Docket No.: 16190, second instance (终), civil case (民), (2020) Shenzhen Intermediate People's Court in Guangdong Province (粤03)

Lower Court Docket No.: 3587, first instance (初), civil case (民), (2019) Futian District People's Court of Shenzhen (粤0304)

SUMMARY OF THE ARGUMENT

The essence of punitive damages is that the amount of compensation shall be greater than the actual damages (infringement profits). For malicious infringement of the exclusive right to use trademark with serious circumstance, if the right holder claims for punitive damages, the people's court may support its claim according to the principle of "case-by-case application and application as required". When determining the amount of compensation, the people's court should try to find the optimal solution.

The people's courts should make full use of the general rule of evidence of "anyone who brings up the claim should bear the burden of proof" and apply special rules such as "documentary evidence order and evidence obstruction system" when necessary to guide the parties to actively, comprehensively, correctly and honestly provide evidence, and fundamentally crack the problem of "difficulty to prove" when determining the sales volume, infringement time, profits and other calculation bases of the infringing goods which make a profit by means of infringement, and should strictly implement the punitive damages system, correctly handle the relationship between compensation with punitive factors and multiple penalties, adhere to the value orientation of realizing claims > guiding proof > implementing punishment, strengthen intellectual property protection, and meet the legitimate and reasonable claims of right holders to the greatest extent.

STATEMENT OF THE CASE AND FACTS

VIVO MOBILE COMMUNICATIONS CO., LTD.,

Plaintiff-Appellee

v.

SHENZHEN YOUPINTONG ELECTRONIC TECHNOLOGY CO., LTD.,

Defendant-Appellant

SHENZHEN HUATANG DIXUN TECHNOLOGY CO., LTD.,

Defendant

Vivo Mobile Communications Co., Ltd. (“vivo”) has the exclusive right to use registered trademark “” (registration No.: 9773708) for “telephone, mobile phone” in Class 9 from September 21, 2012 to September 20, 2022. According to the Decision on Rejecting the Application for Registration of No. 19257768 “VIVO” Trademark, through the long-term use and extensive publicity of vivo, its registered trademark “” (registration No. 9773708), which was used on “mobile phone”, had gained high awareness among the relevant public in China, and was recognized as a well-known trademark.

The registrant of the trademark “” (registration No.: 4764197) was Wenzhou Sikelei Trade Co., Ltd. and the approved goods were “telephone set, pager set, loudspeaker, camera, electric switch, glasses, ophthalmic glass, spectacle frame” in Class 9, with the validity period from October 28, 2008 to October 27, 2018. Upon renewal, the trademark was valid until October 27, 2028. On March 10, 2017, Wenzhou Sikelei Trade Co., Ltd. applied for registration of the trademark “” No. 23108311. The “vivi v9 Mobile Phone Network Access License” was issued on June 16, 2017. On June 27, 2018, Youpintong accepted the exclusive right to use registered trademarks “” (registration No.: 4764197) and “” (registration No.: 23108311).

On August 6, 2018, vivo conducted notarized evidence collection from some vivi cell phone stores on Taobao, and concluded that the 30-day sales volume of vivi phones sold on Taobao was about 12621 by adding the monthly sales volume shown on the sales link. The “vivi” logo was used on the home page of www.vivi-china.com, the information of “vivi v9” “vivi v15” “vivi v12” “vivi X9” “vivi X7” “vivi R9S” and other vivi cell phones was shown on the web pages; and according to the pictures of goods, the “” logo was shown on all cell phones. The website was operated by Shenzhen Youpintong Electronic Technology Co., Ltd. (“Youpintong”) which also conducted the ICP filing of the website. On its official website, Youpintong claimed that the sales volume of one single series of “vivi phone” reached 300,000 on average. “Genuine viviv9- X6.0 inch full-screen smartphone” was sold on “Huatang Dixun Technology” online store on www.taobao.com. According to the pictures of goods, the above logo was shown on all cell phones. Huatang Dixun confirmed that the Taobao online store called “Shenzhen Huatang Dixun Technology Co., Ltd. (“Huatang Dixun”)” was operated by it and the cell phones in dispute were sold by it. The cell phones in dispute were the same kind of goods as the mobile phone goods approved for use with respect to the above-mentioned registered trademark. Youpintong acknowledged that the profit of one phone was RMB 39.3.

