Weekly China Trademark News Updates

December 27, 2022

1. Vans was awarded RMB 16.2 million in treble damages against repeated bad faith trademark infringers

In December 2022, the Ningbo Intermediate Court concluded a trademark infringement lawsuit in favor of the plaintiff Vans, Inc. against the defendants Gao Zhilong, Ruian Jiwo Shoes Co., Ltd. (“Jiwo”), Ruian Xise Wanmei Shoes (“Xise Wanmei”), and Zhang Feifei. The court ordered the four defendants to stop the infringement and ordered that the defendants Gao Zhilong and Zhang Feifei should be jointly liable for compensating Vans for economic losses of RMB16 million (USD2.3 million), and the defendant Jiwo and Xise Wanmei shall be jointly and severally liable for part of the compensation. The four defendants shall jointly and severally bear reasonable legal fees of RMB200,000 (USD28,715).

The court held that Vans’ Cited Marks and the accused infringing marks were all used on footwear products in the same class. The accused infringing marks in this case constitute identical or similar marks with Vans’ Cited Marks.

Accused Infringing Marks	Cited Marks

The court found that Gao Zhilong and Zhang Feifei, the actual controllers of Jiwo and Xise Wanmei, are family members. In 2020, Xise Wanmei was administratively punished for selling products that infringed Vans’ registered trademark, and continued to sell the accused infringing products. Gao Zhilong and Zhang Feifei, as the actual controllers of Jiwo and Xise Wanmei, obviously knew that the accused infringing products sold by Jiwo and Xise Wanmei had greatly infringed upon Vans’ rights to exclusive use of registered trademarks However, Gao Zhilong and Zhang Feifei still actively participated in and even led the sale of the accused infringing goods by Jiwo and Xise Wanmei, which was enough to determine that the four defendants had obvious joint infringement intentions.

Regarding the amount of compensation, Gao Zhilong and Zhang Feifei have been infringing on Vans’ exclusive right to use registered trademarks since at least 2018. After being investigated by the market supervision and management department and sentenced by the court, the defendants should have a certain awareness of infringing on others’ trademark rights, but they continued to carry out identical or similar infringements through online stores, and the sales scale was relatively large. In addition, Jiwo and Xise Wanmei were actually controlled by Gao Zhilong and Zhang Feifei respectively, and they have divided labor and cooperated in the implementation of infringement acts. Therefore, the existing evidence was sufficient to prove that the four defendants have formed a long-term and stable business mainly infringing intellectual property rights from 2018 to 2021 and formed long-term and stable scale returns based on this. In this case, since the four defendants did not submit corresponding evidence to prove that they have other businesses, nor did they submit evidence to prove their own sales profits, they can refer to the trademark licensee of Vans in China. The average profit rate of Vans’ licensee in China is 50%. According to the penalty decision issued by the Ruian City Market Supervision Administration to Xise Wanmei, the gross profit rate of the accused infringing goods is about 46%. Combined with the gross profit rate of Anta, a listed company in the same industry, it can be seen that in the past three years the average annual gross profit margin is about 52.33%. It can also be seen from the above calculation results that the gross profit rate of 50% is in line with the general level of the industry, and also in line with the actual profit of the four defendants in this case, and the four defendants, as the main body of intellectual property infringement, should have a higher profit rate than that of standardized operations. Therefore, in this case, 50% of the sales profit can be used to calculate the profit of the defendants.

The four defendants were bad faith infringers with a wide range and large scale of infringements and obtained a lot of profits from infringements. They based their business on intellectual property infringement. After the four defendants were given criminal administrative punishments, they continued to carry out the same or similar infringements. The infringements were serious, so the court comprehensively considered the nature of the alleged infringement, the sales scale, the popularity of Vans’ trademarks involved, etc., and determined the appropriate punitive damages in this case should be three times. The amount of compensation that the four defendants should bear exceeds the plaintiff’s request, thus, the court fully supported the compensation amount claimed by Vans.

2. The “LUNA” series of facial cleansers were counterfeited by “Dumbo” facial cleansers, the court awarded RMB 900,000 in compensation!

The Hangzhou Intermediate Court recently concluded a counterfeit case in favor of Foreo (Shanghai) Trading Co. Ltd. (“Foreo”), and against Dongguan Ruixinli Cosmetic Appliances Co., Ltd. (“Ruixinli”), Hunan Menghai Trading Co., Ltd. (“Menghai”), Changsha Oufeila Culture Communication Co., Ltd. (“Oufeila”), and Sun Shinan. The court ordered Ruixinli, Menghai, Oufeila to stop the infringement, and that should jointly compensate Foreo for economic losses (including reasonable expenses) of RMB800,000 (USD115,000), and Sun Shinan to compensate Foreo for economic losses (including reasonable expenses) of RMB100,000 (USD14,357).

The second instance court, which affirmed the first instance decision, found that Foreo had been operating the Luna facial cleansers since 2013 in China. Foreo sold its products through multiple channels such as “Sephora,” counters across the country, and online platforms. Through advertisements, online publicity, celebrity endorsements, etc., the Luna series facial cleansers have gained a high reputation among the relevant public in the Chinese market. The product decoration of the Luna series facial cleanser products was mainly composed of bristles that are approximately flat ellipsoid as a whole, with a flat bottom and fan-shaped annular distribution in the middle of the top. Cloth and other elements have maintained its unique product decoration style since entering the Chinese market. Although the entire series has undergone minor revisions successively, the overall style was unified, and the main design elements have not been changed. The revision of decoration has not separated the packaging and decoration from the product. The arrangement and combination of the overall shape, bottom style, bristle distribution shape, and bristle thickness distribution on the decoration was unique, forming a significant overall image, and has nothing to do with the functionality of the product. As part of its publicity, after a long period of use and a lot of publicity, it is enough for the relevant public to associate the overall image of the above-mentioned decoration with the Luna facial cleanser product of Foreo, which has the function of identifying the source of its product. Therefore, the decoration constitutes a unique decoration under the Anti-Unfair Competition Law.

A comprehensive comparison between the Dumbo facial cleanser produced or sold by the four defendants and the Lund series facial cleanser showed that although there were differences in the back pattern and the specific shape of the ellipse, the overall shape of the facial cleansers, the shape of the distribution of bristles, the shape of the bristles, the arrangement and combination of thickness distribution and other aspects were identical or similar, and the overall image of the two decorations were still visually similar. With the general attention of the relevant public, it was easy for the relevant public to mistakenly believe that there was a certain connection between the two sources. Therefore, the decoration of the allegedly infringing product is similar to that of the Luna series facial cleanser.

To sum up, Ruixinli, Menghai, and Oufeila unauthorizedly used the decoration similar to Foreo’s product decoration that has obtained a certain influence, and produced and sold the Dumbo facial cleaners, and Sun Shinan also sold the above-mentioned infringing products. The defendants infringed on the certain influencial product decoration rights enjoyed by Foreo, which constituted unfair competition.

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