The PANPAN trademark was recognised as a well-known trademark for security doors as early as 1999, and has maintained its well-known status ever since. In 2016 Mr Zhou purchased the registered trademark XIN PANPAN ('xin' shares the same pronunciation as 'new; in Chinese) and opened Xin PanPan company to manufacture security doors and locks, among other goods, claiming to be the "new" and "premium" PanPan.

In 2018 PanPan Company filed a lawsuit before the Jiangsu High People's Court, seeking an order against Xin PanPan, Zhou and two other co-defendants to cease all infringements and unfair competition actions, and to bear ¥95 million in damages for trademark infringement and ¥5 million for unfair competition, as well as reasonable expenses.

Both the Jiangsu High People's Court and the SPC fully supported PanPan Company's claims, including the damages claims totalling Rmb100 million and the legal expenses of Rmb650, 000. At the second instance, the SPC ascertained that Xin PanPan had generated Rmb27 million in illicit profits and granted four times the amount of illicit profits in punitive damages.

As Xin PanPan and others had clearly stated at the first instance that their financial management was chaotic and there were no standardised annual financial reports available, they failed to provide accurate information and bore the legal consequences of failing to provide evidence. The SPC ultimately determined the calculation basis for the trademark infringement compensation to be Rmb27.07million based on PanPan Company's evidence and claims.

This case demonstrates exemplary work on collecting corroborative supporting data, making the calculation and relevant numbers provided by PanPan Company very convincing. The annual revenues and growth rates all came from statements by Xin PanPan's management personnel and distribution contracts. The profit ratio was based on the average industrial profit ratio disclosed by the National Statistics Bureau.

In terms of punitive damages, the SPC considered multiple factors, including:

• industry competition;

• the malicious trademark acquisition;

• the repeated infringements;

• intentional factors;

• the broad scope of the infringement; and

• Xin PanPan's high profits.

In particular, the SPC noted as follows:

1. Zhou had had business dealings with PanPan Company as early as 2007, and thus was well aware of the fame and influence of the PANPAN trademarks. Nevertheless, it still established Xin PanPan in September 2016 and actively sought to acquire the XIN PANPAN trademark for infringing activities.

2. Phonetically, 'Xin PanPan' resembles 'New PanPan', thus showing an intent to leverage the renown of PanPan Company and its related trademarks.

3. Zhou directed Xin PanPan to continue using the XIN PANPAN trademark even after it was declared invalid.

4. After a temporary name change, Xin PanPan's official WeChat account was changed back to 'Sichuan Xin PanPan Company Limited', clearly demonstrating an intent to infringe on the series of trademarks of PanPan Company.

In addition to the amount of damages, other highlights can serve as a reference in similar cases:

1. Evidence obstruction - given that PanPan Company had exercised due diligence to provide evidence, and Xin PanPan Company, due to mismanagement and neglect, had failed to provide evidence, the compensation basis was determined in accordance with the claims and evidence provided by PanPan Company.

2. The actual controllers of the company, as well as the individual trademark owners, were made co-defendants and successfully pursued for joint infringement.

3. The Jiangsu High People's Court explicitly acknowledged that PanPan Company had invested significant efforts into investigating and collecting evidence for the litigation. As a result, the court determined that ¥650,000 was a fair and reasonable amount to cover expenses.

This case serves as a good example for rights owners facing malicious infringement, demonstrating the real possibility of hurting infringers - as well as the Chinese courts' resolve to protect IP rights vigorously.