The Higher People's Court of Guangdong Province has released a batch of typical cases involving punitive damages for intellectual property rights. It has legally applied the punitive damages system to malicious intellectual property infringement acts such as free-riding on well-known brands, repeated infringement in a concealed manner, production and sale of counterfeit trademark products, and infringement of others' invention patents. This aims to highlight the market value of intellectual property rights and equally and long-term protect the property rights of various ownership economies.

A total of 6 cases were released this time. In the case involving the "Maple Leaf" trademark, the court applied the maximum 5-fold punitive damages, severely punishing infringement acts with obvious malicious intent and extremely serious circumstances, so as to maintain a fair competitive market order. In the case of a dispute over invention patent infringement filed by Eizo Co., Ltd. against Di Company, the court comprehensively considered factors such as sales volume, operating profit rate, and patent contribution rate to reasonably determine the base of punitive damages, and equally protected the intellectual property rights of Chinese and foreign business entities. In the trademark infringement dispute case filed by Rui Company against Re Company, the court legally applied the rule of obstruction of evidence, calculated the infringement profits based on the brand usage fees collected by the infringer as evidenced by the right holder, promoted the standardized operation of small and medium-sized enterprises, and continuously optimized the law-based business environment.

In recent years, courts in Guangdong have given full play to the functions of intellectual property adjudication, adhered to the concept of strict protection, legally increased the intensity of judicial compensation, ensured that right holders receive full and sufficient compensation, and made malicious infringers pay the price. In 2024, courts in the province legally applied punitive damages in 32 civil infringement cases of intellectual property rights, with a support rate of nearly 60%, and the total amount of compensation awarded was nearly 200 million yuan. This has provided strong judicial protection for Guangdong to accelerate the development of new productive forces.

01 Case of Trademark Infringement Dispute between Tai Company and Zhen Company, etc.

——Specific Considerations for Applying the Maximum Punitive Damages in Trademark Infringement Cases

Adjudication Gist

If an infringer has a specific relationship such as distribution or agency of the trademarked goods of the right holder, clearly knows the popularity of the right holder's trademark, but still intentionally uses a similar trademark beyond the scope of its trademark registration on the same goods as the right holder's trademark, it can be determined to have infringement intent. If the products produced by the infringer are basically infringing products, with a long duration of infringement, a wide scope of infringement, and huge infringement profits, it can be determined that the infringement circumstances are particularly serious. For infringement acts with malicious intent and particularly serious circumstances, the maximum punitive damages shall be applied.

Basic Facts

Tai Company is a Guangdong enterprise established in 2000. It has been producing "Maple Leaf" brand glass adhesive products since 2004, which are sold all over the country and have a high reputation in the industry. Zhen Company was once the exclusive agent and distributor of Tai Company's "Maple Leaf" brand glass adhesive. It knew about Tai Company's registered trademark "Maple Leaf" for glass adhesive products as early as 2005. Zhen Company once tried to apply for the registration of the "Maple Leaf" trademark for products such as glass adhesive, but the application was rejected by the State Trademark Office in September 2008. For nearly 20 years, Zhen Company has been using its registered "Maple Leaf" trademark, which is approved for use on silicone products, on glass adhesive products. In order to deceive operators and consumers, Zhen Company produced and sold glass adhesive products under the name of "acid silicone" and operated on a large scale in Heilongjiang. Tai Company filed a lawsuit, requesting Zhen Company and others to stop the trademark infringement and claim punitive damages of 30 million yuan for economic losses.

Adjudication Result

The effective judgment of the Higher People's Court of Guangdong Province held that: Silicone and glass adhesive are neither the same nor similar products. Zhen Company's use of its "Maple Leaf" registered trademark on glass adhesive products is beyond the scope of the approved goods for the trademark, has no legal basis, and infringes on Tai Company's exclusive right to use the "Maple Leaf" registered trademark. Zhen Company's act of free-riding on the "Maple Leaf" trademark is a knowing violation. The infringement has lasted for a long time, covered a wide range, and brought huge profits, reaching a household name in Heilongjiang. The circumstances of the infringement are extremely serious, and it is necessary to apply the maximum 5-fold punitive damages. By ascertaining Zhen Company's infringement profits as the base for punitive damages, the calculated compensation amount is more than 50 million yuan. Therefore, Tai Company's claim for 30 million yuan in economic losses is fully supported.

