Case 5  Dispute over infringement of trademark “FILA”

[Basic Information]

Case No.: (2017) Beijing 0102 Civil First Instance No. 2431

 (2018) Beijing 73 Civil Final Instance No. 1991

Plaintiff: Fila Sport Ltd.

Defendant: Zhejiang Zhongyuan Shoes Industry Co., Ltd.

Defendant: Rui’an Zhongyuan E-commerce Co., Ltd.

Defendant: Liu Jun

Defendant: Beijing Jingdong 360 Degree E-Commerce Co., Ltd.

[Case Brief]

In 2008, Fila Sport Ltd. (hereinafter referred to as “Fila”) obtained the exclusive legal right to use the series of registered trademark “FILA” in China by authorization. Through continuous promotion activities and publicity, the “FILA” trademarks enjoy a high market awareness at home and abroad. In June 2016, Fila discovered that the brand mark used on footwear products promoted, displayed and sold by Zhejiang Zhongyuan Shoes Industry Co., Ltd. (hereinafter referred to as “Zhongyuan Shoes”) in online and offline stores and Rui’an Zhongyuan E-commerce Co., Ltd. (hereinafter referred to as “Zhongyuan E-commerce”) on online sales platforms including Jingdong was similar to the “FILA” trademarks held by Fila. Liu Jun, as the former legal representative of Zhongyuan Shoes, legal representative of Zhongyuan E-commerce and registrant of trademarks including “GFLA杰飞乐”, participated in the aforementioned infringement act of manufacturing, selling and promoting said products, for which he shall be jointly and severally liable. According to the statistics of Fila, the total sales of the three defendant’s infringing goods reached tens of millions of yuan. Therefore, Fila sued to the court and demanded the three defendants to cease the infringement act and compensate RMB 9 million yuan for economic loss and RMB 410,000 yuan for reasonable expenditures. The court of first instance held that the use of the mark “” and the label “Feile (China)” on the accused goods and the marks “  ”and “  ”on the website by Zhongyuan Shoes and Zhongyuan E-commerce infringed the exclusive right to use registered trademark enjoyed by Fila for relevant “FILA” trademarks. Zhongyuan Shoes and Zhongyuan E-commerce, as operators of goods of the same class, should have the awareness of the registered trademarks of Fila; these two defendants prominently used marks similar to the registered trademarks on products they manufactured, and sold such products on multiple online sales platforms with huge sales amount. In addition, the Trademark Office had already rejected the application for registration of No. 7682295 trademark “”on “clothing, footwear, headgear” on July 19, 2010 for its similarity with No. G691003A trademark “  ”for which Fila enjoyed exclusive right to use trademark, and the three defendants were apparently and fully aware of the “FILA” trademarks previously registered by Fila. Where the three defendants, clearly knowing that their use of the accused marks may seriously mislead consumers and easily cause confusion and mistake of the origin of goods, still continued to manufacture and sell infringing goods, their subjective malice was obvious and the circumstances were serious, therefore the amount of compensation shall be determined as three times of the benefits acquired by Zhongyuan Shoes from the infringement. Accordingly, the court of first instance made a judgment, ordering the three defendants to cease infringement and compensate to Fila RMB 7.91 million yuan for economic loss and RMB 410,000 yuan for reasonable expenditure. The three defendants were dissatisfied with the judgement and appealed. The court of second instance rejected the appeal and affirmed the original judgment.

[Comments]

Paragraph 1, Article 63 of the Trademark Law (2013 Amendment) stipulated the punitive compensation liability for trademark infringement for the first time in the IP field, reflecting the legislation orientation of increasing the intensity of punishment for illegal infringement of IP rights. As the Trademark Law did not clarify the connotation of “malice” and “serious circumstances”, opinions thereof were inconsistent in practice, resulting in the small amount of cases applying punitive compensation. This is a typical case applying the provision of punitive compensation, and its typical significance lies in that it analyzed in details “malice” and “serious circumstances” in the provision of punitive compensation in Article 63 of the Trademark Law, and explicitly pointed out that: manufacturers and sellers of goods accused of infringement, as operators in the same industry with goods on which the registered trademark was approved to be used, still used marks similar to the registered trademark on the same goods they manufactured and sold after the trademark they applied for registration had been rejected for constituting similar trademarks with a prior registered trademark of others, selling a large amount of such infringing goods and acquiring huge amount of benefits; such behavior belonged to circumstances of obvious subjective malice and severe circumstances of infringement, and the defendants shall compensate three times of the benefits acquired from infringement. In addition, the court of this case obtained evidence of the business condition of the defendants’ online shops from relevant e-commerce platforms according to law based on the application of the party involved, and, combining the financial data submitted by the defendants themselves, accurately calculated the benefits acquired by the infringers from infringement. This case increased the intensity of punishment for the malicious infringement of well-known brands, fully reflecting the orientation of applying the provision of punitive compensation to “significant increase the cost of breach of law”; it will provide reference to the trial of similar cases.

photo from: cnwear.com.