Background

In 2013 Moncler S.P.A. ("Moncler") became aware of the manufacture and sale of down jackets by Beijing Nuoyakate Garment Co., Ltd. ("Nuoyakate"). Nuoyakate used marks and logos confusingly similar to Moncler's marks on its products and also applied for the registration of several trademarks and domain names confusingly similar to Moncler's marks in China and other key markets. In November 2014, Moncler brought an action against Nuoyakate for trademark infringement and unfair competition in China's newly established Intellectual Property Court in Beijing ("IP Court"). The IP Court awarded Moncler an unprecedented high amount of damages. We look at the reasoning behind this award below.

Judgment

In December 2014, the IP Court issued a judgment against Nuoyakate for trade mark infringement and unfair competition. The IP Court found that Nuoyakate had knowingly and without the trade mark owner's prior authorisation, used trade marks which were confusingly similar to Moncler's trademarks in Nuoyakate's advertisement and promotional activities for the sale of down jackets and accessories. Nuoyakate was also found to have registered the domain name mockner.com which was confusingly similar to Moncler's "MONCLER" trade mark.

Nuoyakate was ordered by the IP Court to pay unprecedented maximum statutory damages of RMB 3 million (around US$448,000) to Moncler. The IP Court also ordered Nuoyakate to shut down its website at mockner.com and to cease selling clothes that infringed Moncler's trademarks.

Even though Moncler did not produce any evidence of actual loss suffered, and Nuoyakate did not disclose its sales volume or the amount earned by it in relation to the infringing use of Moncler's marks, the IP Court was nevertheless willing to order the maximum statutory damages under the new Trademark Law (effective 1 May 2014). The IP Court's decision was based on the following:

  • Moncler had been well-known in the Chinese market since at least 2008;
  • Nuoyakate's website to which the domain name mockner.com resolved, displayed goods bearing marks that infringed Moncler's trademark rights, which constituted evidence of bad faith;
  • Nuoyakate failed to produce evidence to establish its manufacturing volume and revenue made from sales;
  • Nuoyakate sold the infringing goods at high prices;
  • Nuoyakate deliberately did not print its own company name on the label of the down jackets, which is evidence of malicious infringement; and
  • Nuoyakate was a large-scale infringer and in the process of setting up a commercial network including franchising stores and distributors.

Encouraging Message to Brand Owners

Moncler is reportedly the first petitioner awarded the maximum statutory damages of RMB 3 million (US$448,000), since the new Trademark Law came into effect in May 2014. Before the new law, the maximum damages available was only RMB 500,000 (US$80,000). As stated by Moncler: "[t]his is a ground-breaking case, believed to be the first judgment under China's new trademark law to grant maximum statutory damages in cases of counterfeiting".

The PRC IP Court is clearly intent on taking a firmer approach to crackdown on the rampant trademark infringement in the country. This landmark case sends an encouraging message to brand owners facing challenges and uncertainties in enforcing their rights through litigation in China.

Visit us at www.mayerbrownjsm.com

Mayer Brown is a global legal services organization comprising legal practices that are separate entities (the Mayer Brown Practices). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; Mayer Brown JSM, a Hong Kong partnership, and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2015. The Mayer Brown Practices. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.