In September 2023, the Supreme People's Court delivered a final judgment in a landmark case concerning trademark infringement and unfair competition, GEN Law team represented PanPan Company against Sichuan Xin PanPan Company, Gu Yang Door Factory, and Mr. Zhou, awarding 100 million RMB in total as damages, including 4 times the illicit profits as punitive damages. Furthermore, it recognized the intellectual labor of the attorneys and granted ¥650,000 in reasonable expenses. Damages granted in this case is unprecedented and among the highest damages ever granted to foreign-owned brands.
GEN Law team is led by Steve Zhao, Pei Lyu, and Menghang Jiao. Their skilled litigation and persistence over 5 years led to this significant victory for PanPan's intellectual property rights. The case reiterates China's commitment to strongly protecting trademarks and sends a warning to potential infringers.
Case Background
PanPan, a renowned security door brand with over 30 years of history, has been recognized as a well-known trademark by the SAIC (State Administration for Industry and Commerce back then) in 1999, and has maintained this status ever since.
In 2016, Mr. Zhou purchased a registered trademark Xin PanPan (Xin shares the pronunciation as “new” in Chinese) and opened Xin PanPan company to manufacture security doors, locks, etc., claiming to be the “new” and “premium” PanPan.
In 2018, PanPan Company filed a lawsuit in Jiangsu High People's Court, seeking an order for the defendants to cease all infringements and unfair competition actions and to bear ¥95 million in damages for trademark infringement, ¥5 million for unfair competition, as well as reasonable expenses of 650,000 RMB.
Court Rulings
In first instance, Jiangsu High People's Court acknowledged the infringements and unfair competition and applied quadruple punitive damages, ordering the defendants to bear a total of ¥100 million in damages. Furthermore, the Jiangsu High People's Court acknowledged that Pan Pan had invested significant effort into investigating and collecting evidence for the litigation. The legal team also contributed a substantial amount of intellectual labor, providing valuable and professional support for the trial. As a result, the court determined that ¥650,000 was a fair and reasonable amount to cover expenses.
In second instance, the Supreme People's Court held that:
1. The “PanPan” series of trademarks had been registered and used in China for over 20 years, had a significant scale of operation and product coverage, and had obtained at least 157 awards and honors, attaining well-known status.
2. The Xin Panpan Company utilizes the "Xin Panpan" logo, and some of its products incorporate the "Xin" character in a modified or abbreviated form, emphasizing the use of the "Panpan" character or simply utilizing phrases like "PanPan Security Door" or "Panpan Phase Three." This indicates a clear intent to capitalize on the popularity of Panpan Company's trademark involved in the case, thereby infringing on Panpan Company's exclusive rights to the series of trademarks involved in the case, including well-known trademark rights.
3. Gu Yang Door Factory and the Xin Panpan Company, which operate within the same industry as Panpan Company, have been utilizing the "Xin Panpan" business name and its abbreviation, as well as a panda mascot image that bears a striking resemblance to PanPan. This appears to be a deliberate effort to capitalize on PanPan company's reputation and influence and has the potential to create confusion among customers. According to the Anti-Unfair Competition Law, these actions constitute unfair competition and may mislead consumers into believing that their products are associated with PanPan’s.
4. Xin Panpan Company and others participate in false advertising practices involving misleading commercials about the relationship between Panpan Company and Xin Panpan Company, the history of the Xin Panpan brand, and commercial defamation.
5. In terms of damage compensation calculation, Panpan Company has made diligent efforts to provide evidence for the calculation of damage compensation. Considering Xin Panpan Company and others clearly stated in the first instance that their financial management is chaotic and there are no standardized annual financial reports available, they failed to provide accurate information and bear the legal consequences of failing to provide evidence.
6. The Supreme Court ultimately determined the calculation basis for the trademark infringement compensation in this case to be 27.075 million yuan based on the evidence and claims of Panpan Company. The court considered multiple factors, including industry competition, malicious trademark acquisition, repeated infringement, intentional factors, broad scope of infringement, and high profits. As a result, the court confirmed the application of 4 times punitive damages and supported the request for 95 million yuan in trademark infringement damages and 5 million yuan in unfair competition damages. Additionally, the court ordered all parties to bear the reasonable expenses of 650,000 yuan incurred by Panpan Company.
Case Highlights
This case is intricate, involving multiple trademark infringements and unfair competition actions. Both trial courts conducted detailed analysis and determination of the relevant facts during the proceedings, serving as precious references for subsequent similar cases.
Regarding the application of punitive damages, the court made a detailed discussion on determining the multiple of compensation, considering the intentional infringement factors, such as: (1) Zhou had business dealings with Panpan Company as early as 2007, knowing well the fame and influence of the "Panpan" name and related trademarks, yet still established Xin Panpan Company in September 2016, actively sought to acquire the "Xin Panpan" trademark, and authorized its use to Xin Panpan Company, which then contracted Gu Yang Door Factory to produce security doors and other metal door and window products, engaging in business identical to Panpan Company's. (2) "Xin Panpan" phonetically resembles "New Panpan," showing intent to leverage the renown of Panpan Company and its related trademarks. (3) Zhou directed Xin Panpan Company to continue using the disputed infringement mark even after the “Xin Panpan” trademark was declared invalid. (4) After the temporary name change of the WeChat official account, it was changed back to “Sichuan Xin Panpan Company Limited,” clearly demonstrating intent to infringe on the series of trademarks involved by Panpan Company.
Additionally, the case has the following highlights, serving as references for similar cases:
1. Application of Proof of Obstructive: Given that Panpan Company had exercised due diligence to provide evidence, and Xin Panpan Company, due to mismanagement and neglect in providing evidence, the compensation basis was determined in accordance with the claims and evidence provided by Panpan Company.
2. Acknowledgment of well-known trademark of "Panpan" within civil judicial proceedings.
3. Explicit Recognition of the Value of the agent ad litem's work and support for a relatively higher amount of reasonable expenses.
4. The actual controllers of the company as well as the individual trademark owners, were made co-defendants and successfully pursued their liability for joint infringement.
Encouraged by the judgment of this case, GEN Law team deeply appreciates the level of the Chinese courts and judges in case handling and their resolution to protect intellectual property rights. We also hope this case can serve as a beneficial reference for rights holders encountering similar infringement activities when forming their rights protection strategies.
