Shanghai High Court rules in favor of Fendi over TM infringement

Shanghai High Court rules in favor of Fendi over TM infringement

The Court held that the Capital helped Yilang advertise its products and referred to Yilang's store as "Fendi," making it culpable

The Shanghai High Court has given a decision in favor of Fendi, an Italian Luxury brand, ordering Capital Outlets Commercial Development and Shanghai Yilang International Trade must pay Fendi, ¥350,000 (US$54,100) as damages for trademark infringement and illicit competition.

The Capital outlets opened up in 2015 in Suzhou, Jiangsu Province rented nine stores to Yilang for selling products. The products sold were from different brands including Fendi. After a year, Fendi recognized that one of the shops has used its trademark without permission. The mark was used on their store signs, packages, and receipt including the trademark of Fendi on their brochure, signs, and packages. After finding it, the owner sued Capital for ¥1 million (US$154,000) in damages.

On the contrary, both Capital and Yilang claimed that their usage of the mark was not contrary to law. Yilang said that the products were not counterfeit so it was reasonable to use the trademark. Whereas, Capital claimed, that it had not broken the law because the mark was used to inform customers about the source of the products. Hearing both sides, the local District-level Court ruled in favor of Capital and Yang. Aggrieved by this, Fendi appealed to Higher Court. In 2017, the Shanghai Intellectual Property Court reversed the District Court judgment and ordered Yilang and Capital to pay ¥350,000 in penalties, to which Yilang request a retrial.

In a trademark infringement case, it is difficult to determine the exact loss that the company suffered. It might be determined by the profit gained by the infringer. In case when the amount of profit or loss is difficult to determine, the damages can be assumed in reference to multiples of trademark for royalties. As in this case, it was difficult to determine the loss or Fendi and the profit of the infringer, so the damages were calculated on the premise of nature, period and consequences of the infringement and Fendi's reasonable expenditure during the enforcement of its right, in this case, deciding to pay ¥350,000 to Fendi.

The High Court in its order touched upon the two models of luxury goods. First, selling products in brand-operated stores or exclusive shops, and second, selling products in integrated stores run by other companies. The Court held that the trademark should not be used on integrated stores selling multiple brands and added that the Capital helped Yilang advertise its products and referred to Yilang's store as "Fendi," making it culpable as well.