Since recent years, the damages granted in intellectual property lawsuits, especially in trademark infringement cases, have been increasing remarkably in China. In a trademark infringement dispute opposing Meichao Group to Beijing Xiujie Xinxing Building Materials, the Beijing Intellectual Property (“IP”) Court has tried the highest amount of damages ever awarded in the civil trademark infringement cases since its inception two years ago.

Meichao Group is the owner of the trademark “墙锢” registered in class 1. This trademark is well-known on the Chinese market for adhesives and glue products for industrial purposes. Meichao Group filed a lawsuit against Beijing Xiujie with the Beijing IP Court on the grounds of trademark infringement and unfair competition.

The Beijing IP Court deemed that Beijing Xiujie's unauthorised and conspicuous use of the trademark “墙锢” (identical to the one of the plaintiff) on its products (which are concrete interface treating agent) had infringed the rights of Meichao Group. Beijing Xiujie was sentenced to immediately stop its illegal use of the trademark “墙锢” and was ordered to pay damage of RMB 10 million to Meichao Group for its economic loss and the reasonable expenses for safeguarding its right.

In this ruling, the high amount of the damages was substantially determined due to the fact that the infringer refused to provide the required evidence. This refusal was found unjustifiable by the Court given that the plaintiff had duly performed its burden of proof. In fact, according to the Article 63 of the revised China Trademark Law, if the trademark owner has made reasonable efforts to prove the amount of the actual damages, the burden of proof will be shifted to the infringer. Where the infringer fails to provide the relevant financial documents or provides false account books or financial materials, the Court may determine an amount of compensation on the damages claimed by the trademark owner and the evidence furnished thereby.

This ruling featured the application of rules of evidence and determination of damages by reference to the market value of the IP asset concerned, which reflected the Court's attempt to reinforce the protection of intellectual property rights under legal provisions and evidence-based framework. This decision follows the case law recently applied by the IP Courts. In the Moncler case, Beijing IP Court issued the final compensation for trademark infringement at RMB 3 million, which was the highest amount of legal compensation provided in the revised Trademark Law that came into force in May 2014.

In short, this decision reaffirms that the Beijing IP Court acts towards enabling trademark owners to obtain more compensation for the infringement of their trademark rights. In fact, statistics show that the average compensation granted by China IP Court before 2014 was around 80,000 RMB. According to insider sources from Beijing IP Court, the average of statutory damages granted by Beijing IP Court reached 450,000 RMB in 2015. This increase has greatly promoted judicial protection and recognition of IP values.