Protection of Literacy and Artistic Works” and initiated the “Regulations on Implementing International Copyright Treaties.” The Berne Convention gives copyright protection to works of applied art, specifically addressing foreign works in Article 6 of the Regulations on Implementing International Copyright Treaties. Interlego found that Coko in varying manners copied 53 toy blocks of Interlego’s and therefore infringed the copyright of Interlego. Fuxing market in Beijing sold the accused plastic toy blocks manufactured by Coko and also infringed the copyright of Interlego. Therefore, Interlego, according to Berne Convention, Copyright Law of The People’s Republic of China, and the Regulations on Implementing International Copyright Treaties, requested the court to order: 1) the defendants to stop all infringing acts immediately; 2) Coko to turn over the molds for the infringed toy and all other toy blocks that infringed on Interlego’s copyright to be destroyed, 3) Coko to make a public apology in The Beijing Daily and Tianjin Daily; 4) Coko to pay RMB100, 000 in damages to Interlego; 5) Coko to pay all litigation cost of this case and pay Interlego the expense for investigating and obtaining evidence and the counsel fees.

In its defense, Coko claimed, “Interlego did not sign or seal the indictment, and furthermore, the entrusted agent who signed on the indictment is not the legal representative. Therefore, our company has objection to the plaintiff’s qualification and requests the court to examine the plaintiff’s qualifications. Coko’s molds and technology for toys subassembly was imported from Korea in 1994 and does not infringe upon the plaintiff’s legal rights and interests; Lego's manufacture designs for which the plaintiff claim copyright protection should not be qualified as works of applied art as they are merely individual parts of plastic toys and therefore should not be protected by copyright law. Coko has been granted design patent protection on the accused parts of the plastic toys, and thus should be protected by law. There are no grounds for the plaintiff’s request that our company should pay the expense of investing and obtaining evidence and the counsel fees. Therefore, Coko requested the court to reject the plaintiff’s request.”

Beijing Fuxing Markent did not submit their written defense. During the court hearing, Fuxing Market maintained: “The sale of Coko’s manufactured products is legal. Necessary examination was made when our market bought the accused toys from Coko and Coko had all the necessary certificates. Additionally, as the seller, our market should not assume the legal consequence of this case, consequences of which should be assumed by the manufacturer of the accused products. Although our market began to sell Coko’s toys as early as July 1999, it was impossible for our market to learn that such manufactured products claimed a copyright as there is no sign indicating a copyright on the package. Currently our market has canceled the sale of Coko’s toys, sealed all the stock, and will not display the stock until the court makes their final decision.

After the initial trial, Beijing No. 1 Intermediate People's Court held:

The defendants’ infringing act accused by Interlego took place before the amendment of Copyright Law of The People’s of China, therefore the Copyright Law prior to the amendment will be applied in the trial of this case. In spite of the fact that there is not the signature of the plaintiff, but instead the signature of the entrusted agent on the indictment, the expressed intention is still genuine. Such action does not go against the law and therefore Coko’s objection to the Interlego’s qualification as the plaintiff is not established.

The technology drawings and confirmation letters of the 53 toy blocks involved submitted to the court by Interlego can prove that the Lego Company is the creator of the above discussed toy blocks. The letter of transfer issued by the Lego Company is evidence that Lego has irrevocably transferred the copyright and all rights and interests in China on the relating works to Interlego. The defendants did not raise objection on whether the letter of transfer goes against Danish law. Copyright Law of The People’s Republic of China does not forbid the transfer of the copyright within certain territories. Therefore, the court confirms that the letter of transfer issued by Lego Company is valid and Interlego is the owner of the copyright and the relating rights and interests of Lego’s toys.

Interlego is a Swiss company and both Switzerland and China are members of the Berne Convention. According to Article 2 of Berne Convention, the works protected by the Convention includes works of applied art. As a member of Berne Convention, China is obliged to protect the copyright of works of applied art originating in members of the Berne Convention.

On September 25, 1992, the Chinese Government issued Regulation on Implementing International Copyright Treaty, Article 2 of which provides that the Copyright Law of The People’s Republic of China, the Rules of Implementing Copyright Law, and the Regulation of Protection to Computer Software and Regulation on Implementing International Copyright Treaty shall apply to the protection of foreign works, Article 6(1) of which provides that the duration of protection to foreign works of applied art is 25 years from the date when the work were completed. Therefore, the copyright protection to foreign works of applied art shall be governed and adhered to by Chinese copyright laws and regulations.

