Because it believed that a clothing store and a clothing company sold clothing with the image of Bubble Mart's art works through a short video platform, a Beijing Cultural and Creative Co., Ltd. sued the two defendants and a Beijing technology company to the court, demanding punitive damages, and ordering the three defendants to stop the infringement and compensate for economic losses and reasonable expenses totaling 33.6 million yuan. After trial, the Haidian court ruled that the clothing store and the clothing company should pay punitive damages of 5 million yuan and reasonable expenses of 20,000 yuan.
Brief facts of the case
The plaintiff, Culture & Creative Co., Ltd., claimed that it enjoyed the copyrights of the four art works involved in the case, "Molly", "Labubu", "Skullpanda" and "Dimoo", in accordance with the law. The clothing store and the apparel company jointly sold clothing and bags with the images of the four art works involved in the case on a short video platform set up by the technology company without permission, infringing their copyrights in respect of the art works involved in the case. Culture & Creativity Co., Ltd. believes that the apparel store and the apparel company continued to carry out the acts involved in the case after receiving the prosecution materials in this case and accepting the administrative punishment, and continued to infringe by opening other entities, etc., which is a situation where the subjective intent is obvious and the infringement is serious, and punitive damages should be applied. As the operator of the short video platform, the technology company failed to exercise reasonable care, which constituted aiding and abetting infringement.
The defendant clothing store and the clothing company jointly argued that the act involved in the case was carried out by the clothing company, that it had never produced the products involved in the case, that it had purchased the products from a third party and sold them, and that the acts involved in the case had been stopped, and that the number of products involved in the case was small, the sales scale was small, and the income was low, so punitive damages should not be applied in this case. The defendant technology company argued that it had exercised reasonable care as the operator of the short video platform and should not bear the corresponding legal liability.
Heard by the courts
After trial, the court held that the joint production and sale of clothing and handbags printed with the image of the art works involved in the case by the clothing store and the clothing company infringed on the right of reproduction and distribution enjoyed by Cultural and Creative Co., Ltd. in respect of the art works involved in the case, and should bear corresponding legal responsibility. As operators of short video platforms, technology companies have exercised reasonable care and should not bear corresponding legal liabilities.
On whether punitive damages should be applied in this case. The court held that, first, the clothing store and the apparel company deliberately carried out the acts of copyright infringement involved in the case, and the evidence showed that they clearly knew that the art works involved in the case were works of others who enjoyed copyrights, and continued to carry out the acts involved in the case after receiving the prosecution materials in this case and after the apparel company was administratively punished for live streaming the sale of the clothing printed with the image of the "Molly" art work involved in the case, which is a fact that the acts involved in the case continued to be carried out despite knowing that the acts involved in the case were infringing, and the subjective intent was very obvious. Second, the circumstances of the conduct involved in the case are serious. The two defendants began to carry out the acts involved in the case shortly after their establishment, and continued for at least one year; the art works involved in the case were the only patterns on the clothing produced and sold by the two defendants, which was the selling point of their publicity; and the frequency of their live broadcasts was high, and there were many styles and types of products involved in the case, After receiving the administrative penalty, he continued to carry out the acts involved in the case by means of live streaming, and used different short video accounts to conduct live broadcasts, which is the second time to carry out the same or similar infringement after being administratively punished for infringement, which shows the seriousness of his infringement. In summary, the apparel store and apparel company intentionally committed the copyright infringement involved in the case, and the circumstances were serious, which met the statutory constitutive elements for the application of punitive damages.
Regarding the amount of punitive damages. In this case, Cultural and Creative Co., Ltd. submitted a number of licensing contracts related to the art works or other art works involved in the case, as well as corresponding invoices and printouts of the cooperation promotion webpage, which has a strong objectivity, so it is appropriate to calculate the compensation base with reference to the royalties in this case. The court made a distinction between the rights and royalties of the four art works involved in the case based on factors such as the actual performance of the aforesaid authorization contract and the evidence, the comparability of the permitted rights, the method, scope, and duration of the licensed use, the comparability of the acts involved in the case, and the usual royalty standards for the same type of products in the same industry, and at the same time considered that the apparel store and the apparel company still insisted on not submitting circumstances that could objectively and comprehensively reflect the evidence of their profits under the circumstance that the court repeatedly explained and required the submission of evidence of their true profits. It was determined that the compensation base for the art works of "Molly", "Labubu", "Skullpanda" and "Dimoo" in this case was 1 million yuan, 500,000 yuan, 500,000 yuan and 500,000 yuan respectively. With regard to the multiple, the court determined that the multiple of punitive damages was 1 time, taking into account the proportion of the IP income of the four art works involved in the case in the revenue of the Cultural and Creative Co., Ltd., their popularity and influence, the sales volume of the products involved in the case, and the continuation of the acts involved in the case, especially after the administrative penalty.
In the end, the court ordered the clothing store and the apparel company to compensate Cultural and Creative Limited with $5 million and reasonable expenses of $20,000. After the verdict was pronounced, the clothing store and the clothing company appealed, and the original judgment was upheld in the second instance. The verdict is now in force.
What the judge said
This case is the first typical case in which the Haidian court has tried to calculate the amount of punitive damages in detail. Strict implementation of the system of punitive damages for intellectual property rights and increasing the extent of compensation for infringement will help punish serious infringement of intellectual property rights in accordance with the law and comprehensively strengthen the protection of intellectual property rights. Promoting the refined calculation of the base and multiple of punitive damages and the accurate application of punitive damages is the essence of further improving the punitive damages system and increasing the protection of intellectual property rights in the mainland.
During the trial of this case, the Haidian court tried to calculate the compensation base in a refined manner, referring to the royalties as the basis for compensation, and conducting a refined comparative analysis of the different circumstances of the four art works involved in the case in terms of popularity, comparability of licensing matters and the infringement in this case, the style and sales volume of the infringing products, etc., and made differentiated calculations on the compensation base of different works. The scale of the infringement and other factors, the multiple of punitive damages was determined, and finally a high compensation of 5.02 million yuan was made. On the basis of referring to previous cases, this case further calculates the base amount of punitive damages based on the difference between the object of protection and the tort, which provides a useful reference for scientifically and reasonably determining the amount of punitive damages, accurately applying punitive damages, and further promoting the improvement of the punitive damages system.
Source: Beijing Haidian Court
编辑：Sharon