Typical Significance

This case makes it clear that for infringement acts with obvious malicious intent and extremely serious circumstances, the maximum punitive damages can be applied to effectively curb infringement acts. At the same time, the amount of punitive damages determined in this case is comprehensive and can solve disputes in a package, demonstrating the clear attitude of the people's court to vigorously protect well-known brands and severely punish the source of infringement, which helps to stimulate the innovation vitality of enterprises and maintain a fair competitive market order.

02 Case of Trademark Infringement Dispute between Jin Company and He Moumou, etc.

——Connection and Application of Compensation in "Criminal-Civil Intersection" Cases of Intellectual Property Rights

Adjudication Gist

If an act of infringing others' intellectual property rights constitutes a criminal offense at the same time, the criminal judgment's determination that the infringer has paid sufficient compensation to the right holder is only the recognition of the damage caused by the criminal offense in the criminal procedure, and does not necessarily exempt the infringer from civil compensation liability and punitive damages liability. When applying punitive damages, the profit from civil infringement or the amount of illegal gains can be used as the base, and the compensation actually paid by the infringer in the criminal case shall be deducted from the total compensation. If a fine has been imposed and executed in the criminal case, the multiple of punitive damages in the civil case can be appropriately reduced.

Basic Facts

Jin Company enjoys the trademark for Class 9 goods such as "printed circuits". He Moumou and Qiu Moumou are deputy general managers of the company, Lu Mou is an employee of the company and Qiu Moumou's wife, and Li Mou is He Moumou's wife. These four people established Zhi Company, falsely claiming to be a subsidiary of Jin Company to the outside world, and entrusted Jin Company's partners to produce printed circuit boards using multiple logos similar to Jin Company's product logos, then assembled them into liquid crystal display modules and sold them to Jin Company's customers, with a sales amount of about 3 million yuan. He Moumou, Qiu Moumou, Li Mou, and Lu Mou were convicted of counterfeiting registered trademarks for manufacturing and selling counterfeit printed circuit boards of Jin Company's registered trademarks, and were sentenced to fixed-term imprisonment and fines. Li Mou paid 100,000 yuan in compensation to Jin Company, and the criminal ruling confirmed that the losses suffered by Jin Company due to the crime had been fully compensated. Jin Company requested punitive damages of 2.7162 million yuan for economic losses and 282,800 yuan for reasonable rights protection expenses against He Moumou and the other three.

Adjudication Result

The effective judgment of the Higher People's Court of Guangdong Province held that: The use of the alleged infringing logos by He Moumou and the other three on printed circuits and assembled liquid crystal display modules constitutes trademark infringement. As senior executives of the company, He Moumou and Qiu Moumou, together with their spouses, counterfeited Jin Company's products and sold them to Jin Company's customers, with obvious infringement intent and serious infringement circumstances. The base of punitive damages should be the infringement profit of 951,300 yuan from the sale of liquid crystal display modules, and the maximum 3-fold punitive damages should be applied in accordance with the Trademark Law at the time of the infringement. However, considering that the four have been fined in the criminal case and the fine has been executed, a 2-fold punitive damages is imposed on them, and the calculated compensation amount is 2.8539 million yuan. Therefore, Jin Company's claim for 2.7162 million yuan in economic losses is fully supported. After deducting the 100,000 yuan compensation already paid by Li Mou from the total compensation, the judgment ordered He Moumou and the other three to jointly compensate Jin Company for 2.6162 million yuan in economic losses and 50,000 yuan in reasonable rights protection expenses.

Typical Significance

This case makes it clear that for intentional infringers with serious circumstances, even if they have been subject to criminal fines and have voluntarily and fully compensated the right holder for the damage caused by the crime, the right holder can still claim punitive damages for the damage caused by the infringement. It provides a useful reference for the application of the punitive damages system in "criminal-civil intersection" cases of intellectual property rights, and conveys the judicial signal of the people's court to severely crack down on serious infringement acts involving criminal offenses and fully protect intellectual property rights.

