Bloomberg Terminal Design at Issue in Shanghai Court Case

July 9, 2012

Dazhihui terminal

As intellectual property cases go, this one is sufficiently out of the ordinary to make it interesting. The dispute, between Bloomberg and local competitor Dazhihui, involves the Bloomberg terminal. If you’re a finance person, you are well familiar with the ubiquitous dual-panel display, hardware that is present in offices all over the world.

Dazhihui also makes a dual-panel terminal that feeds its customers financial data (if you don’t get embedded images, here’s a link). Amazing coincidence.

Bloomberg says that the Dazhihui product is an infringement of its intellectual property rights, but exactly what are we dealing with here? The claim is that the Dazhihui hardware not only includes the dual-panel display but also adopts the same colored keyboard and layout design as the Bloomberg terminal (see image below or go here for link).

Bloomberg’s accusations do not include any suggestion that a trademark or copyright is involved. The thought crossed my mind that Bloomberg had a design patent on its terminal, but none of the press coverage mentions patent rights. Moreover, the arguments being made by Bloomberg are a clear signal as to its legal theory and cause of action: unfair competition, specifically trade dress infringement.

How do we know? Trade dress actions stem from Article 5(2) of the Anti-unfair Competition Law, which says that business operators may not:

[U]se the specific name, package, decoration of the famous or noted commodities, or use a similar name, package, decoration of the famous or noted commodities, which may confuse consumers distinguishing the commodities to the famous or noted commodities[.]

We also have other guidance on trade dress, notably a judicial interpretation from the Supreme Court. However, let’s just stick with the basics for now. To prevail in a trade dress action, Bloomberg would have to prove that:

1) Its terminal design is unique;

2) The Bloomberg terminal is well known in the relevant business sector; and

3) The Dazhihui product is sufficiently similar to cause consumer confusion.

Now lets go back to the claims Bloomberg is making, at least as much as we know from the press coverage. Caijing reports that:

Bloomberg said the financial data device “Da Zhihui” has adopted the similar design of the Terminal’s dual flat-panel display, color keyboard as well as overall style, which could cause confusion between the two products.

Sounds like a trade dress case to me.

Bloomberg terminal

What makes this so interesting is that a typical trade dress case usually involves something like product packaging or perhaps the overall design of a retail establishment. When you think about those knock-off Apple stores or Starbucks shops, which use the same color and design elements of the foreign franchisors, we’re talking trade dress infringement.

But the Bloomberg terminal looks like a desktop PC, not something one would normally associate with having unique trade dress.

So what are Bloomberg’s chances here? For trade dress, you really need to see these things side by side and in action, and I haven’t. To be honest, I don’t even know if the pics I have included here are updated and represent the specific products at issue in this case. In the hearing in Shanghai last week, apparently Bloomberg’s lawyers included a live demo, which makes sense.

I assume that Bloomberg will be able to prove that its terminals are sufficiently well known in China in the relevant sector. As I said, these suckers are ubiquitous. And there do seem to be several design elements of the Dazhihui product that are similar to that of the Bloomberg terminal. Indeed, I think it’s rather obvious that the Dazhihui terminal imitates the Bloomberg product.

But that similarity alone does not necessarily equate to infringement. I think this may turn on the issue of consumer confusion; I assume Bloomberg argued that the two products are close enough to make customers question the origin of the Dazhihui product.

One argument made by Dazhihui a while back, and probably repeated last week, is rather confusing:

Lawyers representing Dazhihui say Bloomberg’s accusations are unfounded. The Chinese company has no reason to imitate Bloomberg’s design since it has the largest market share in China while Bloomberg is the only third largest in the country.

You see, Dazhihui’s product is more successful than Bloomberg’s in China. Does that matter? Actually, no it doesn’t. Whether an infringer sells one knock-off widget or captures the entire market is irrelevant to the underlying question of the infringement itself. Keep in mind that Bloomberg has been in the market here since the mid-90s — in other words, they were using the design first.

I don’t really have enough information here to venture a prediction. I will say, however, that this isn’t as easy a case as it may appear. Those dual-panel displays really jump out at one at first glance, but that’s hardly a unique characteristic. A colored keyboard isn’t either. Bloomberg needs to rely on specific elements of similarity that are unique to its product.

If there are any finance types out there who have seen both terminals in action, feel free to chime in.