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SATA GmbH v. Zhejiang Olida Unfair Competition Case
date: 2019-07-18

SATA is a German spray paint equipment company with more than 110 years of history. With its high quality products and services, SATA has a good reputation in the spray equipment industry worldwide. SATA’s quality assurance has won the favor of consumers, but it also attracted other companies in the same industry to attempt to take the unfair competition of “SATA”. Zhejiang Olida Company is one of them.

SATA found that Olida has engaged in a large number of unfair competition activities in its production and operation. On the third-party platform website, the words "SATA COPY" are marked on the display of its spray gun products; When describing the spray gun products in the Taobao shop where it operates, it published false information about SATA products, such as "the SATA spray gun has no warranty and the maintenance cost is high", "German Sata... is not confident in its own quality, moreover not responsible towards their clients”, etc. On the official website and brochure, Olida used the same picture as SATA’s promotional photo on its product brochure; In the promotional email the appearance, packaging, model, performance, etc. of the product are similar to those of SATA; Many mentions of "SATA" are used in the source code of its official website. In response to the above behavior, SATA filed an unfair competition lawsuit against the Beijing Dongcheng District Court.

In response to Olida’s use of “SATA COPY”, Dongcheng Court held that SATA’s long-term sales and promotional activities for spray gun products in China have shown a lot of evidence that “SATA” or its name in Chinese chararcters will be used in this process. The use of the name of the enterprise has already gained considerable market popularity, which is enough to establish the corresponding relationship between “SATA” and Sata GmbH amongst the relevant public. Therefore, “SATA” should be recognized as “Enterprise Name” in the “Anti-Unfair Competition Law”. Olida has displayed the word "SATA" when selling its own spray gun products on a third-party sales platform. Although there is also the word "COPY" in the name of the product, because of the popularity of Sata's English company name "SATA" consumers are more likely to focus on the word "SATA"; even if some consumers notice "COPY", based on the popularity of Sata, it is still easy for consumers to misunderstand that Olida and Sata have a licensing or other special relationship. The misunderstanding would also lead the consumers to believe that the quality of related products sold by Olida is guaranteed by Sata, misleading consumers to purchase related products, thus gaining an unfair competitive advantage.

In response to the untrue content in Olida’s product introduction, Dongcheng Court believes that there is no comparison with Sata GmbH products since Olida’s own product warranty service has been clearly introduced.

However, Olida has not proved that it published the relevant content, nor verified the relevant facts or provided evidence to prove that its published content is true, so it cannot be determined that the content is an objective fact; as such "having no confidence in its own products" and "not responsible for its clients" belongs to the subjective evaluation of the plaintiff's products and is not based on facts, especially as a competitor, Olida obviously lacks rationality in such evaluation, which will have a negative impact on Sata GmbH’s relevant consumers, business and product reputation, thereby damaging Sata’s market competitive advantage, thus constituting unfair competition.

In response to Olida’s use of Sata’s promotional images, the Dongcheng Court held that Olida’s website and brochure did use a picture consistent with Sata’s previous publicity. However, the main content of the picture is the image of a man who is working with a hand-held spray gun, which is a common way of advertising such products. Thus, it is impossible to prove a direct relation of the photo with Sata and its products. It is impossible to determine if the use of the picture by Olida will cause confusion and misunderstanding among relevant consumers and thus does not constitute unfair competition. If Sata believes that the use of the photo by Olida infringes on its other legitimate rights and interests in the picture, it may make additional claims in accordance with relevant laws and regulations.

The court held that, according to the evidence in the case, Olida did use the word "SATA" in the source code of the official website it operated, and stated in the external product advertisement that its product was of the same quality as Sata’s product but at a lower price. The court comprehensively considered the plaintiff's popularity, the nature of the infringement, the duration of the case, and the degree of subjective fault. The court confirmed the compensation for economic losses of 500,000 yuan and reasonable expenses of 60,000 yuan.

Kangrui Law Firm represented Sata GmbH in the above case.

At present, Olida company refused to accept the ruling and appealed; the case continues in the second instance.