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Vans Wins Triple Punitive Damages in Chinese Trademark Infringement Case

On August 18, 2022, the Ruian City People’s Court announced a ruling in favor of Vans against a shoe manufacturer award triple punitive damages in a trademark infringement case.  Vans was awarded 2,428,226 RMB as well an injunction, which was recently upheld on appeal. The shoe manufacturer was also subject to administrative fine and seizures previously.

Left: Genuine, Right: Counterfeit
On November 5, 2019, the Ruian Municipal Bureau of Supervision inspected the shoe factory, and seized and seized a total of 1,230 pairs of shoes marked with the “ ” logo having item number 675 produced by the shoe factory. Afterwards, the Bureau issued an administrative penalty decision, finding that shoe factory infringed Van’s trademark ““, and decided to confiscate all 1,230 pairs of infringing shoes and impose a fine of 37,392 RMB.
On March 25, 2021, the Ruian Municipal Bureau of Supervision again seized a total of 1,590 pairs of the above-mentioned infringing shoes when inspecting the shoe factory, and then issued an administrative penalty decision, confiscating the 1,590 pairs of infringing shoes, and fined the factory 71,550 RMB.
During the period from 2020 to 2021, Vans found that the above-mentioned shoes with the item number 675 produced by the shoe factory were widely sold in online stores, the monthly sales remained high, and the cumulative transaction amount reached more than one million RMB. In June 2021, Vans sued the shoe factory and three major online stores at the Ruian Court, requesting to stop the infringement and compensate for economic losses.

The defendant Shoe Factory argued that the alleged infringing logo had a fork on the right side, which had its own uniqueness and would not cause the relevant public to misidentify the source of the goods or think that it had a specific connection with the goods of the Van’s registered trademark. In addition, the price of shoes in the online store is about 20 RMB, which is aimed at low-end market customers. The price of shoes with registered trademarks involved in the case is mostly hundreds of RMB directed at middle and high-end market customers. The target market customers of the two are completely different and therefore obviously will not cause confusion to the relevant public.

After trial, the court found out that between 2018 and 2021, the Shoe Factory produced a large number of shoes marked with the logo with an item number of 675, and shipped them to 14 online stores for online sales. The total number of successful orders was 160,183 pairs were sold, with a turnover of 3,553,581 RMB. It was also found that in the past four years, the Municipal Supervision Bureau imposed administrative penalties on the shoe factory twice. Until July 2021, the shoe factory was still producing the goods involved.

After hearing, the court held that in this case, the accused infringing shoes belonged to the same commodity as the shoes approved for use by the registered trademark involved. The “ ” logo used on the upper of the shoe of the alleged infringing product is clear and conspicuous, and obviously plays a role in identifying the source of the product, which is an act of trademark use. After comparison, the “ ” logo and the registered trademark “ ” are basically the same in overall composition, line shape, etc.; only the ends of the lines are split, and the overall composition is similar. Therefore, the accused infringing goods are goods that use the same or similar trademark on the same goods, which is likely to cause confusion among the relevant public, and belong to the goods that infringe the exclusive right of the registered trademark involved.

The defendant  Shoe Factory has been caught twice infringing by the Bureau, but it continues to infringe, and the amount of profit from the infringement is huge. It should be determined to be a malicious infringement of the exclusive right to use a trademark and the circumstances are serious. In accordance with the provisions of Paragraph 1 of Article 63 of the Trademark Law, the Ruian Court applied triple punitive damages to the defendant and ordered it to compensate the plaintiff for economic losses of 2,428,226 RMB, and the other three defendants paid a total of 267,561 yuan.

After the first-instance judgment, the defendant  and others filed an appeal. Recently, the Wenzhou Intermediate People’s Court upheld the original judgment in accordance with the law, and the case has now come into effect.

The Judge stated,

In this case, the defendant, a shoe factory, as the source enterprise of producing the infringing goods involved in the case, still did not repent after two administrative penalties, and still carried out mass production and sales. The Ruian Court used triple punitive damages in accordance with the law, severely cracked down on the source production links, cut off the illegal counterfeit industrial chain, made malicious manufacturers pay a heavy price, deter potential infringers, vigorously regulate the market competition order, guide the society in respecting property rights, and protect innovation and creation.

The full text of announce is available here (Chinese only).

Principal, and Director of the China Intellectual Property Practice

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