A recent verdict had been reached by Wenzhou Intermediate Court on a second instance case against infringement on trademark "Adidas", a well-known sports brand. The court deemed the infringement established and applied punitive damages. The defendant was sentenced to compensate the plaintiff Adidas for three times of its economic losses, totaling more than 1.07 million yuan. 

The calculation of punitive damages in this case has offered a theoretical basis for the future disputes. 

As natural person, the two defendants funded the establishment of Zhengbang Company in 2014 to produce and sell uppers with the trademark "Adidas". From 2015 to 2017, the infringement products of said company had been seized by Ruian Market Supervision Bureau for three times. 

Adidas claimed punitive damages of 2.64 million yuan and reasonable expenses of 40,000 yuan in the case. The court of first instance found the defendants guilty but announced only 200,000 yuan of total damage. Adidas filed the appeal, and Wenzhou Intermediate People's Court changed the judgment of the first instance.

Wenzhou Intermediate People's Court's consideration and calculation factors for punitive damages are as follows.

In view of the nature of infringement, the defendant has violated many identical trademark rights of Adidas Company for many times with obvious subjective malice. The number of uppers seized in previous action is nearly twice that of infringing uppers involved in this case. The serious nature of this case can be proved by the defendant's infringement act that has reached certain scale in quantity and has been conducted continuously to thereby cause severe consequences. 

As for the ground of compensation, based on the unit price (189 yuan/pair) of the genuine shoes in Adidas' official flagship store, the court of second instance confirmed, through calculation, a 50.4% of gross profit margin according to the 2017 account statement provided by Adidas. 

The sales volume is established on the 6,050 pairs of uppers to be export to Russia but later seized by Ruian Market Supervision Bureau in its third action. Considering that the infringing products are all uppers, not finished shoes, and cannot be directly used in the consumption field, the court of second instance deducted 40% of the infringing products at its discretion. The eventual damage caused by infringement will be: 189 yuan/pair × 6,050 pairs × 50.4% gross profit rate × 60% = 345,779.28 yuan. Considering the nature of the defendant's infringement, the court ruled three times of its illegal profits over the defendant as the final punitive damage.