On the occasion of the 30th anniversary of the Guangdong Trademark Association, the Guangdong Trademark Association released the “Light of the Bay Area” TOP 30 Typical Cases of Trademark Protection over the Past 30 Years. The case “A Certain International Luxury Brand v. A Certain Individual over Trademark Infringement,” represented by Lusheng Law Firm, was honorably selected.
Brief Introduction of the Case
The client is the right holder of an internationally renowned jewelry and watch brand. Its trademark has been repeatedly recognized as a well-known trademark by the former State Administration for Industry and Commerce and by effective court judgments, and enjoys a very high reputation. Previously, the client had filed a lawsuit against Zhang XX for selling watches infringing its trademark rights, and the parties reached a settlement agreement. Zhang XX undertook to cease the infringement, destroy the infringing products in stock, pay compensation to the client, and expressly promised that, should he commit infringement again, he would pay punitive damages. However, Zhang XX failed to honor his commitments. Instead, he diverted traffic from the original infringing WeChat store of the client to multiple WeChat accounts of himself and his affiliates, and set up new WeChat stores to continue selling infringing watches.
Lusheng Law Firm, acting for the client, filed a lawsuit with the court, requesting that Zhang XX be ordered to cease the infringement and that punitive damages be applied, and claiming compensation for the client’s economic losses and reasonable expenses.
The effective judgment of the Yuexiu District People’s Court of Guangzhou Municipality held that the trademark involved in the case enjoys a relatively high degree of reputation. After the settlement in the previous litigation, Zhang XX did not cease his infringing acts but continued to seek illegal profits, thereby constituting repeated infringement. He also used WeChat accounts of affiliated persons to sell infringing watches, with the intention of evading liability for infringement. His subjective intent was manifestly malicious, and the circumstances of infringement were serious, so punitive damages should be applied. The court, in accordance with the law, obtained the transaction details of Zhang XX, calculated his sales amount during the period of infringement, and then, based on the average profit rate of the same industry, determined his infringing profits as the base amount for punitive damages, applying double punitive damages. The court ordered Zhang XX to compensate Company K for economic losses and reasonable rights protection expenses in an amount exceeding RMB 720,000.
Typical Significance
1. Successfully Overcoming Obstacles to the Application of Punitive Damages and Establishing a Benchmark Judgment on “Concealed Infringement after Settlement”
In this case, by applying for the retrieval of transaction records of multiple accounts of Zhang XX and submitting similar case judgments as corroboration, our firm, on the basis of fully considering the well-known status of the trademark involved, effectively proved his subjective malice in repeated infringement and the scale of the infringement. In response to the defenses raised by Zhang XX, such as “fake transactions” and “payments unrelated to the infringement,” our firm, through professional evidence analysis, demonstrated that his receipts mainly originated from the sale of infringing products.
The court ultimately applied the rule on obstruction of evidence, taking the retrieved payment records as the base, and, with reference to the profit rate of the same industry, applied double punitive damages. This effectively resolved the practical difficulty in judicial practice of determining the base amount for punitive damages. This innovative practice not only provides a replicable rights protection path for similar cases, but also highlights the judicial orientation of the courts in strictly punishing concealed repeated infringement.
2. Innovating an Electronic Data Evidence Collection Model to Address the Problem of Concealed Infringement
In response to the infringer’s adoption of new concealed infringement methods, such as using multiple WeChat accounts and Alipay accounts of others to receive payments, this case, by applying to the court for the retrieval of full-chain electronic transaction records, constructed a complete evidentiary chain of infringing profits, thereby providing a replicable rights protection solution for electronic data evidence collection and damages calculation in similar cases.
3. Improving the Full-Chain Judicial Safeguard for the Protection of Well-Known Trademarks
As a successful rights protection case of an internationally renowned luxury brand, this case, from the supervision of the performance of the settlement agreement to the crackdown on new infringing acts, has formed a closed-loop protection model of “discovery–settlement–repeated infringement–punishment,” significantly enhancing the rights holder’s enforcement efficiency and providing a demonstrative reference for the protection of intellectual property rights of similar luxury brands in China.
