High damages awarded against well-known HK mark owner

The Hangzhou Intermediate People’s Court has ordered Generation 2000, a well-known Hong Kong-based fashion chain with over 400 franchised outlets in China, to pay Rmb20 million (around US$2.8 million) to Zhao Hua for infringing his 2000 trademark.

Generation 2000 owns the G2000 trademark, which was registered in December 1992 for “clothing, footwear and headwear” (ie, the specific goods mentioned in the Class 25 heading). Zhao owns the 2000 trademark, registered in 1997 for “socks, gloves, scarves, veils, mantillas, ties, belts, and waistbands”. Under the Chinese classification system, the goods of the respective parties are dissimilar because they are in different sub-groups within Class 25. Generally goods in different sub-groups in the same class are considered dissimilar.

Generation 2000 had tried to invalidate the 2000 trademark before the Trademark Review and Adjudication Board, but was unsuccessful. This decision was upheld in appeals to the lower and upper courts in Beijing respectively. The grounds or arguments are unknown. Between 2000 and 2006, upon a petition from Zhao, administrative authorities in Guangzhou and Beijing conducted several raids and seized a large amount of G2000 goods, on the grounds that they were infringing the 2000 trademark.

The Hangzhou Intermediate Court held that sale of goods such as socks, gloves and ties bearing the trademark G2000 infringed the 2000 trademark because G2000 was similar to 2000. Having regard to the duration, geographical scope and nature of the infringement, as well as the price of the infringing goods, the court held that the defendants’ profit far exceeded the claimed amount of Rmb20 million and thus it awarded Rmb20 million as damages.

According to the law, damages are assessed by reference to either the plaintiff’s actual loss or the defendant’s actual profit. Should this be difficult to calculate, the court has the discretion to award statutory damages of up to Rmb500,000 (around US$70,000). It is not known what evidence was made available to the court in order to convince it that Generation 2000’s profit was so substantial, in particular considering that its primary sales are in clothing.

Generation 2000 has indicated that it will appeal.

This case demonstrates the importance for trademark owners of ensuring that their trademarks are registered and well covered in China.