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The Supreme Court of China has issued a landmark second instance judgment on trademark infringement and unfair competition disputes.

In a decision on July 27, 2023, the Court upheld the first instance court judgment, (2022) Zui Gao Fa Min Zhong, No. 312, which ordered five defendants to jointly compensate Siemens RMB 100 million (approximately US $14 million) as damages and an additional RMB 163,000 (approximately US $23,285) as reasonable expenses.

In addition to finding that the mark SIMBMC, used by the defendants, was similar to Siemens’s house mark and its use in the case constituted trademark infringement, the Supreme Court’s judgment addressed these six key points:

Siemens initially filed the lawsuit in August 2017, before the revised Anti-Unfair Competition Law came into effect on January 1, 2018. However, evidence from the company indicated that the alleged infringement continued after January 2018, justifying the application of the revised law in this case.

The Court determined that the use by the principal defendant, Ningbo Qishuai Electric Appliance Co., Ltd. (Qishuai), of the SHANGHAI SIEMENS ELECTRIC APPLIANCE CO., LTD. mark, along with the registered trademark SIMBMC owned by its associated company, on the bodies of its washing machines, infringed upon Siemens’s exclusive trademark rights.

The Court found that Qishuai’s use of the corporate name, Shanghai Siemens Electric Appliance Co., Ltd., on the accused products’ packaging and promotional materials misled the public into believing an affiliation with or endorsement by Siemens, which constituted the unauthorized use of influential corporate names and the incorporation of registered trademarks as part of a corporate name under the provisions of Article 6(2) and (4) of the revised Anti-Unfair Competition Law of 2017.

In assessing damages, the Court considered factors such as Siemens’s corporate reputation, the defendants’ evident malicious intent, the substantial scale and prolonged duration of the infringement, as well as the profit margin of the washing machine products and the reasonable expenses Siemens incurred.

Two of the defendants, Mr. Gong and Ms. Wang, were Qishuai’s only shareholders and its actual controllers. The Court found that they played a significant role in the deliberate infringing acts, being the perpetrators of the infringing mark, SIMBMC, among other things, and held them jointly liable with Qishuai for the compensation of RMB 100 million.

The other two defendants, a seller of the infringing products and its shareholder, Mr. Wu, were held jointly liable for compensation of up to RMB 500,000 (approximately US $71,428), because as specialized washing machine sellers, they must have known the SIEMENS brand but still knowingly sold Qishuai’s infringing products.

The Supreme Court’s judgment serves as a precedent for trademark infringement cases, highlighting the consequences for intentionally infringing upon established brands.