The facts that have been found out indicate that the time from the date when 53 toy blocks on which Interlego claim copyright protection were completed to the date when Interlego filed the lawsuit with Beijing No. 1 Intermediate People's Court does not exceed 25 years. If the above said toy blocks are recognized as works of applied art according to Chinese Copyright Law, they should be protected in China.
However, Chinese Copyright Law does not define works of applied art. According to the theory of copyright law, the court regard works of applied art as intellectual creations with originality that possesses the characteristics of practical applicability and artistic quality and meet the requirement for works. The artistic content of works of applied art (the production results from the intellectual effort made by the author in the artistic quality of the works) is protected under copyright law. The practical applicability of such works is not protected under copyright law. According to the concept of works of applied art, the following method can be used in determining whether the work is a work of applied art.

1. To determine whether the article possesses characteristic of practical applicability Practical applicability herein is a certain concept, which means that such article can be used in true life and the function for viewing and collecting is not the only function of such an article. For example, the sculpture whose only function is to be viewed shall not be protected as a work of applied art as it does not possess the characteristic of practical applicability.
2. To determine whether the article possesses characteristic artistic quality
Artistic quality is an important characteristic that distinguishes the work of applied art from common products. It is difficult to say that the parts of a product, such as the parts of a machine, possess artistic quality. There is no standard to follow when determining the artistic quality, thus creating an inconsistency in understanding and appreciating art. Therefore, the artistic quality shall be cognized by the standard of general public. To cognize artistic quality, originality shall be considered a requirement.

3. To determine whether the article meets the requirements for works, namely the characteristic of originality and reproducibility
The originality is a complex characteristic to determine, whereas the reproducibility is very simple. Originality means that the author created such a work independently of others or in the public area. Works that are made by copying or imitating the design, sculpt, and shape do not possess the characteristic of originality and therefore are not works of applied art.

According to the concept of works of applied art and the above said method, the court holds that, as parts of toys, 53 toy blocks on which Interlego claimed copyright protection as works of applied art possess characteristic of practical applicability and reproducibility. Therefore, to determine whether these toy blocks are works of applied art or not, it is crucial to determine whether they possess characteristics of artistic quality and originality. If all these toy blocks meet the requirements for works of applied art, the court need determine whether the toy blocks manufactured by Coko are substantially similar to those manufactured by Interlego. According to the above said principle, the court classified the toy blocks on which Interlego claimed copyright protection into three types:

1. Three toy blocks in ordinary shapes do not possess the characteristics of originality and artistic quality and therefore do not meet the requirements for works of applies art.

2. Seventeen toy blocks possess characteristics of originality and artistic quality to which Interlego’s toy blocks are not substantially similar. These toy blocks possess characteristics of originality and artistic quality, meet the requirements for works of applied art and therefore can be protected as works of applied art. However, Coko’s toy blocks are not substantially similar to these 17 toy blocks and therefore did not infringe on the copyright of these toy blocks. Considering the fact that these 17 toy blocks’ originality is very strong, the court adopted a stricter standard in order to balance the interest of the owner of the copyright and the interest of the public when determining whether the Coko’s toy blocks are substantial similar to those of Interlego’s.

   3. Thirty-three toy blocks possess characteristics of originality and artistic quality to which Interlego’s toy blocks are substantially similar. These toy blocks possess characteristics of originality and artistic quality, meet the requirements for works of applied art and therefore can be protected as works of applied art. Coko’s toy blocks are substantially similar to these 33 toy blocks and therefore infringed copyright of these toy blocks.

The grounds on which Coko is pleading, namely, Coko’s allegation that its molds and technology for toys subassembly were imported from Korea, can not be entirely supported because of the refusal to allow adjudication organ of Korean Patent Bureau to testify that Coko did not infringe the legal right and interests of Interlego. Although the toy blocks on which Interlego claimed copyright protection are parts of plastic toys, they exist as independent articles that possess artistic quality and originality and meet the requirement for works of applied art and shall be protected under the Copyright Law. The fact that Coko may have been granted patent right for some of its toy blocks does not effect the determination whether Coko infringed the copyright of Interlego. When patent right for design conflicts with copyright, the prior legal right shall be protected. In this case, Interlego’s copyright is a prior legal right since Interlego had enjoyed the copyright before Coko was granted patent right for the design. Whether or not Coko was granted patent right for design in China, Coko still infringed upon the copyright of Interlego if Coko’s toy blocks are deemed substantially similar to those of Interlego’s. On the basis of the grounds of the above said, Coko’s grounds of pleading are not established and cannot be accepted by the court.

