On 1 April 2021, the Guangdong Higher People’s Court announced that LEGO was awarded RMB 30 million in damages for trade mark infringement and unfair competition against Guangdong Meizhi Zhijiao Technology Co., Ltd. and a related entity, Shantou Zhilepin Toys Co., Ltd. and Guangzhou Zhiwan Trading Co., Ltd. (“Zhiwan Trading”) (collectively, the “Defendants”) at second instance.
LEGO brought an action to the Guangdong Higher People’s Court for trade mark infringement and unfair competition agains the Defendants, who were involved in the manufacture and sale of “Lepin” or “乐拼”-branded toy products. LEGO claimed that the “Lepin” and “乐拼” marks were similar to its “LEGO”, “乐高” and “CHIMA” registered trade marks. It was also found that the Defendants’ products were similar to its own products in terms of overall design and assembly, which can easily lead to confusion by the relevant public that the Defendants’ products were related to LEGO’s products. A total of RMB 30 million was claimed for economic losses and reasonable expenses.
The first instance court held that the Defendants’ use of the infringing marks were sufficient to cause confusion and misunderstanding among the relevant public and infringes upon LEGO's exclusive right to use its registered trade marks, constituting as unfair competition. Regarding the determination of the amount of compensation, the court of first instance held that the evidence provided by LEGO could not prove that the Defendants’ profits from the infringement reached RMB 30 million or that their profits from the infringement clearly exceeded RMB 3 million. Finally, the court considered the reputation of LEGO’s trade marks and the Defendants’ subjective fault in the infringement, and held that the Defendants are jointly and severally liable to compensate LEGO for the economic loss of RMB 3 million, of which Zhiwan Trading was jointly liable for RMB 300,000.
After the first instance judgement, both sides filed an appeal to the Guangdong Higher People’s Court. In the second instance, the Guangdong Higher People’s Court established the Defendants’ infringements. In terms of determing the amount of damages awarded, according to the relevant ruling, the revenue made from the manufacture and sale of the infringing products by the Defendants was RMB 330 million from 11 September 2017 to 23 April 2019. In addition, based on the sales data of “Lepin” products provided by Zhejiang Taobao Network Co., Ltd., it can be reasonably presumed that the amount of sales of infringing products has exceeded RMB 500 million. Based on reasonable estimates with reference to the profit margin of related industries, the overall profit of the infringing products involved should exceed beyond RMB 160 million.
In the end, the court held that there was malicious infringement on part of the Defendants. The Guangdong Higher People’s Court supported LEGO's claim for damages and compensated LEGO RMB 30 million for economic loss.