On February 7, 2024, the Jiangsu High Court issued a second-instance judgment in the case of Schneider Electric v. Schneider Elevator, upholding the first-instance judgment of the Suzhou Intermediate Court that found Schneider Elevator infringed Schneider Electric's trademark and unfairly competed and awarded compensation of RMB 40 million (USD5.5 million).
The Suzhou Intermediate Court found that the "
" and "Schneider in Chinese"
trademarks registered by Schneider Electric for use on Class 9
circuit breakers, switches, contactors and other commodities
constituted well-known marks. Schneider Elevator prominently used
the "Schneider in Chinese" and "SCHNEiDER"
logos constituted trademark infringement. Schneider Elevator used
"Schneider in Chinese" in its corporate name and used
"www.schneider-elevator.cn" and
"www.schneider-elevator.com" domain names constituted
unfair competition. Based on the operating income of Schneider
Elevator, the profit margin of the elevator industry, taking into
account the brand contribution, and applying punitive damages based
on Schneider Elevator's bad faith in taking advantage of
Schneider Electric, the court decided that the amount of
compensation that Schneider Elevator should pay was RMB 40
million.
Both parties appealed to the Jiangsu High Court.
The Jiangsu High Court found that considering the market share
of Schneider Electric's products, relevant publicity reports,
companies established in China with the brand name "Schneider
in Chinese," operating income and tax payments, industry
rankings, trademark protection records, etc., there were sound
factual and legal basis in recognizing the "" and "Schneider in Chinese"
marks as well-known marks.
Before the establishment of Schneider Elevator in 2010, Schneider Electric had invested in and established a number of companies with the name "Schneider in Chinese" across China. The audit reports, tax-related certificates, invoices and other evidence submitted by Schneider Electric can prove its large sales scale from its business and the high operating income. And the continuous and large-scale publicity of the company in newspapers and magazines were enough to show that its corporate name "Schneider in Chinese" has a high reputation. Although Schneider Electric does not directly produce elevator products, it produces components for elevator products which are all electromechanical products. The first instance judgment correctly found that Schneider Electric had a certain relationship and market competition with Schneider Elevator. Schneider Elevator should have known about the popularity and influence of Schneider Electric's corporate name "Schneider in Chinese," but instead of taking any steps to avoid the word, Schneider Elevator used "Schneider in Chinese" as its corporate name without authorization. Its subjectivity cannot be described as good faith, and the corresponding behavior constituted unfair competition.
Regarding the amount of compensation, Schneider Electric, when filing the lawsuit, clearly requested that the amount of compensation be determined based on the benefits obtained by the infringement, and it did not make a request for punitive damages before the conclusion of the debate before the first-instance court. Therefore, the first-instance court's application of punitive damages was incorrect. However, given Schneider Elevator's main business income, elevator industry gross profit margin, profit margin and other evidence, it can be proved that Schneider Elevator's infringement profits exceed the maximum statutory compensation of RMB5 million. If statutory compensation is simply used to determine the amount of compensation in this case, it will undoubtedly be too low and the right holder will not be able to obtain sufficient compensation. This will not only be extremely unfair to the right holder, but will also objectively indulge the infringement. Therefore, the court found that the discretionary compensation method could be used to determine the amount of compensation in this case. Therefore, after comprehensively considering factors such as the popularity and market value of the rights and trademarks involved, the subjective bad faith of Schneider Elevator, the time and scale of the infringement, and brand contribution, the first instance judgment's determination of RMB40 million in compensation not was correct.
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