Quadruple Punitive Damages Awarded For Infringement After Reaching Settlement

Beijing East IP Law Firm


Beijing East IP Ltd. was founded in 2002 by Dr. GAO Lulin and a group of experienced Chinese and international attorneys to provide top quality intellectual property services in China.Together with Beijing East IP Law Firm, a registered law firm before the Justice Department of the People’s Republic of China in 2004, we offer a complete set of intellectual property services ranging from patent and trademark prosecution, litigation to other intellectual property rights protections and enforcements.
A Xiamen company is the registrant of the "Yanzhiwu in Chinese" and "Wanyan in Chinese", and sued the defendant a Changzhou food factory who produced and sold products under marks...
China Intellectual Property
To print this article, all you need is to be registered or login on Mondaq.com.

A Xiamen company is the registrant of the "Yanzhiwu in Chinese" and "Wanyan in Chinese", and sued the defendant a Changzhou food factory who produced and sold products under marks "Yanzhiwo in Chinese" and "Wanyan in Chinese" for trademark infringement.

The first instance court found that the "Yanzhiwo in Chinese" mark used on the outer packaging of the accused infringing product and the plaintiff's "Yanzhiwu in Chinese" mark were both composed of Chinese characters, with only one character difference between "wu" and "wo." The pronunciations of them are highly similar, which constitutes similar marks. Given the plaintiff's Yanzhiwu in Chinese brand enjoys a high reputation in the field of bird's nest products, the accused infringing mark "Yanzhiwo in Chinese" can easily cause confusion among the relevant public, who may believe that the accused infringing product originates from the plaintiff or there are some specific relationships with the plaintiff. The "Wanyan in Chinese" logo used on the outer packaging of the accused infringing product is visually indistinguishable from the plaintiff's "Wanyan in Chinese" mark, which constitutes as identical marks. Therefore, the defendant used marks identical with the plaintiff's registered trademarks on the same goods without authorization, which constituted an infringement of the plaintiff's trademark right, and should be liable to stop the infringement and compensate for damages.

Regarding whether punitive damages can be applied against a defendant and how the amount of damages is determined. The court verified that, the defendant was sued by the plaintiff in another case for the same infringements and they reached settlement. The settlement letter clearly stipulated that "the defendant promised not to produce or sell products that infringed the exclusive rights of the plaintiff's registered trademarks of 'Yanzhiwu in Chinese' and 'Wanyan in Chinese'" and voluntarily assumed liability for infringement. Under this circumstance, the defendant continued to carry out trademark infringement production and online promotion activities, and established a sales channel in cooperation with another agent, making it easy for the infringing products to be placed elsewhere. Combined with factors such as the defendant's false statements in the lawsuit, it can be determined that its subjective intention to infringe is obvious and circumstance is serious. The plaintiff also voluntarily selects to first apply punitive damages, so punitive damages should be applied in this case.

The plaintiff claimed that the amount of RMB26,500 (USD3,663) in said settlement case between the two parties should be used as the base for punitive damages, and that the amount of punitive damages should be RMB100,000 (USD13,825) as quadrupled. Based on factors such as the intentionality of the defendant's infringement, the moderateness of the compensation base, and the false statements, the first instance court supported the plaintiff's claim that punitive damages should be quadrupled. The court specifically stated that the calculation method should be quadrupled by RMB26,500 and the total should be RMB106,000. The plaintiff only claimed RMB100,000, which is the plaintiff's disposal of its own right and this court shall respect such claim.

In addition, regarding the final amount of compensation that the right holder should receive, in addition to punitive damages RMB100,000, it should also receive the base compensation RMB26,500 itself. At the same time, considering the plaintiff's reasonable rights protection expenses, the court ordered the defendant to compensate the plaintiff for economic losses and reasonable expenses to stop the infringement, totaling RMB150,000.

The defendant was dissatisfied and appealed. After trial, the second instance court affirmed the compensation amount and affirmed the lower court's decision.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

See More Popular Content From

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More