Interlego’s allegation that Fuxing Market infringed upon its copyright is not established. Fuxing Market performed the necessary examination when it bought the toy blocks from Coko. Additionally, Fuxing Market as an ordinary seller and can not know that there are toy blocks infringing upon Interlego’s copyright in Coko’s toy series when only part of Coko’s toy blocks infringed upon Interlego’s copyright. Therefore, Fuxing Market was not at fault and its action did not infringe the copyright of Interlego. However, Fuxing Market has the obligation to stop selling the infringing product after the court confirms that Coko’s toy blocks contain some blocks infringing on Interlego’s copyright.

In summary, Coko’s act infringed on the copyright of Interlego, however Fuxing Market did not infringe the copyright of Interlego. Coko should assume corresponding legal liability, including stopping the infringing act, paying damages, and making a public apology. The court upholds Interlego’s request that Coko should stop manufacturing and selling infringing toy blocks and turn over the molds for the infringing toy blocks to the court to be destroyed. The court does not accept the amount of damages claimed by Interlego, which is calculated on a basis of a presumption and cannot be supported by any evidence. The court will calculate the amount of damages according to the number of works of applied art on which Interlego claimed protection, the number of infringing products contained in Coko’s toy blocks and the effect raising from Coko’s infringing act. The court does not uphold Interlego’s claim for RMB 100,000 in counsel fees because during the suit in this court the agent entrusted by Interlego is not a Chinese counsel but a Chinese citizen and the counsel fee is not supported by any accurate bill documentation. Considering the harmful effect on Interlego caused by Coko’s infringing act, Coko shall publish an announcement in a newspaper to make an apology. The court will not completely uphold Interlego’s request that the defendant publish an announcement to apologize in two newspapers. According to Article 46 (1), (2) and Article 1, 2, 3 and 6(1) of Regulation on Implementing International Copyright Treaty, the court of first instance made the following decision on December 25, 2001: a) Coko must stop infringing acts immediately on the date when the decision comes into effect, namely, the toys manufactured and sold by Coko cannot contain any toy blocks infringing on the copyright of Interlego; Coko must, at its own expense, turn over the molds for the infringing toy blocks to court to be destroyed within 30 days after the decision comes into effect; b) Coko must pay Interlego RMB 50,000 damages for economic loss and RMB 17,017 as compensation to Interlego’s for expenses on stopping the infringing act, RMB 67.017 in total, within 30 days after the decision comes into effect; c) Coko must publish an announcement in Beijing Daily to make an apology and eliminate harmful effect within 30 days after the decision comes into effect. The content of announcement must be approved by the court; d) Fuxing Market must stop selling the toys that contain the toy blocks infringing on the copyright of Interlego on the date when the decision comes into effect. e) Interlego’s other claims are rejected.
Coko and Interlego were not satisfied with the decision and appealed to the Beijing High People’s Court. Saying the presented facts are clear and accurate and the application of the law is correct in decision of first instance, Beijing High People’s Court rejected the appeal and affirmed the decision of first instance on December 18, 2002.

【Judge’s memoir】

In the past, the number of the cases relating to works of applied art was very small, especially cases on which a substantial decision was made. These cases are of great influence in the area of intellectual property and were called a landmark decision by the press. It is foreseen that this case will influence similar cases in China in the future.
      
The Berne Convention definitely provides that the members shall protect works of applied art, but does not provide what exactly should be considered works of applied art. Additionally, according to the principle of independence of copyrightii in the Berne Convention, the protection under substantial law, afforded by China to the citizens of member countries of the Berne Convention who claim copyright protection in China, shall be governed by Chinese laws. There is no provision on what is to be considered a work of applied art in Chinese Copyright Law. The expression, works of applied art, is used in Regulation on Implementing International Copyright Treaty issued by the State Council in 1992, in which what exactly is to be called works of applied art is not explained. Therefore, works of applied art and the requirements for works of applied art need first to be defined. The court can consult the theory of law and relating documents under the circumstance that there is no provision already in statute law.
     
Guide to Berne Convention for The Protection of Literacy and Artistic Works, published by World Intellectual Property Organization in 1978 defines works of applied art: “Convention uses this general expression to cover the artistic contributions of the makers of knick-knacks, jewelry, gold and silverware, furniture, wall paper, ornaments, clothing, etc.”iii This definition provides the scope of works of applied art. Legal Glossary of Copyright and Neighboring Right, compiled by World Intellectual Property Organization, defines works of applied art as works possessing practical applicability, no matter if these works are made by a craftsman or produced by an industrial process. According to the definitions of the above said, only the works possessing practical applicability as well as artistic quality are qualified as works of applied art. Some Chinese scholars define works of applied art as artwork possessing practical use value.iv
Referring to the definitions above said, I defined works of applied art as intellectual creation with originality possessing practical applicability and artistic quality and meeting the requirements for works, which must meet the following requirements: 1) practical applicability; 2) artistic quality; 3) originality; and 4) reproducibility. The trial court held. The appeal court confirmed the definition. However, there is following dispute on the requirement for works of applied art defined in this case in theory and in practice:

