In a recent trademark infringement lawsuit, Shanghai Pudong Court held that the defendant company had obvious subjective intention to conduct trademark infringement, as the defendant continued to use the trademark even after its invalidation. The court innovatively applied the calculation method of "punitive damages + statutory damages" to judge the defendant company to pay compensation of more than 1.86 million yuan. This is also the first case in Shanghai Pudong Court to coordinate the application of punitive damages and statutory damages. 

In 1981, the plaintiff company registered the English trademark on its sewing machines and other goods. As an enterprise engaged in the production and sales of industrial sewing machines, the defendant company has used English logos similar to the plaintiff's trademarks on its products and related publicity for a long time, and registered Chinese and English logos including the similar English logos as trademarks in August 2010. But in fact, it has only used said similar English logo. 

In view of the defendant's above behavior, the plaintiff filed an invalidation application against the defendant's trademark in 2015. In April 2016, the trademark was declared invalid by the Trademark Review and Adjudication Board, and the defendant immediately filed an administrative lawsuit. In December 2019, the final judgment of Beijing High Court found that the defendant's trademark and the plaintiff's trademark constituted similar trademarks, and the defendant's trademark was invalid from the beginning. 

However, from the trademark registration to the final invalidation of the past few year, the defendant continued to use the similar English logo on his website, exhibition, brochure and business card. In the above process, the alleged infringing products sold in China were subject to administrative punishment by the market supervision department, and since 2012, related products have been sold to overseas markets. 

Shanghai Pudong Court held that, the defendant company used the alleged infringement logo on industrial sewing machines and other products sold in China, which may easily cause the consumers to confuse the sources of goods and services, and some export products also have contact with relevant operators in domestic transportation and warehousing, which may lead to misunderstanding. Therefore, the defendant's behavior constitutes trademark infringement, and the defendant should bear civil liability for stopping infringement and compensating losses. 

Meanwhile, the plaintiff company has used its trademark for a long time, and after long-term publicity and use, said trademark has been widely known by the relevant Chinese public and enjoys a high reputation. In this case, many products of the defendant company are highly similar to the plaintiff's products in appearance, position of the mark and the marking method, and have obvious intention of free-ride. Especially, when it comes to the relevant administrative and litigation procedures, the defendant should reasonably predict the possibility of infringement of the logo’s usage, but fail to avoid the relevant risks. Therefore, there is enough evidence to conclude that the defendant has infringing intention, which meets the requirement of "serious circumstances". 

With regard to the calculation of compensation amount, in this case, it is difficult to determine the actual losses suffered by the plaintiff due to the defendant's infringement, but according to the documented evidence, some benefits obtained from its export behavior can be calculated. Therefore, the court comprehensively considered the subjective intention of the defendant company, the scale and circumstances of infringement, the specific sales situation that can be ascertained and other factors. The defendant's infringement is divided into two parts, and the compensation amount is calculated respectively: three times punitive damages are applied to the order part where the specific sales situation can be found out, and legal damages are applied to the sales behavior where the specific sales situation cannot be found out. 

To sum up, the court ruled that the defendant should stop the infringement and compensate the plaintiff for economic losses and reasonable expenses for safeguarding rights, totaling more than 1.86 million yuan. The defendant refused to accept the appeal, and the court of second instance rejected the appeal and upheld the original judgment. 

“The punitive damages is not solely for making up for the losses”, said Liu Jialuo, presiding judge of the case, “it also forced the infringer to pay compensation higher than or even several times higher than the actual loss or infringement profit, as a posture to intensify the crackdown on serious circumstances such as source infringement, malicious infringement and repeated infringement, thus deterring the occurrence of infringement”. However, in judicial practice, it is often difficult to fully determine the actual loss of the obligee infringed. According to the court, if people cannot cast aside rigid thinking of “punitive damages cannot be applied as long as the total amount cannot be ascertained”, it will seriously affect the function of punitive damages system. Therefore, in the determination of compensation amount in this case, "punitive damages" and "statutory damages" are applied at the same time, in order to form an active exploration of the application of punitive damages in intellectual property cases and further standardize the business behavior of domestic enterprises through legal means.