Moncler S.p.A. v. Beijing Nuoyakate Garment Co., Ltd. (Beijing Intellectual Property Court 2015)
In a decision rendered late last year, the Beijing Intellectual Property Court (“Beijing IP Court”) granted Moncler S.p.A. (“Moncler”) the maximum statutory damages allowed under China’s new trademark law in an action for trademark infringement and unfair competition.
Moncler reports that in 2013, it discovered the manufacture and sale of down jackets with counterfeit Moncler logos by Beijing Nuoyakate Garment Co., Ltd. (“Nuoyakate”), a Chinese company that had sought to register several confusingly-similar trademarks and domain names in China and in other key markets. Moncler successfully sued Nuoyakate in the Beijing IP Court in December 2014.
In China, plaintiffs in infringement actions have the burden of proving actual damages and, absent such proof, can be awarded statutory damages. Under the new Chinese Trademark Law that went into effect in May 2014, if the brand owner makes reasonable efforts to furnish proof of actual damages, the burden of proof shifts to the infringer, who the Court can order to submit accounting books or other financial statements showing the profits earned due to their infringement.
In this case, Nuoyakate failed to disclose such information to the Beijing IP Court. Accordingly, the Beijing IP Court awarded Moncler the maximum statutory damages of RMB 3 million (almost US $450,000 at today’s exchange rate), which is believed to be the first judgment under China’s new Trademark Law granting the maximum penalty. Additionally, the Court ordered that Nuoyakate shut down its website and cease selling clothing that infringed Moncler’s trademarks.
In reaching its decision, the Beijing IP Court considered, inter alia, that:
- Moncler had established a good reputation in its trademarks in China since at least 2008 when it entered the market.
- Nuoyakate’s website displayed goods bearing Moncler’s trademarks that did not originate from Moncler and sold such goods at high prices.
- Nuoyakate intentionally omitted its own company name on the label of down jackets, which was deemed to be evidence of its bad faith.
- Nuoyakate committed such infringing activities on a substantial scale and was in the process of establishing a commercial network including distributors and franchisees.
This decision is significant as it is the first reported instance of the maximum statutory damage being awarded in a trademark infringement action. While it may signal a commitment to taking a robust stance against trademark infringers, since Chinese courts are not governed by past precedent, it remains to be seen whether the maximum penalty will be bestowed in future damage awards.