A company sued a sports equipment company for trademark infringement
-- Determination of the applicable conditions and compensation base for punitive damages in intellectual property cases
keyword
- civil
- Trademark infringement
- Punitive damages
- Compensation base
- Obstruction of Evidence
Basic facts of the case
The plaintiff company claimed that the plaintiff was the world's first Pilates company and the world's largest provider of Pilates equipment and education. The plaintiff registered the trademark "MOTR" in various classes of goods and services in China. The plaintiff's "MOTR" fitness equipment was widely sold in China, and the relevant information was also commonly reported in the media, and the trademark in question was extremely well-known. The plaintiff found that the defendant sold fitness equipment using the trademark "MOTR" at the 2018 Fifth China (Shanghai) International Fitness, Sports and Leisure Exhibition held in Shanghai. The defendant also promoted the above-mentioned fitness equipment through various methods such as WeChat shopping malls and on-site sales in factories. In addition, the defendant had entered into a settlement agreement with the plaintiff in 2012 for infringement of the plaintiff's intellectual property rights. The plaintiff argued that the defendant's actions constituted trademark infringement and that there was repeated infringement, so punitive damages should be applied. The court requested the court to order the defendant to stop the infringement of trademark rights and compensate the defendant for economic losses and reasonable expenses for rights protection totaling RMB 3 million.
The defendant, a sports equipment company, argued that the defendant had not infringed the trademark in question and was not liable for compensation. The "MOTR" mark is the generic name of the Pilates roller product in question. The trademark in question is an English acronym of "movement on the roller", which means "movement on a roller" in Chinese, which is a description of the function and use of the product, and is not distinctive. The plaintiff did not use the disputed trademark for profit in China, and the disputed trademark could not establish a unique correspondence with the plaintiff. The defendant company had a small business scale, had a short period of contact with the trademark in question, and did not produce or sell it in large quantities.
After trial, the court ascertained that the plaintiff was registered in California, United States of America in August 1993, and was mainly engaged in the production and sales of sports equipment and the promotion of fitness courses. The plaintiff is the registrant of the trademark "MOTR", which is approved for use in Class 28 of "body exercise muscle equipment, gymnastic equipment, manually operated fitness equipment (exercise equipment), elastic bands for yoga and sports fitness activities", and is valid from October 14, 2016 to October 13, 2026. The plaintiff had sent staff to participate in the 2006 Beijing International Fitness Conference, and information about the "MOTR" fitness equipment and fitness programs was also commonly reported in WeChat, Sohu.com, Changjiang Business Daily, New Express and other media.
On November 11, 2017, the plaintiff's agent went to the defendant's factory to purchase three Pilates roller products, and obtained a receipt (payment) certificate, two business cards, and three product manuals. The person receiving the payment on the receipt (payment) voucher is a sports equipment limited company. The handle of the drum is marked with the "MOTR" logo, the ends of the stretch belt are marked with the "E" and "MOTR" logos, the cover of the product manual is marked with the "MOTR" logo, and the "MOTR" logo and the name of the plaintiff company appear in several places in the training videos on the CD-ROM. On December 29, 2017, the plaintiff notarized and obtained evidence from the WeChat mall operated by the defendant, and one of the most popular products was the "Lotates bed for Motr movement". From October 6 to December 9, 2017, the customer service posted many times on Moments to promote Pilates roller products marked with the "MOTR" logo. On March 15, 2018, the defendant participated in the 2018 Fifth China (Shanghai) International Fitness, Sports and Leisure Exhibition. The defendant's booth was equipped with a variety of fitness equipment, including a Pilates roller with a gray body and a grass green top, and the handle on the top of the product was marked with the "MOTR" logo.
On July 13, 2011, the plaintiff's lawyer in Spain sent an infringement warning letter to the defendant's shareholders, informing them that the fitness equipment manufactured by the defendant and imported and sold by the shareholders in Spain infringed the plaintiff's EU trademark, and demanded that the defendant and its shareholders immediately stop the infringement. After several negotiations, the defendant and its shareholders entered into a settlement agreement with the plaintiff in February 2012, under which the defendant promised not to engage in any conduct that might infringe or hinder the plaintiff's intellectual property rights.
On September 6, 2019, the Shanghai Pudong New Area People's Court rendered the (2018) Hu 0115 Min Chu No. 53351 Civil Judgment: the defendant, a sports equipment Co., Ltd., shall immediately cease to infringe the exclusive right to use the registered trademark of the plaintiff company from the effective date of this judgment; Within 10 days from the effective date of this judgment, the defendant Sports Equipment Co., Ltd. shall compensate the plaintiff for the economic losses and reasonable expenses paid to stop the infringement in a total of RMB 3 million.
After the judgment was pronounced, neither party appealed, and the judgment has taken legal effect.
Reasons for the Adjudication
The effective judgment of the court held that the main points of dispute in this case were: (1) whether the alleged infringement constituted an infringement of the plaintiff's exclusive right to use the registered trademark; 2. Determination of relevant civil liabilities and the amount of compensation.
