Lego on left, Lepin on right
On April 1, 2021, the Guangdong Higher People’s Court issued its final decision in a case opposing Lego against three entities, namely Guangdong Meizhi Zhijiao Technology Co., Ltd. (Meizhi Company), The Second Branch of Guangdong Meizhi Zhijiao Technology Co., Ltd., and Shantou Zhilepin Toys Co., Ltd., manufacturing infringing toys promoted and sold under the “Lepin” brand. The court awarded damages in the amount of 30 million RMB (approximately 3, 8 million Euros), a tenfold increase comparing to the first instance judgment holding that the defendants had engaged in infringement of 8 registered trademarks and unfair competition during a period of 4 years generating revenues of at least 330 million RMB.
Meizhi Company engaged in blatant copying of Lego bricks since as early as of 2015. Instead of bringing civil action, Lego first opted for criminal proceedings against the executives of the company. In 2019 following a raid on the infringing entity’s premises, 9 individuals from the management of the company were arrested. One year later, the legal representative, Mr. Li , who among other things instructed others to register the Lepi trademarks, was then sentenced to 6 years imprisonment and a fine worth RMB 90 million was imposed upon him.
Seeking remedies in civil court, Lego then seized the Guangdong Intellectual Property Court, which compensated the latter for economic losses and reasonable expenses RMB 3 Million. On appeal, Guangdong Higher Court held, inter alia, that “Lego” trademarks have become very well-known in the relevant market. Meizhi, on the other hand, registered a series of “Lepin” trademarks, which were extremely similar to “Lego” logos, so as to color combination and overall impression, and could thus easily confuse relevant public as to the origin of the goods and weaken the distinctiveness of Lego trademarks. Use of “Leipin” trademarks, according to the court, damaged Lego’s market reputation.
When assessing the amount of monetary compensation, the court took into account the massive scale of sales of the infringing products, that were marketed both online and offline (on business premises of Meizi, major toys exhibition, through email, company’s website, WeChat public account, etc.). In concrete terms, based on the evidence introduced in criminal proceedings, which included the "Lepin" sales record on Taobao, the revenue of the infringing products could exceed RMB 500 million, leading to overall profits likely worth more than 160 million RMB.
Based on the above, the Guangdong Higher People’s Court held that Meizhi infringed Lego’s IP rights on large scale during long span of time generating considerable profits. The infringement was well thought out and organized. The malicious infringement and imitation of Lego are obvious. As such, the infringement was serious and should be severely sentenced. The Court hence agreed with Lego’s claim for compensation, and increased the original judgment by ten times to 30 million RMB compensation for Lego’s related economic losses.
Source:
https://www.natlawreview.com/article/guangdong-higher-people-s-court-ups-
damages-10x-appeal-trademark-infringement-case (English)