Maco Group (Maco)is the owner of Chinese registered trademark“墻錮” (QIANGGU) in respect of “industrial adhesives and glues”, which enjoys a high market recognition among the relevant public after years of commercial advertisement and use by Maco. Beijing Xiujie Xinxing Building Materials Co., Ltd. (the Defendant) used the wordings of “秀潔墻錮”(XIUJIE QIANGGU)、“易康墻錮”(YIKANG QIANGGU)、“興潮墻錮” (XINGCHAO QIANGGU) on identical products. Maco filed a lawsuit at Beijing IP Court, requesting that the Defendant stop infringement activities, remove negative influences, and pay for the economic losses caused plus the reasonable costs for an amount of 10 million RMB yuan.

The Defendant tried to argue that QIANGGU had become a generic name and that the alleged infringement activity was fair use. However, the court held that the level of recognition of QIANGGU among the relevant public cannot prove it has become a generic name for concrete interface treatment agent products. Moreover, the Court noticed that the Defendant used QIANGGU in bigger size and placed it in a prominent position of the pacakging bucket, which obviously constituted trademark use. Therefore, the Defendant is found infringing on Maco’s trademark right.

With regard to the amount of indemnity, Maco claimed to determine the figure based on the profit acquired by the Defendant through infringement activities, and provided evidence collected through public information channels at their best, which includes the Defendant’s scale of operations, unit sales profit of infringing goods, production volume, sales period, number and geographical coverage of Defendant’s retail stores. With regards to sales profit, Maco requested to take account of the unit price difference and the gross margin of the infrining products. As for the sales volume, although there is no exact number, Maco claimed the monthly production of the Defendant’s “XIUJIE QIANGGU” products alone were at 10,000 tons, and the Defendant had separate sales departments for “XIUJIE” and “YIKANG” series, based on which, in combination with other factors such as Denfendant’s scale of operation, the number of retail stores and geographical coverage, it is reasonable to deduce that the three infringing products should have a total of monthly sales volume over 10,000 tons. The Defendant challenged the objectivity of the above evidence, but refused to provide the bookkeeping records and information of the relevant business activities even after the court explained to them the corresponding legal consequences and ordered them to submit relevant evidence showing the actual operation situation. In the end, Beijing IP Court granted full support to Maco company’s petition and ordered the Defendant to compensate Maco for 10 million RMB yuan.

With use of the rules of evidence in civil proceedings, the collegiate panel has made a reasonable allocation of the burden of proof between the parties, which provides reference to similar cases for trial. In addition, the full support rendered by Beijing IP Court to the indemnity amount requested by the plaintiff, has made it the trademark infringement case with the highest indemnity amount since the establishment of the court.

Update of the second instance ruling issued on October 31, 2017

Beijing Higher People’s Court made the 2nd instance judgement, affirming Beijing Xiujie’s acts of using “墻錮” (QIANGGU) trademark on “concrete interface treatment agent” products had infringed on Maco’s trademark right. Adopting the approach of determining the indemnity based on infringer’s illegal profit as requested by Unitalen, and taking into consideration of the situation of the alleged infringement activities, the malicious intent of the infringer and other factors, the second instance judgment ordered Beijing Xiuyue pay MACO 6 million yuan for economic loss and reasonable costs.