03 Case of Invention Patent Infringement Dispute between Eizo Co., Ltd. and Di Company

——Reasonable Determination of Elements for Calculating the Base in Patent Infringement Punitive Damages Cases

Adjudication Gist

If the total sales volume of infringing products can be determined, it should be recognized that there is a basis for determining the amount of compensation based on infringement profits. If infringing products are sold with gifts, this can be appropriately considered when determining the profit rate and patent contribution rate. When determining the operating profit rate, it can be comprehensively determined by combining the industry average profit rate and the audit report commissioned by the infringer. When determining the patent contribution rate, it can be comprehensively determined by considering factors such as whether the patent technical solution is a core technology and the degree of substitutability of the technical solution, and reasonably deducting the benefits generated by other patents, trademarks, and other rights.

Basic Facts

Eizo Co., Ltd. is the patentee of the invention patent "Method for Synthesizing Polynucleotides". This patent is an improvement by Eizo Co., Ltd. on the efficiency of LAMP (Loop-Mediated Isothermal Amplification) nucleic acid synthesis based on its related patents. Di Company was once a distributor of Eizo Co., Ltd.'s LAMP-related products. In 2018, it was ordered to compensate Eizo Co., Ltd. 2 million yuan for infringing this patent and related patents. In 2019, Di Company re-applied for a registration certificate for the infringing products in this case and carried out manufacturing, selling, and offering for sale activities. Eizo Co., Ltd. then filed a lawsuit with the court, requesting punitive damages of 28.5 million yuan in total for economic losses and reasonable expenses.

Adjudication Result

The Guangzhou Intellectual Property Court held after trial that: The infringing products manufactured, sold, and offered for sale by Di Company fall within the protection scope of the involved patent, constituting infringement. As a former distributor of Eizo Co., Ltd., Di Company, after its products infringed this patent, re-registered and implemented new products without substantial modification of the technical solution. The infringement lasted for a long time and covered a wide sales range, which meets the applicable requirements for punitive damages.

The infringement profit of Di Company, which serves as the base for punitive damages, is calculated by multiplying the total sales volume of the alleged infringing products with gifts by the operating profit rate and then by the patent contribution rate. Based on factors such as Di Company's subjective fault and the circumstances of its infringement, a 2-fold punitive damages is determined. The court ruled that Di Company should compensate Eizo Co., Ltd. more than 2.39 million yuan in economic losses and reasonable expenses. The second-instance judgment of the Supreme People's Court rejected the appeal and upheld the original judgment.

Typical Significance

This case clarifies the rules for determining the sales volume of infringing products with gifts, as well as the comprehensive consideration factors for operating profit rate and patent contribution rate, providing a reference path for the reasonable determination of the base of punitive damages in patent infringement cases. This case is a foreign-related case involving biomedical invention patents, reflecting the clear attitude of the people's court to adhere to equal protection of intellectual property rights of Chinese and foreign subjects, and helping to create a good law-based business environment.

04 Case of Trademark Infringement Dispute between Rui Company and Re Company

——Specific Application of Punitive Damages in Franchise Mode

Adjudication Gist

If an infringer, knowing that the right holder's trademark has a high reputation, uses trademarks similar to the right holder's through franchise operations and conducts all-round imitation, it can be determined to have subjective intent of trademark infringement; developing a large number of franchisees nationwide and collecting high fees can be determined as serious infringement circumstances. If the infringer, without justifiable reasons, refuses to provide the account books and materials of brand usage fees in its possession as ordered by the people's court, the base of punitive damages can be calculated based on the right holder's claims and evidence, i.e., the brand usage fees collected by the infringer.

Basic Facts

Rui Company is the right holder of a registered trademark for a chain coffee brand. It has been operating coffee stores since 2017, and after long-term promotion and use, the brand has gained high popularity. Re Company is the operator of a coffee brand. It registered the "Xing Coffee" trademark in 2022 and has 86 franchise stores nationwide. The signs, coffee cups, handbags, account avatars, and promotional pictures of each franchise store prominently use multiple logos similar to Rui Company's logos. Rui Company then filed a lawsuit with the court, requesting an order for Re Company to stop the aforementioned infringement acts, eliminate the impact, and pay punitive damages of 5 million yuan in total for economic losses and reasonable rights protection expenses.