Regarding the first point of controversy. The trademark "MOTR" used by the defendant is identical to the plaintiff's trademark in question, and the category of goods is the same as that approved for use in the plaintiff's trademark. The defendant's use of the "MOTR" mark was an act of using the same logo as the registered trademark on the same kind of goods, which infringed the plaintiff's exclusive right to use the registered trademark. The defendant argued that the "MOTR" mark was the generic name of the product in question, but did not provide any evidence to substantiate it. The "MOTR" trademark involved in the case is a fictitious word, which itself has strong distinctiveness as a trademark, and has been able to establish a unique corresponding relationship with the plaintiff after continuous use and extensive publicity by the plaintiff and its cooperative merchants, so the court did not accept the defendant's above-mentioned defense.
Regarding the second point of controversy. Since the defendant has infringed the plaintiff's exclusive right to use the registered trademark, it should bear the corresponding civil liability. Therefore, the court upheld the plaintiff's claim for the defendant to stop committing the infringing act. The notary fees, travel expenses, and document printing fees claimed by the plaintiff were reasonable expenses paid to stop the infringement, and were all corroborated by relevant bills and notarial deeds, and the court fully upheld them.
About economic losses. The plaintiff asserted that the amount of compensation should be calculated based on "the benefits obtained by the infringer due to the infringement", and the specific formula was "profit from infringement = product sales volume × (product unit price - product cost)", but the defendant did not put forward its own basis and method for calculating the amount of compensation. Therefore, the court adopted the preponderance of evidence standard, in accordance with Article 14 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Trademark Dispute Cases, recognized the calculation formula advocated by the plaintiff, and determined the specific values of each parameter in the above formula one by one based on the ascertained facts, and finally determined the amount of infringement profits on this basis.
The plaintiff asserted the application of punitive damages, and the defendant's liability for compensation was determined according to three times the amount of illegal gains. The court held that, in accordance with the first paragraph of Article 63 of the Trademark Law, which stipulates that "in the case of malicious infringement of the exclusive right to use a trademark, the amount of compensation may be determined by not less than one time but not more than three times the amount determined in accordance with the above-mentioned method", the plaintiff's claim had a factual and legal basis and should be supported. The specific reasons are as follows: First, the infringing mark used by the defendant is exactly the same as the plaintiff's right trademark, and the two are used on the same product, and the style, color, and logo position of the trademark are almost identical, and this comprehensive imitation of the plaintiff's trademark and product shows that the defendant's intention to infringe the plaintiff's trademark right and cling to the plaintiff's goodwill is very obvious. Second, the defendant had been warned by the plaintiff as early as 2011 for alleged infringement of products exported to Spain, and after several communications with the plaintiff, the defendant finally signed a settlement agreement, promising not to engage in any activities that might infringe or interfere with the plaintiff's intellectual property rights in the future, but after a few years, the defendant was again found to produce and sell products that infringed the plaintiff's exclusive right to use the registered trademark. The defendant's failure to keep its promises and disregard for the intellectual property rights of others is a violation of the principle of good faith, and the infringement is extremely serious. Third, the defendant's total sales in 2016 had reached more than 800 yuan, and in this case, the defendant promoted and sold the infringing products through various online and offline channels such as WeChat mall, WeChat Moments, factories, exhibitions, etc., and the products were sold to Xiamen and other provinces and cities. Fourth, the defendant's infringement not only caused confusion in the market, but also caused the quality problems of degumming of the infringing products, which would cause consumers to mistakenly purchase and mistakenly believe that the plaintiff's products had quality problems, which would bring negative evaluation to the plaintiff's business reputation, and the consequences of infringement would be more serious.
To sum up, the court held that the defendant's subjective malice was obvious and the circumstances of the infringement were serious, and the punishment of the defendant should be increased, so it determined three times the multiple of punitive damages in this case. The above-mentioned determination of three times the amount of profits from infringement has exceeded 3 million yuan, and the plaintiff's claim in this case is fully supported in view of the total amount of damages of 3 million yuan, including reasonable expenses.
Summary of the trial
1. Those who have been warned on suspicion of infringing on other trademarks of others, and then signed a settlement agreement promising not to engage in infringing activities, but once again sell infringing products through online and offline channels, and the products still have quality problems, such behavior meets the applicable requirements for punitive damages on "bad faith" and "serious circumstances".
2. The defendant's refusal to perform the obligation to disclose evidence has constituted an obstacle to the presentation of evidence, and the court is sufficient to prove the sales volume of the infringing goods based on the content of the defendant's WeChat promotion, and the defendant cannot provide evidence to deny the authenticity of the promotional content, it shall support the plaintiff's claim; The unit profit of the infringing goods may be determined in combination with the similar products outside the case and the defendant's self-admission.
Associate indexes
Article 179, Paragraph 1, Item 1, Item 8, Paragraph 3 of the Civil Code of the People's Republic of China (Article 15, Paragraph 1, Item 1, Item 6 and Paragraph 2 of the Tort Liability Law of the People's Republic of China, which came into effect on July 1, 2010)
Article 57, Paragraph 1, Article 63, Paragraphs 1 and 2 of the People's Republic of China Trademark Law (Article 57, Paragraph 1, Article 63, Paragraphs 1 and 2 of the People's Republic of China Trademark Law, which came into effect on May 1, 2014, are applicable in this case)
Articles 14 and 17 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Trademark Dispute Cases (Articles 14 and 17 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Trademark Dispute Cases, which came into effect on October 16, 2002)
First instance: Shanghai Pudong New Area People's Court (2018) Hu 0115 Min Chu No. 53351 Civil Judgment (September 6, 2019)