A. What is practical applicability?

Practical applicability is also called practical use value by some scholars. There is no authoritative explanation for practical applicability at present. The court of suit held that practical applicability is a certain concept, meaning that the article can be applied in true life and the function for view and collection is not the only function of such an article. I think this opinion of the court is a development in legal theory. Practical applicability is an important difference between works of applied art and artwork. Certainly, there is no dispute on the requirement that works of applied art possess practical applicability.

B. Whether works of applied art must possess artistic quality and what the extent of artistic quality shall be?

Artistic quality can also be called artistic enjoyability,v aesthetic significancevi, or aesthetic feeling. Whether works of applied art must possess artistic quality and what the extent of artistic quality shall be, is disputable. For instance, in the House Report on copyright act, the U.S. Congress stated that the definition or works of applied artwork “carries with it no implied criterion of artistic taste, aesthetic value, or intrinsic quality.”v   Article 4 (1) of U. K. Copyright, Designs and Patents Act 1988 provides that a graphic work, photograph, sculpture or collage, irrespective of artistic quality, are qualified as works of applied art v . In a Chinese case relating to infringement of copyright of works of applied art, the appellate court held that some of the articles on which the plaintiff claimed protection shall not be protected as works of applied art on the ground that such articles did not possess aesthetic significance. Some scholars maintained that such decision was not made on legal basisix. 

In the author’s opinion, works of applied of art should be artworks first. Artworks must possess artistic quality and the laws and the judges may neglect the extent of artistic quality. Artistic quality is different from the quality of art or the extent of artistic quality. Therefore, articles on which the protection as works of applied art were claimed must possess artistic quality, or all articles possessing practical applicability can be protected as works of applied art. Although the House Report states that the definition or works of applied art work “carries with it no implied criterion of artistic taste, aesthetic value, or intrinsic quality”, the U.S court will determine whether the articles possess artistic feature or artistic elements separable from Utilitarian dimension x. In summary, there is no doubt that works of applied art shall possess artistic quality or artistic element.

Additionally, the fact that the articles are produced in batches or by an industrial process shall not influence the existence of the artistic quality of such articles. In this case, somebody alleged that only handicrafts can be protected as works of applied art in a Western Country but cannot provide the basis. In a case tried in Chinese court relating to the copyright of clothing, somebody alleged that only the clothing created independently possessed the artistic quality whereas the clothing produced by industrial process and sold in the market was not qualified as artworks. Such allegation is not on the legal basis in our country. The Tunis Model Law sets out two possible sources of works of applied art: those made by craftsman, and those produced by an industrial process, the first occupying an important place in the developing countries.xi The U.S. House Report on copyright act states that: “Works of applied art encompass all original pictorial, graphic, and sculptural works that are intended to be or have been embodied in useful articles, regardless of factors such as mass production, commercial exploitation, and the potential availability of design patent protection ”xii . All theses statements provide theoretical basis for the viewpoint that the fact that the articles are produced in batches or by an industrial process shall not shall not influence the existence of the artistic quality.

C. Separability of practical applicability and artistic quality

To obtain the copyright protection, the articles on which copyright protection are claimed must meet the requirements for separability of practical applicability, useful article and artistic quality (Artistic or aesthetic features), which vary with country. According to U. S. Copyright Act, artistic or aesthetic features of the article must be separable from Utilitarian dimension xiii, and Separability tests includes test for Physical separability and test for Conceptual separability x . In most European counties, practical applicability and artistic quality shall be inseparable from each other. In China, some specialists maintained that practical applicability and artistic quality shall be inseparable from each other, and, if separable, the part possessing artistic quality of the article shall be protected as work of fine art. I agree with these specialists and hold that practical applicability and artistic quality of Interlego’s toy blocks are inseparable from each other.

D. Cognizance of artistic quality and originality

As mentioned above, works of applied art possess artistic quality. However, the standard for artistic quality varies with each individual and there is not an impersonal standard. In my opinion, artistic quality shall be cognized by the standard of the general public. To cognize artistic quality, the originality that is the requirement for works shall be considered simultaneously. To the court, the requirement for artistic quality is undemanding, and a little artistic quality is enough to make the general public regard it as artwork. The requirement for originality is also undemanding. As to an ordinary article such a cup in ordinary shape, we can deny its artistic quality as well as originality and accordingly, refuse to afford protection as works of applied art.