Maximum statutory damages awarded against persistent infringer

The Beijing First Intermediate People's Court has awarded Levi Strauss & Co (Levi) damages in the sum of Rmb500,000 ($64,000) in Levi's claim against a Beijing company for infringement of the trademark LEVI'S. Although only around 100 counterfeit jeans and jackets bearing the mark LEVI'S were in evidence, the court took into consideration the circumstances of the case and awarded the maximum amount of statutory damages under the Trademark Law of China.

Levi is the owner of the mark LEVI'S registered in China in Class 25 of the Nice Classification in respect of jeans and various other items of clothing. In 2005 Levi purchased counterfeit LEVI'S-marked products from two shops run by a company called Jingaobi and filed complaints with two district offices of the Administration for Industry and Commerce (AIC). The two AIC offices subsequently raided the Jingaobi shops and a total of around 100 counterfeit LEVI'S products were seized in the operations. After ascertaining that the goods infringed Levi's rights in the LEVI'S trademark, each of the district AIC office issued a penalty order against Jingaobi for its infringing activities.

In March 2006 Levi revisited Jingaobi's shops and found that they were continuing to sell counterfeit LEVI'S products. After purchasing samples of the counterfeit goods as evidence, Levi filed suit before the Beijing First Intermediate People's Court seeking an injunction order against Jingaobi and an order that it pay damages in the amount of Rmb500,000.

Jingaobi denied infringement, claiming that its goods were authorized products imported from the United States. In support of its claim, Jingaobi produced copies of a letter from a shipping company called Genco and a licence issued by a company called Gimco, which said that Jingaobi was authorized to distribute and sell certain goods including some LEVI'S goods. Also produced were some import documents and receipts of payment of import duties.

Article 56 of the Trademark law of China provides that where a party unknowingly offers for sale goods that infringe the exclusive right of another person to use a registered trademark, but is able (i) to prove that it obtained the relevant goods by lawful means, and (ii) to identify the supplier, it shall not be liable for damages for the infringement.

The court held that as Levi denied that it ever authorized Genco or Gimco to distribute or sell LEVI'S products and verified that the goods sold by Jingaobi under the LEVI'S label were counterfeits, the mere production by Jingaobi of a letter from a shipping company and a copy of a licence was not sufficient to show that Jingaobi obtained the relevant goods by lawful means. Further, as Jingaobi continued to sell the counterfeit goods at the same points of sale after having been penalized twice by the AIC, the infringement was wilful.

With regard to the quantum of damages, Article 56 provides that where the profit earned by the infringer or loss suffered by the trademark owner cannot be determined, the people's court may award a compensation not exceeding Rmb500,000 according to the circumstances of the case.

In the present case, as the illegal profit made by Jingaobi or the loss suffered by Levi was difficult to ascertain and as Jingaobi's infringement was wilful, the court:

• awarded Levi the maximum statutory compensation of Rmb500,000 under Article 56;
  
  
• ordered Jingaobi to bear the court fee of Rmb10,010; and
  
  
• ordered Jingaobi to cease infringing the rights of Levi in the LEVI'S mark.

Rebecca Lo, Rebecca Lo & Co, Hong Kong