Supreme Law Intellectual Property Dispute Determination Rules | The amount of compensation at the discretion of the court of first instance exceeds the upper limit, and the Supreme Law retrial upholds it.
Published:
2020-11-15
1. the source of the problem
The first paragraph of Article 63 of the the People's Republic of China Trademark Law amended in 2013 stipulates: "The amount of compensation for infringement of the exclusive right to use a trademark shall be determined according to the actual loss suffered by the right holder as a result of the infringement; if the actual loss is difficult to determine, it may be determined according to the infringer The benefits obtained by the infringement; if the loss of the obligee or the benefits obtained by the infringer are difficult to determine, it, it shall be reasonably determined with reference to the multiple of the trademark license fees. For malicious infringement of the exclusive right to use a trademark, if the circumstances are serious, the amount of compensation may be determined in accordance with the above-mentioned methods to determine more than one time and less than three times the amount. The amount of compensation shall include the reasonable expenses paid by the right holder to stop the infringement." The third paragraph stipulates: "if the actual losses suffered by the obligee as a result of the infringement, the benefits obtained by the infringer as a result of the infringement, and the license fee for the use of a registered trademark are difficult to determine, the people's court shall, according to the circumstances of the infringement, award compensation of less than 3 million."
Article 17 of the the People's Republic of China Anti-Unfair Competition Law (hereinafter referred to as the Anti-Unfair Competition Law) revised in 2017 stipulates that the amount of compensation for operators who have suffered damage due to unfair competition shall be based on the actual losses suffered by them as a result of the infringement. If the actual loss is difficult to calculate, it shall be determined according to the benefits obtained by the infringer as a result of the infringement. The amount of compensation shall also include the reasonable expenses paid by the operator to stop the infringement. If the actual losses suffered by the obligee as a result of the infringement and the benefits obtained by the infringer as a result of the infringement are difficult to determine, the people's court shall, according to the circumstances of the infringement, award the obligee a compensation of less than 3 million yuan. Paragraph 1 of Article 17 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Cases of Unfair Competition stipulates that the determination of the amount of damages for acts of unfair competition as stipulated in Articles 5, 9 and 14 of the Anti-Unfair Competition Law may refer to the method of determining the amount of damages for infringement of the exclusive right to use a registered trademark.
In judicial practice, if the actual loss and infringement income are difficult to calculate, the people's court has the right to make a judgment of compensation below 3 million yuan according to the circumstances of the infringement, but the discretionary amount in this case is 3.2 million yuan, which is beyond the legal compensation limit, but the Supreme People's Court still maintains it.
2. Supreme Court Judgment Rules
Trial court: Supreme People's Court
Case No.: (2020) Supreme Fa Min Shen No. 4383
Cause of action: trademark infringement dispute
Referee Date: September 28, 2020
The retrial applicant, Inner Mongolia Luwang Cashmere Co., Ltd. (hereinafter referred to as Luwang Company), refused to accept the civil judgment of Zhejiang Higher People's Court (2019) Zhejiang Minzong No. 409 due to the infringement of trademark rights and unfair competition disputes with the respondent Li Zhanwen, Yu Fuda, Li Zhancheng and the defendants Zhejiang Tmall Network Co., Ltd. (hereinafter referred to as Tmall Company) and Zhejiang Taobao Network Co., Ltd. (hereinafter referred to as Taobao Company), apply to the Supreme People's Court for a retrial.
In this case, Luwang Company claims to determine the amount of compensation based on Huachen's infringement profits. According to Article 14 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Trademark Civil Dispute Cases, the benefits obtained from infringement can be calculated based on the product of the sales volume of the infringing commodity and the unit profit of the commodity; if the unit profit of the commodity cannot be ascertained, it shall be calculated according to the unit profit of the registered trademark commodity. According to the evidence submitted by Luwang Company, the sales records of Luwang Yang flagship store recorded in the notarial deed show many styles of goods, which cannot be used as the basis for determining the sales quantity of the accused infringing goods. The selling price of infringing goods sold by the "E Gulong Cashmere" store recorded in the notarial deed cannot prove the specific cost of goods sold by the online store. Other evidence submitted by Deer King Company is also insufficient to prove the cost and profit of the cost of the accused infringing, therefore, according to the evidence submitted by Deer King Company, it is difficult to determine the infringement profit of Huachen Company. In this case, the court of second instance, considering the popularity of the registered trademark that Luwang Company claims to protect its rights, the subjective fault of Huachen Company, the specific circumstances of the infringement, and the rights protection fees paid by Luwang Company, determined the compensation amount of 3.2 million yuan (including the reasonable litigation expenses of 125000 yuan) as appropriate, which is not improper. Deer King Company's claim that there is an error in the amount of compensation determined by the second instance judgment cannot be established.
3. depth analysis
The right holder should not rely solely on the discretion of the court, but should make every effort to provide evidence. In this case, the retrial applicant also provided a large amount of evidence to prove his actual loss in the original trial case, which had an impact on the court's discretion. But can the discretionary cap be breached when the discretionary clause is applied rather than the actual damages? No further discussion is made in this case, but from the expansion of the punitive provisions for trademark infringement damages from one to three times to one to five times, and the increase of the discretionary cap to 5 million, it can be seen that the tort damages are gradually increasing.
Article 63 of the Trademark Law was revised in 2019: "The amount of compensation for infringement of the exclusive right to use a trademark shall be determined according to the actual loss suffered by the right holder as a result of the infringement; if the actual loss is difficult to determine, it may be determined according to the benefit obtained by the infringer due to the infringement; if the loss of the right holder or the benefit obtained by the infringer is difficult to determine, it shall be reasonably determined with reference to the multiple of the trademark license fee. For malicious infringement of the exclusive right to use a trademark, if the circumstances are serious, the amount of compensation may be determined at more than one time and less than five times the amount determined in accordance with the above-mentioned methods. The amount of compensation shall include the reasonable expenses paid by the right holder to stop the infringement." In order to determine the amount of compensation, the people's court may order the infringer to provide account books and materials related to the infringement when the obligee has tried his best to provide evidence and the account books and materials related to the infringement are mainly in the hands of the infringer; if the infringer does not provide or provides false account books and materials, the people's court may determine the amount of compensation with reference to the claims of the obligee and the evidence provided.
If the actual losses suffered by the right holder as a result of the infringement, the benefits obtained by the infringer as a result of the infringement, and the license fee of the registered trademark are difficult to determine, the people's court shall, according to the circumstances of the infringement, award compensation of less than 5 million yuan.
The retrial court should be based on the increase in the scope of protection of trademark infringement and the sufficient evidence of the retrial applicant in the original trial, and did not correct the behavior beyond the discretionary upper limit. Therefore, for the trademark infringer, it should be a warning, for the trademark owner should be sufficient evidence, to avoid only proving the infringement and litigation, relying solely on the court's discretion to compensate.
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