Further to the award of punitive damages to Balanced Body (revisit our blog post here), we have seen a string of cases in the first half of 2020 where Chinese judges awarded punitive damages to trade mark owners for trade mark infringement.
- Guangzhou Redsun was awarded 50 Million RMB against its ex-employee
Guangzhou Redsun has been using the “红日 (Redsun)” mark on kitchen and bathroom products since 1993, and its Redsun marks have been recognised as well-known trade marks in China. The Defendant Shi was a former employee who went on to establish Guangdong Zhimei to manufacture and sell integrated stoves and other products under the mark “红日E家 (Redsun E Home)”.
In 2017, Guangzhou Redsun filed a lawsuit against Guandong Zhimei and four provincial distributors. The Guangzhou IP Court found that the infringement was malicious and fully supported Redsun’s demand for damages of 50 Million RMB. Shi had used the same sales channels and outlets established by Guanzhou Redsun, used a similar domain name <www.redsun-gd.com>, sold both “Redsun products” and its own “Redsun E Home” in Zhimei’s stores with misleading slogans such as claiming that “Redsun E Home” was the upgraded version of “Redsun”, etc. All of these marketing strategies had misled the public to believe that “Redsun E Home” was related to the well-known brand “Redsun”, which constituted unfair competition and trade mark infringement.
The Appellate Court, the Guangdong Higher People’s Court, upheld the ruling, but Guangdong Zhimei had refused to disclose its full and complete financial records and continued to sell infringing products, even after an injunction had been granted by the Guangzhou IP Court. Guangdong Zhimei’s infringing acts caused extremely large economic losses to Guangzhou Redsun. Accordingly, Guangdong Zhimei and the four distributors were ordered immediately to cease the infringement and compensate Guangzhou Redsun for economic loss in the sum of 50 Million RMB and reasonable fees of 450,000 RMB.
- Opple Lighting was awarded 3 million RMB in a retrial, after losing in two previous courts
Opple’s “欧普’ (OuPu)” mark had previously been recognised as a well-known trade mark in China. In 2016, Opple found that Guangzhou Huasheng sold lamps bearing the “欧普特 (OuPuTe)” mark on an online platform and brought an infringement action. Both the Court of First Instance and the Appellate Court found that the “欧普特 (OuPuTe)” mark was dissimilar to Opple’s OuPu mark, and Opple’s case was dismissed. In 2019, Opple applied to the Guangdong Higher People’s Court for a retrial, and the Court overturned the previous rulings. The Court recognised that Opple’s trade mark was certified as a well-known trade mark – so its strong distinctiveness and fame should be fully taken into account in determining if confusion would be caused. Huasheng’s “欧普特 (OuPuTe)” mark only differed from Opple’s “欧普 (OuPu)” mark by the last Chinese character, and use of Huasheng’s mark would have caused confusion as to the origin of the goods. It was also noted that Huasheng was fully aware of Opple’s mark, since Huasheng’s own earlier trade mark application for “OPTE 欧普特” on lamps was blocked by OuPu’s mark. However, Huasheung proceeded to register its mark for other goods, continued to use this mark on lighting products and sold them in large quantities on online platforms. Huasheng’s OuPuTe products were also subject to administrative penalties for quality issues. The Court found that the act of infringement was severe and awarded punitive damages of three times the determined damages, awarding a total of 3 Million RMB.
- ByteDance and Microlive were awarded 2 Million RMB
In March 2020, the Hangzhou Internet Court awarded 2 Million RMB to Beijing ByteDance Technology Co. Ltd (ByteDance), the registered owner of Tik Tok and related trademarks, and Beijing Microlive Vision Technology Co. Ltd (Microlive), the operator of the Tik Tok website and app.
In December 2018, a Hangzhou company sold products on the Tik Tok app and organized a conference with other Defendants to kick off the “Ten of Thousands Sellers on Tik Tok Alliance”. In the conference, the Hangzhou company used registered trademarks of ByteDance extensively in different places for promotional purposes. The company also claimed that they were Tik Tok’s authorized agent and their special guests were from Tik Tok’s headquarters. At the same time, the company and the Defendants also used ByteDance’s registered trademarks and posted copyrighted videos of Microlive on different social platforms, including their WeChat subscription accounts, personal Weibo accounts and QQ accounts to advertise the company.
The Court found that the Defendants had malicious intentions and they knowingly carried out the infringing activities over a long period of time from December 2018 till 13 March 2020. The Tik Tok mark has also been recognised as a well-known trademark in China, and the plaintiffs produced evidence to show that the usual licensing fee for using the Tik Tok trademark at an event was up to RMB 19.4 Million. One of the Defendants was also a large scale company with a registered capital of RMB 100 million. Accordingly, the Court considered that the act of infringement was severe and awarded punitive damages of 2 Million RMB.
These examples continue to show that the Chinese Courts are more and more willing to grant punitive damages since the amendments made to the PRC Trade mark Law. In these three cases, the relevant infringed marks were all very famous or well-known in the relevant fields in China, and the Courts could find bad faith evidence or malicious intent on the part of the Defendants. In March 2020, the Supreme People’s Court listed, in its Judicial Interpretations Project Plan for 2020, that its “Interpretation on several issues concerning the application of punitive damages for intellectual property infringement” is one of its regulations targeted to be issued in the first half of 2021. We look forward to those further guidelines from the highest Court in China and further cases in the meantime with punitive damages awards.
