Represented by Beijing Wan Hui Da (Shanghai) Law Firm, Wyeth LLC (“Wyeth”) and Wyeth Shanghai Trading Co. Ltd. (“Wyeth Shanghai”) won the first instance on December 25, 2020 in a litigation against a long-term infringer, Guangzhou Wyeth Baby Products Co., Ltd. (“Guangzhou Wyeth”) and other 5 defendants (three companies and two individuals) for joint trademark infringement and unfair competition.

It is worth noting that plaintiffs clearly advocated the application of punitive damages of RMB 30 million (~$4.6m), and RMB 550k (~$85k) reasonable expenditure, were fully supported by the Hangzhou Intermediate People’s Court (the “Court”). It is the first case in Zhejiang Province where the highest award of punitive damages was applied.

Since the provision of punitive damages was incorporated into Trademark Law (effective since May 1, 2014), cases in which Chinese courts clearly applied punitive damages to punish malicious and serious infringement are very rare.  The case is very encouraging to IP right holders. The case sends a strong signal that courts in China are growing more confident in the application of punitive damages against bad faith infringements and are increasingly aggressive in handing out high damages to brand owners, as long as they are merited by preponderant evidence.

In the lawsuit, plaintiffs accused 6 defendants of using the trademarks “Wyeth” and “hui shi in Chinese characters” in production and sales of infant bathing, feeding, laundry, diapers, adult care and pregnant products. The Court believe that these goods shall be considered similar to baby formulas and baby food for which Wyeth trademarks are registered, considering Wyeth trademarks have been known to the relevant public and have high reputation.

The high reputation of Wyeth's trademarks were again affirmed by the Court in unfair competition claim, and one defendant, Qingdao Wyeth was order to cease immediately the use of “Wyeth” in business name.  

The application of punitive damages of RMB30 million (~$4.6m) was admitted, for all defendants (1) have conducted obviously bad faith infringement, based on mutually corroborating evidence and past administrative and judicial enforcement records; and (2) have conducted serious infringement.

The Court applied Article 63 of the Trademark Law and Article 17 of the Anti-Unfair Competition Law, that is, the basic amount of the damage suffered by plaintiffs was determined according to the benefit stemming from the infringement, which is conservatively not less than RMB 10 million (~$1.54m), and considering the factors of malice, scale and length, the distinctiveness and popularity of Wyeth trademarks, etc., the Court determined to apply punitive damages by tripling the basic amount.

Cindy ZHEN, Partner of Wan Hui Da Intellectual Property