June 2022

Lihui Jiang and Teresa Huang

On April 21, 2022, the Supreme People’s Court released the top 10 intellectual property rights (IPR) cases and 50 typical IPR cases in Chinese courts in 2021.  The 50 typical cases were classified according to three aspects, namely, civil, administrative, and criminal, while the top 10 IPR cases have their own characteristics.  This article will focus on one of them, a case involving trademark punitive damages.

[Case summary]  

“Wyeth” is a famous brand of infant milk powder, and Wyeth Limited Liability Company (hereinafter, “Wyeth Co.”) is the proprietor of the registered trademark “惠氏” [Chinese translation of “Wyeth”] and “Wyeth,” etc.  Wyeth (Shanghai) Trading Co., Ltd. (hereinafter, “Wyeth Shanghai Co.”) is licensed to use the above trademarks and defend the trademark rights in China.  The former Guangzhou Wyeth Baby Maternal and Infant Products Co., Ltd. (hereinafter, “Guangzhou Wyeth Co.”) engaged in large-scale production and sales of mother and baby care products and other goods bearing the “惠氏,” “Wyeth,” or “Wyeth Little Lion” logo for a long time without permission, obtained the “惠氏,” “Wyeth,” and other trademarks for goods in classes of personal care products through squatting, assignment, and other ways, explicitly or implicitly indicated in its promotional materials that it is connected to Wyeth Co., and generated huge profits by engaging its online and offline infringing acts in conjunction with the other defendants in manners such as the joint operation of online stores.  Wyeth Co and Wyeth Shanghai Co. filed a complaint with a court with the Guangzhou Wyeth Co. and others as the defendants.

The court of first instance found that the infringement was tenable and each defendant obviously had malicious intent.  Therefore, the amount of compensation was calculated by the calculation method for punitive damages, and the judgment fully supported the claim amount of Wyeth and Wyeth Shanghai Co.  Out of dissatisfaction, the defendants appealed.  The second instance court held that, since the infringement of each defendant was deliberate and serious, the amount of compensation for this case should be determined by applying the calculation method for punitive damages if the rights holder specifically requested the application of punitive damages.  In this case, Wyeth Co. and Wyeth Shanghai Co. explicitly requested the application of punitive damages calculated by three times the compensation base according to the profitability of Guangzhou Wyeth Co. from infringing acts that could be substantiated based on the evidence on file (including the sales revenue from infringing goods confirmed by the second instance court and in reference to the average profit rate in the same industry).  The RMB 30 million claim asserted by Wyeth Co. and Wyeth Shanghai Co. was fully supported.  The second instance court pronounced the decision in court to dismiss the appeal and uphold the original judgment.

[Typical significance] 

This case is a typical case involving the application of punitive damages by the people’s court and was the first case heard by a court in Zhejiang that applied the Interpretation on the Application of Punitive Damages in Civil Cases Involving Infringement of Intellectual Property Rights.  Imposing punitive damages pursuant to law has significantly increased the cost of infringement and legal violation and penalized malicious infringing acts, while providing sufficient relief to the infringement victim.  This reflects the professionalism of the judiciary and its protection of IPR holders.