In recent years, the Guangdong courts have fully leveraged the adjudicatory function of intellectual property trials, adhered to the concept of strict protection, and lawfully increased the intensity of judicial damages awards to ensure that right holders obtain full and adequate compensation and that malicious infringers pay the price. On 17 July, the Guangdong High People’s Court released a batch of typical cases on punitive damages for intellectual property rights. The case in which Lusheng Law Firm acted as "Model Cases of Punitive Damages for Intellectual Property Infringement Released by the Guangdong High People's Court 2025”.
Case Selected Involving Lusheng
Acting for an international luxury brand in a trademark infringement dispute against an individual
Brief Case Overview
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 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 for selling watches infringing its trademark rights, and the parties reached a settlement agreement. Zhang undertook to cease the infringement, destroy the infringing products in stock, and pay compensation to the client, and expressly undertook that, should he commit further infringing acts, he would pay punitive damages. However, Zhang failed to honor his undertakings. Instead, he diverted traffic from the original infringing WeChat store of the client to multiple WeChat accounts of himself and related persons, 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 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 held that: the trademark involved in the case enjoys a relatively high reputation; after reaching a settlement in the previous litigation, Zhang did not cease his infringing acts but continued to seek illegal profits, constituting repeated infringement; he also used WeChat accounts of related persons to sell infringing watches in an attempt to evade liability for infringement. His subjective intent was manifestly malicious, and the circumstances of the infringement were serious, so punitive damages should be applied. After lawfully obtaining Zhang’s transaction details, the court calculated his sales amount during the period of infringement and, based on the average profit margin of the industry, determined his infringing profits as the base for punitive damages, and applied punitive damages at twice that base. The court ordered Zhang 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 for “concealed infringement after settlement”
In this case, by applying for the retrieval of transaction records for multiple accounts of Zhang 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 Zhang’s defenses such as “fake transactions” and “payments unrelated to the infringement,” our firm, through professional evidence analysis, demonstrated that the main source of the payments he received was the sale of infringing products.
The court ultimately applied the rule on obstruction of evidence, took the retrieved payment records as the base, referred to the industry’s average profit margin, and applied punitive damages at twice that amount, thereby effectively resolving 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 strictly punishing concealed repeated infringement.
2. Innovating electronic data evidence collection models to address the challenge of concealed infringement
In view of the infringer’s use of multiple WeChat accounts of others and Alipay accounts for payment collection and other new concealed infringement methods, this case, by applying to the court for 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 full-chain judicial protection for well-known trademarks
As a successful rights protection case for an internationally renowned luxury brand, this case, from supervision over 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 protection efficiency of the right holder and serving as a model for intellectual property protection of similar luxury brands in China.
