Recently, the Shanghai Jinshan District Court concluded a first-instance trademark infringement lawsuit between the plaintiff Huawei Technologies Co., Ltd. ("Huawei") and an anonymous cosmetic company, Jishe Clothing (Shanghai) Co., Ltd. ("Jishe"), an individual Li. The court ordered the defendants to immediately stop the trademark infringement and jointly compensate Huawei for economic losses of RMB 10 million (USD 2.27 million).
The court found that Huawei legally obtained the right to register the "Huawei in Chinese" mark. The creative titles of 27 products in the Tmall store "Kubaluo Flagship Store" prominently use the words "Huawei in Chinese," "Huawei Genuine Product in Chinese," "Suitable for Huawei mobile phone in Chinese," "Suitable for Huawei genuine mobile phone in Chinese" and other words in prominent positions. It did not display its own product brand and the operating entity of the Tmall store "Kubaluo Flagship Store" infringes Huawei's trademark right. The operating entities of the Tmall store "Kubaluo Flagship Store" are the two defendants. Jishe and the anonymous cosmetic company have the same controlling shareholder or the same actual controller, and the control relationship lasts for 6 months or more. Therefore, Jishe and the anonymous cosmetic company jointly committed infringing acts.
Defendant Li's personal bank account is mixed with defendant Jishe. Li's personal Alipay account is related to Jishe and the anonymous cosmetic company, and the anonymous cosmetic company's invoice is defendant Li. Taking the above circumstances into consideration, Li is the actual controller of Jishe and the anonymous cosmetic company. Although the infringement in this case was ostensibly carried out by the business entities of the Tmall store "Kubaluo Flagship Store," namely the defendants Jishe and the anonymous cosmetic company. The defendant Li, as the actual controller, had complete control over Jishe and the anonymous cosmetic company. Li was aware of the infringements carried out by the two entities from the beginning and participated in it using personal bank accounts and personal Alipay accounts. Therefore, Li is a joint infringer and should bear joint and several liability.
Regarding the benefits gained by the Tmall store "Kubaluo Flagship Store" due to infringement, according to the identified facts, the sales volume of 27 infringing products was RMB 19.99 million. Regarding the profit rate, the Huawei claimed that the profit rate of the 27 infringing products can be calculated based on the facts found in the administrative penalty decision, which was 39.15%. This court believes that the data did not include warehousing, transportation, and other costs, but the data is verified by the market supervision and management department in accordance with the law. Therefore, this court refers to the said data and determines the profit rate to be 30%. In summary, the benefits obtained by the anonymous cosmetic company and Jishe due to infringement were RMB 5.99 million. The court held that the defendants, the two entities intentionally infringed upon Huawei's trademark right with deep subjective malice, long infringement time, and large scale of infringement, which was a serious situation. The base number should be RMB 5.99 million and four times punitive damages should be applied to the defendants, which resulted in RMB 23.98 million. Huawei claims a total economic loss and punitive damages of RMB 10 million, which did not exceed the scope that the court can support according to law, therefore the court will fully support its claim.
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