Fat decisions on damage compensation

13 Jun 2019

The recent amendment of the Trademark Law, scheduled to enter in force in November 2019, increased to 5ml RMB the threshold of the statutory damages in case of infringement of trademark.

For those of you not familiar to this concept, the so called “statutory compensation” will be issued when it is impossible for the judge to ascertain the loss suffered by the IP owner, or the profit earned by the infringer, or the royalty of the IP at issue based on the evidences in the case.

Generally, the judge will base statutory compensation on the popularity of the registered trademark at issue, the nature, scale, duration and consequences of the infringement, the subjective degree of infringement, and the reasonable expenses expended by the plaintiff.

In this and the next article we will review a few landmark cases whose peculiar feature is the high damage compensation in relation to trademark infringement cases in China.

Dunhill vs. Danhuoli

Probably the last notorious case is Dunhill vs Danhuoli. On October 10, 2018 the luxury brand Dunhill has been awarded RMB 10 million (USD 1.47 million) after the Foshan Intermediate People's Court, Guangdong Province, ruled that rival menswear brand Danhuoli was guilty of both trademark infringement and unfair competition. The case raised once again attention to the issue of damage compensation consequent to infringement of IPR in China.

Many commenters say it is an isolated case and therefore it shall not catch much attention due to the fact that it is an exception – once again – an isolated case. If the case proves something, it proves that commonly – in the majority of cases - damage compensations in China is very low.

On the contrary there are other commenters that highlight the non-uniqueness of the case. They tend to notice that there are signs of trend of consistent increasing decisions awarding reasonably high damage compensations to IPRs owner in trademark field.

Without taking position on the dispute (yet?) we have carried out a search on Court decision issued in recent years (after the 2014 Trademark Law).

Moncler v. Mockner

Soon after the promulgation of the 2014 amendment of the Trademark Law that raised the statutory damage compensation in the field of trademarks to 3ml RMB, the Italian fashion brand Moncler was awarded by Beijing IP Court in May 2014 a remarkable damage compensation of 3ml RMB (450,000 USD) in the case against Mockner. It is probably the first case the fully exploited the maximum capability of the statutory damages compensations with the limitation at 3ml RMB.

Meichao "墙锢" vs Xiujie

In 2016 it is again Beijing IP Court that issued the remarkable damage compensation in favor of the well-known brand Meichao. The amount of damages liquidated is 10ml RMB (1,450,000 USD), which is the highest since the establishement of the Court in 2014.

It is worth mentioning that the case is the first in which the judge issued the damage compensation higher than 3 ml RMB notwithstanding the lack of precise evidence of the amount of damage.

In such circumstances usually judge prefers to rely on the statutory damages compensation, namely no more than 3ml RMB. The judge of the case at issue – on the contrary – argued that the limit of statutory damages does not work here because the evidences submitted by the plantiff have preliminarily shown that the profit made by the defendant has reached 10ml and the defendant refused to provide evidences to the contrary after the Court instructed it to do that.

New Balance v. New Barlun

And we shall also remember the New Balance trademarks saga where New Balance (the Chinese branch of the America company) was firstly condemned to pay RMB 99.8 million (14 million USD) for the trademark infringement of“新百伦” (New Balance in Chinese) owned by Mr. Zhou Lelun and later the amount of damages was reduced to RMB 5 million in the appeal phase in front of the Guangdong High Court.

But also the decision issued by the Suzhou Intermediate P. Court that awarded to New Balance 10,000,000 RMB for the infringement of the N logo committed by New Barlun.

In the next article we will discover few more cases and particularly: