The Wuxi Intermediate People's Court recently awarded punitive damages to consumers of counterfeit coffee purporting to be from US coffee-maker Starbucks. Unlike traditional trademark infringement cases, where the rights owner is the plaintiff, this case was unusual as it had been initiated by the Consumers Council of Jiangsu Province (JSCC) – a non-governmental organisation for the protection of consumers' rights and interests – on behalf of consumers at large, based on the Law on the Protection of Rights and Interests of Consumers.
The consumer group initiated the public interest civil case following an administrative case concerning counterfeit Starbucks coffee.
In 2018, the Wuxi Municipal Administration for Market Regulation raided Shuang Shan Food (Xiamen) Co, Ltd (SSF), a company that had knowingly and fraudulently distributed counterfeit Starbucks coffee manufactured by another party in China since 2017 with total sales amounting to more than 7 million yuan ($1.1 million). The case was subsequently transferred for criminal prosecution.
In 2019, the manufacturer – as well as SSF and its director – were convicted of manufacturing or selling the fake coffee.
In early 2020, the public prosecutor suggested that JSCC file a public interest civil lawsuit against SSF on behalf of an unspecified group of consumers who had purchased the counterfeit Starbucks products that SSF distributed.
The case was determined under:
- the relevant provisions of the Civil Procedural Law, which provides that the authorities and specified organisations may file a lawsuit against acts that jeopardise the public interests of society, such as polluting the environment or damaging the rights and interests of consumers at large;
- the Interpretations of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Cases Involving Consumer Civil Public Interest Litigation, which affirm that the local consumer councils are the appropriate organisations to bring civil litigation on behalf of consumers at large; and
- the Law on the Protection of Rights and Interests of Consumers, which provides that if a business operator provides goods or services fraudulently, it will pay punitive damages at a value of three times the aggregated price paid by consumers for the goods sold, or for the services provided.
The Court awarded punitive damages of 21.72 million yuan ($3.36 million) in a first-instance civil decision on 13 May 2021 that became publicly available in the following weeks.
This is one of few public interest civil lawsuits protecting consumers' rights that have been brought in China. The next issue facing the JSCC will be allocating the damages awarded to the consumers at large in a fair and acceptable manner. The decision may be appealed.
For further information on this topic please contact Wei He at Wanhuida Intellectual Property by telephone (+86 10 6892 1000) or email ([email protected]). The Wanhuida Intellectual Property website can be accessed at www.wanhuida.com.
This article was first published in INTA Bulletin.