vivo alleged that the manufacture and sale of cell phone products using the trademark “vivi” by Youpintong and the sale of cell phone products using the trademark “vivi” by Huatang Dixun infringed its exclusive right to use registered trademark “” (registration No.: 9773708), and filed a lawsuit with Futian District People’s Court of Shenzhen, requesting the court to order the two companies to stop their infringement acts and jointly compensate vivo for its economic loss of RMB 5 million and reasonable expenses of RMB 126,000 incurred by vivo for protecting its rights.

On May 28, 2019, the court of first instance issued the Assistance Enforcement Notice to Zhejiang Taobao Network Co., Ltd., ordering to immediately take down the cell phone products with the logo “” sold by the online store called “Huatang Dixun Technology”.

The court of first instance held that, Youpintong did not use the registered trademark “” strictly in accordance with the approved registered trademark and the specification of the approved goods, and “” was altered in its distinguishing features and turned into “” for actual use, which was similar to the registered trademark “”. The goods on which both trademarks were used were cell phones, which belonged to the same kind of goods. If these two kinds of cell phones were sold in the market at the same time, it would make the relevant public misunderstand the source of the goods or think that the source had a specific connection with the registered goods. Youpintong used the mark “” similar to the registered trademark “” on the same kind of goods without the permission of the right holder, which was likely to cause confusion, and the cell phone on which the mark was used would become infringing goods; The sale of infringing cell phones by Huatang Dixun constituted infringement of the exclusive right to use the registered trademark “”, and Huatang Dixun shall bear civil liability for stopping the infringement act and compensating for damages. Accordingly, the court made the first instance judgment on February 21, 2020 as follows: (I) Youpintong shall immediately stop infringing the exclusive right of vivo to use the registered trademark “” (registration No.: 9773708), i.e. immediately stop the publicity and advertising of cell phones with the logo “” on www.vivi-china.com, stop producing and selling cell phones with the logo “”, and remove the infringing logo on the infringing goods in stock; (II) Huatang Dixun shall immediately stop infringing the exclusive right of vivo to use the registered trademark “” (registration No.: 9773708), i.e. immediately stop selling cell phones with the logo of “” “” and remove the infringing logo on the infringing goods in stock; (III) Youpintong shall compensate vivo for its economic losses of RMB 1,035,000 as well as the reasonable expenses of RMB 100,000 incurred by it for protecting its rights; (IV) Huatang Dixun shall compensate vivo for its economic losses of RMB 200,000 as well as the reasonable expenses of RMB 26,000 incurred by it for protecting its rights; (V) Other claims of vivo were rejected.

Youpintong refused to accept the first instance judgment and appealed to Shenzhen Intermediate People’s Court in Guangdong Province. On November 20, 2020, Shenzhen Intermediate People’s Court made the second instance judgment. The court rejected the appeal and affirmed the original judgment. The judgment in this case has come into effect.

ANALYSIS

This is the first case in Shenzhen in which punitive damages for trademark rights were applied. The court of first instance applied the multiple penalty and the court of second instance introduced punitive elements in calculating the infringement profit. The court of first instance and the court of second instance both boldly explored the specific application of punitive damages for trademark rights, created the principle of “case-by-case application and application as required” for punitive damages for trademark rights, fully applied the general rules of evidence, and fully followed the value orientation of realizing claims > guiding proof > implementing punishment when choosing the basis for calculating infringement profits to determine the amount of compensation, creating a set of replicable trial experiences for improving the reasonableness and rationality of the calculation of compensation amounts.

This case was selected as one of the “Top Ten Typical Intellectual Property Cases of Shenzhen Courts in 2020”.