On April 26, the 21st World Intellectual Property Day, the Zhejiang Higher People’s Court opened a second-instance trial and declared the first case applying to the Supreme People’s Court’s Interpretation on the Application of Punitive Damages to the Trial of Civil Cases of Infringement on Intellectual Property Rights (hereinafter referred to as Judicial Interpretation of Punitive Damages), the defendant was sentenced to punitive damages of 30 million yuan and compensation for reasonable expenses of 550,000 yuan.

"Wyeth", coming from the United States, is an old brand popular among consumers in the infant milk powder industry. It has been developed for nearly 100 years. The American Wyeth Company is also the trademark owner of trademarks like “Hui Shi”"Wyeth".

The defendant Guangzhou Wyeth Company was established in 2010. In recent years, it has produced and sold goods such as maternal and child care products with the marks of “Hui Shi” “Wyeth”, and “Hui Shi Little Lion” on a large scale for a long time. Trademarks like "Hui Shi" and "Wyeth" have been registered in the categories of toiletries through squatting, assigning form others and other methods. Guangzhou Wyeth Company also indicated in activities associated with Wyeth Company of the United States in its promotion.

Then Wyeth Company and Wyeth Shanghai Company sued Hangzhou Intermediate People’s Court and named Guangzhou Wyeth Company, Chen Zeying, Guan Xiaokun, Guangzhou Zhengai Company, Qingdao Wyeth Company, and Hangzhou Xiangdi Company as the defendants, and demanded Guangzhou Wyeth Company, etc. The defendant stopped trademark infringement and unfair competition, and applied punitive damages of 30 million yuan for economic losses and 550,000 yuan for reasonable expenses.

The Hangzhou Intermediate People's Court made a first-instance judgment and determined that the above six defendants jointly committed trademark infringements. Qingdao Wyeth had committed unfair competition and applied punitive damages, it was determined for infringement profit of at least 10 million yuan, 3 times. Finally the court fully supported the litigation request of Wyeth Company and Wyeth Shanghai Company, namely compensation of 30 million yuan and a reasonable cost of 550,000 yuan.

All defendants dissatisfied about the decision and appealed to the Zhejiang Higher People's Court. After the trial, the Zhejiang High Court further clarified the applicable conditions of punitive damages, compensated for the application deviation caused by determining the base with discretionary thought in the first instance, and carried out accurate calculations on the base of punitive damages based on the evidence submitted by Wyeth Company and Guangzhou Wyeth Company, therefore, the upper and lower limits of infringement profits were determined. Particularly, according to the Judicial Interpretation of Punitive Damages, were calculated separately, and the total amount of compensation was finally determined with separate calculation of the base and multiples. Due to the lower limit of the total amount of compensation has exceeded Wyeth's litigation request, the court of second instance pronounced a judgment in court, rejected the appeal, and upheld the original verdict!

In commercial practice, the material investment requires huge amount of material investment on exploiting the consumer market, and whether the products are enable to achieve good consumer performance and market share in the market has is closely related to the investment of brand owners and users. Therefore, the law regulates a punitive compensation system against malicious registration, intentional infringement and other acts that seriously infringe on the interests of brand owners, for the purpose of curbing infringements and compensating right holders for losses, meanwhile, warns market competition entities to return to the framework of fair competition and focus on their own brands instead of deliberately cling to the reputation of other businesses.

From China Intellectual Property Magazine

April 26th, 2021