Guangdong Higher People’s Court Ups Damages 10X on Appeal in Trademark Infringement Case for Lego Bricks
On April 1, 2021, the Guangdong Higher People’s Court announced the awarding of 30 million RMB (~$4.7 million USD) to Lego on appeal, an increase from the original award of 3 million RMB. Late last year, the Shanghai Higher People’s Court also upheld a 6-year prison term for Lego infringers in a related case for copyright infringement. The Lego manufacturers, using the brand name Lepin (乐拼), include Guangdong Meizhi Zhijiao Technology Co., Ltd. , a related entity, and Shantou Zhilepin Toys Co., Ltd. (广东美致智教科技股份有限公司、广东美致智教科技股份有限公司第二分公司、汕头市智乐拼玩具有限公司), committed trademark infringement and unfair competition. The defendants had infringed on 8 registered trademarks and the commercial name of Lego for 4 years generating revenue of at least 330 million RMB.
On appeal, the Guangdong Higher People’s Court stated that after long-term use and publicity, the “Lego” series of trademarks have become extremely well-known in the toy market, and have become the main mark used by the relevant public to identify Lego products. Meizhi Company uses a series of “Lego” logos, which are very similar to “Lego” in terms of color combination, form of expression, and overall visual effects, which can easily lead to public confusion and weaken the distinctiveness of the “Lego” series of trademarks. This causes damage to Lego’s market reputation.
The person in charge of the company, Li XX, instructed others to register a series of infringing trademarks, organize the factory to produce infringing products, and to sell. There was the on-site display and mass sales in the business premises of Meizhi, the Guangzhou International Toys and Model Exhibition, authorized sales premises, etc., and also through email, online Company website, WeChat public account and other channels for publicity and sales.
According to the relevant criminal ruling, from September 11, 2017 to April 23, 2019 alone, the illegal business revenue of the infringing products produced and sold by Meizhi Company reached 330 million RMB. In addition, based on the sales data of “Lepin” products provided by Zhejiang Taobao Network Company, the revenue of the infringing products can be reasonably estimated to exceed 500 million RMB. With reference to the reasonable estimation of profit margin of the relevant industry, the overall profits of the infringing products involved must be far more than 160 million RMB.
Based on this, the Guangdong Higher People’s Court held that Meizhi’s infringement was prolonged, was large in scale, and was highly profitable. The infringement was well thought out and organized. The malicious infringement and imitation of Lego are obvious. It is a serious infringement and should be severely sentenced. The Court agreed with Lego’s claim for compensation, and increased the original judgment by ten times to 30 million RMB compensation for Lego’s related economic losses.
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