Xiaomi Technology, a consumer electronics and smart manufacturing company, was awarded RMB 30 million (approximately US $4.7 million). The Shenzhen Intermediate People’s Court awarded three times punitive damages, plus reasonable costs. The judgment was issued on December 31, 2021 and was reported on February 9, 2022. (2020) Yue 03 Min Chu No. 7080.

As one of China’s largest smart phone companies, Xiaomi Technology’s business spans 80 countries worldwide. Its trademarks, including XIAOMI in Chinese and the MI logo, , have been repeatedly recognized as well-known trademarks in China, with Xiaomi having entered the household electric appliances market years ago, where it established a loyal customer base.

The defendant is a Shenzhen-based company as registered under the name “Shenzhen Xiaomi Trading Co., Ltd.” on December 24, 2012, and since then operating under the Chinese trade name, Xiaomi (which is identical to plaintiff’s trademark). The defendant runs a store named “Xiaomi Digital Franchised Store” on Tmall, one of China’s most predominant e-commerce platforms, where the plaintiff’s Chinese mark/trade name 小米 is extensively used in the title of a line of branded products. The defendant used as its logo, which highly resembles the plaintiff’s logo, used on its online storefront.

In December 2020, the plaintiff initiated the lawsuit against the defendant under the Trademark Law and Anti-Unfair Competition Law. The court ordered the defendant to do the following:

1. Cease trademark infringement by removing Xiaomi in Chinese from its store names and product descriptions;
2. Cease using Xiaomi in Chinese in its business name; and
3. Pay CNY 30 million in compensation, including punitive damages.

Punitive damages were introduced into China’s Trademark Law as part of the 2013 Trademark Infringement Act, effective as of May 1, 2014, and the upper limit was increased from three times punitive damages to five times punitive damages in 2019. The Supreme People’s Court of China (SPC) released the Interpretation on Application of Punitive Damages in Trying Civil Cases on IP Infringement, expatiating the application conditions of punitive damages in 2021.

In Wyeth v. Guangzhou Wyeth, the Zhejiang High Court clarified that punitive damages shall be calculated based on basic compensation. The SPC’s interpretation and the above calculation is reflected in the Xiaomi case. The court upheld the plaintiff’s claim for punitive damages based on the following:

1. The defendant’s bad faith, including its awareness of the plaintiff’s well-known trademark as well as its combining of the Xiaomi trademark and trade name, similar to how the plaintiff used the mark; and
2. The serious circumstances, including the defendant’s significant profits from infringement and its past infringement record, once sued by Huawei for similar trademark infringement.

By: Cai Ye, first published by INTA