Intellectual Property Law

Chinese Court Redresses Trademark Infringement with Huge Damages Award

By Michael Atkins

The China Business Law Blog recently published two posts (here and here) about a 20 million yuan ($2.8 million) trademark infringement award by the Hangzhou Intermediate People’s Court. That’s a far cry richer than the 500,000 yuan ($64,000) Starbucks won last year in its trademark infringement suit (STL post on the decision here; discussion of the damages calculation in that case here). So why the (relatively) big award this time?

Here’s how the China Business Law Blog explains it:

“The court’s award of damages in [G2000 v. 2000] is intriguing. Plaintiff pleaded for damages totaling 20,000,000 Yuan (that is right, 20 million). And the Court ordered the Defendants to turn over the figures for total sales, profits, etc. for the goods complained of in the relevant period of time, but the Defendant failed to do so. Generally, Chinese courts award damages to a plaintiff in an IP infringement case to the extent of a defendant’s illegal profits as proven, rather than losses sustained by the plaintiff. … In addition, if the illegal profits or plaintiff’s losses cannot be accurately ascertained, the statutory maximum of damages is 500,000 Yuan. … Therefore, in an act rarely seen in Chinese courts, the Court awarded a whopping 20 million Yuan to the plaintiff.”

Despite the vast difference in amounts, this seems consistent with the Starbucks decision. The Starbucks court found the coffee company did not reliably establish the amount of the infringer’s profits or its own losses owing to the infringement, so it fixed damages at the statutory maximum of 500,000 yuan. Here, the court found the plaintiff had established the amount of its damages to the tune of 20 million yuan. Whether that proof was based on the infringers’ profits or plaintiff’s losses is unclear. (The China Law Blog could not find a copy of the decision and relied on Chinese-language press accounts for its post.) I can’t see how plaintiff could prove defendants’ profits without having their financial information. But I can imagine the court was in no mood to give defendants a break after they violated its order compelling production of such information.

The China Business Law Blog reports the defendants have appealed the case to the Zhejiang Higher People’s Court, so this decision may change.

Full post as published by Seattle Trademark Lawyer on March 01, 2008 (boomark / email).