On the occasion of the 30th anniversary of the Guangdong Trademark Association, the Guangdong Trademark Association released the “Bay Area Light” List of Top 30 Typical Trademark Protection Cases over 30 Years. The case titled “Trademark Infringement Dispute between an International Luxury Brand and a Certain Individual”, 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 trademarks have repeatedly been recognized as well-known trademarks by the former State Administration for Industry and Commerce and by effective court judgments, and enjoy a very high reputation. Previously, the client filed a lawsuit against Zhang Moumou for selling watches infringing its trademark rights. The parties reached a settlement agreement, under which Zhang Moumou undertook to cease the infringement, destroy infringing products in stock, pay compensation to the client, and expressly promised to pay punitive damages should he commit further infringing acts. However, Zhang Moumou failed to honor his commitments. Instead, he diverted traffic from the original infringing WeChat store to multiple WeChat accounts held by 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 an order that Zhang Moumou 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 People’s Court of Yuexiu District, Guangzhou Municipality held that: the trademark involved in the case enjoys a relatively high degree of reputation; after reaching a settlement in the previous lawsuit, Zhang Moumou did not cease the infringing acts but continued to seek illegal gains, 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 manifest, and the circumstances of infringement were serious; therefore, punitive damages should be applied. The court, in accordance with the law, obtained Zhang Moumou’s transaction details, calculated his sales amount during the period of infringement, and then, based on the average profit margin in the same industry, determined his infringing profits as the base for punitive damages, applying double punitive damages. The court ordered Zhang Moumou to compensate Company Ka 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 of multiple accounts held by Zhang Moumou and submitting similar case judgments as corroboration, our firm, on the basis of fully considering the well-known status of the trademark involved, effectively demonstrated his subjective malice in repeated infringement and the scale of the infringement. In response to Zhang Moumou’s defenses such as “fake transactions” and “payments unrelated to infringement,” our firm, through professional evidentiary analysis, proved that the main source of the payments was the sale of infringing products.
The court ultimately applied the rule on obstruction of evidence, taking the retrieved payment transaction records as the base, and, with reference to the profit margin in 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 strictly punishing concealed repeated infringement.
2. Innovating electronic data evidence collection to address the problem of concealed infringement
In response to the infringer’s use of multiple WeChat accounts of others and Alipay accounts for receiving payments as 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 the full-chain judicial protection for well-known trademarks
As a successful rights protection case involving 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 holder’s enforcement efficiency and providing a model for intellectual property protection of similar luxury brands in China.