Adjudication Result

The effective judgment of the Futian District People's Court of Shenzhen held that: The infringing logos are highly similar to the involved trademarks in terms of combination elements, composition characteristics, and visual effects, constituting similar trademarks and infringing on Rui Company's exclusive right to use the registered trademark. Re Company, knowing that Rui Company's involved trademark has high popularity, still used multiple infringing logos similar to the involved trademark and imitated Rui Company in an all-round way, with obvious infringement intent. Re Company has a large number of franchise stores, with a wide range and large scale of infringement, and has made huge profits from collecting brand franchise fees, so the infringement circumstances are serious. The court ordered Re Company to submit evidence related to the brand usage fees in its possession, but it failed to do so, constituting obstruction of evidence. Therefore, based on Rui Company's evidence, it is calculated that Re Company's infringement profit from collecting brand franchise fees is at least 1.72 million yuan. A 2-fold punitive damages is applied, and the amount of compensation for trademark infringement is determined to be 5.16 million yuan. The judgment fully supports Rui Company's claim for 5 million yuan in economic losses and reasonable expenses.

Typical Significance

This case legally applies punitive damages to trademark infringement acts that comprehensively imitate multiple trademarks of well-known brands and extensively develop franchisees. It actively applies the rule of obstruction of evidence, calculates the infringement profits based on the brand usage fees collected by the infringer, and fully protects the well-known brands of private enterprises. At the same time, it has a positive significance in improving the risk prevention awareness of small and medium-sized franchisees in identifying "fake brands" and provides strong judicial guarantees for promoting the high-quality development of the private economy.

05 Case of Trademark Infringement Dispute between Ka Company and Zhang Moumou

——Determination of Repeated Infringement in Trademark Infringement Punitive Damages Cases

Adjudication Gist

If an infringer, after reaching a settlement in a previous infringement lawsuit with the right holder and assuming infringement liability, diverts customer resources from the original infringement channel to a new infringement channel through the original infringement channel and continues to commit the same infringement act in a more concealed way by changing means, it constitutes repeated infringement, which is intentional infringement with serious circumstances, and punitive damages should be applied. The transaction details of each infringement channel can be retrieved upon the party's application, and the base of punitive damages can be determined by ascertaining the amount of the infringer's infringement profits.

Basic Facts

Ka Company is the right holder of the trademark of a well-known jewelry and watch brand. The trademark has been repeatedly recognized as a well-known trademark by the State Administration for Industry and Commerce and the effective judicial documents of the court, enjoying an extremely high reputation. Ka Company once sued Zhang Moumou to the court for selling watches that infringe the above-mentioned trademark. Zhang Moumou reached a settlement agreement with Ka Company, promising to stop the infringement, destroy the inventory of infringing watches, and pay 120,000 yuan in compensation to Ka Company, etc. However, Zhang Moumou did not stop the infringement act, but instead diverted customers from the original infringing WeChat store to personal and related personnel's WeChat accounts and newly opened WeChat stores, and continued to sell infringing watches. Ka Company then filed a lawsuit with the court, requesting an order for Zhang Moumou to stop the infringement and pay punitive damages of 3 million yuan in total for economic losses and reasonable expenses.

Adjudication Result

The effective judgment of the Yuexiu District People's Court of Guangzhou held that: The involved trademark has a high reputation. Zhang Moumou did not stop the infringement act after reaching a settlement in the previous lawsuit, but continued to seek illegal interests, constituting repeated infringement. He also used the WeChat accounts of related personnel to sell infringing watches, intending to evade infringement liability. His subjective intent is obvious, and the infringement circumstances are serious, so punitive damages should be applied. After the court legally retrieved Zhang Moumou's transaction details, it calculated the sales amount during the infringement period, then determined his infringement profit as the base of punitive damages according to the average profit rate of the same industry, and applied a 2-fold punitive damages. The judgment ordered Zhang Moumou to compensate Ka Company for more than 660,000 yuan in economic losses and 55,000 yuan in reasonable rights protection expenses.

Typical Significance

This case is a typical case of repeated infringement in a concealed way. The infringer tried to evade infringement liability by re-registering stores, using multiple WeChat accounts for private transactions, and collecting payments through Alipay. The people's court legally retrieved transaction details to accurately find out the infringer's infringement profits, and applied the intellectual property punitive damages system to severely crack