LEGO vs. LEPIN: How Punitive Damages work in a Trademark Infringement Case

Author: Yingying Zhu, Partner at Beijing MINGDUN Law Firm


Date: May 5, 2021




In China, compensatory damages are also called “actual damages”, which compensate a plaintiff for the losses suffered due to the harm caused by the defendant. In addition to compensatory damages, punitive damages may be awarded by judges in some exceptional cases. Punitive damages are known as having a 'quasi-criminal' nature and serving the function of punishing the defendant in a civil lawsuit. In fact, the purposes of punitive damages are two-fold: to punish the defendant for outrageous misconduct and to deter the society from committing similar misbehavior in the future.


In a trademark infringement civil lawsuit, the basic principle is to monetarily compensate the plaintiff’s losses due to the defendant’s trademark infringement activities. Damages awarded in a typical trademark infringement lawsuit are meant to make the plaintiff “whole” again from a financial standpoint. That being said, punitive damages are possible in cases where the defendants are found to be willful, malicious and highly reprehensible and the circumstances of the case are severe.


The Guangdong High Court struck a heavy blow to a copycat of LEGO in the LEGO vs. LEPIN judgement[1] with an award of CNY30 million (USD4.56 million) as punitive damages to compensate the aggrieved plaintiff and to punish the defendants whose infringement acts were considered willful, malicious and especially reprehensible with severe circumstances.


As one of the landmark rulings in the landscape of awarding punitive damages under the trademark law regime, the LEGO vs. LEPIN judgement is sending a strong and positive message to brand owners who have been bitterly battling with copycats — “We've Got Your Back”.


Basic Facts


Since 2015, under the brand name “LEPIN”, Guangdong Meizhi and three affiliates had been actively engaged in copying LEGO building sets and multiple LEGO minifigures, passing off the LEGO brand, and carrying out unfair competition practices by imitating, manufacturing and selling building brick toys nearly identical with those of LEGO. In addition, the external design, packaging and manuals of LEPIN’s products were also direct imitations of those designed and used by LEGO. Furthermore, the defendants rushed to file a series of trademarks for LEPIN in relation to toys in China.

According to the figures released by a Shanghai court in a related criminal judgement,[2] during the period from September 2017 to April 2019, through the channels of online and brick-and-mortar stores selling, the defendants sold out nearly 4.25 million boxes of LEGO counterfeit toys involving 634 different LEGO models, generating a revenue of more than CNY330 million.

LEGO filed a series of civil and criminal lawsuits against Guangdong Meizhi and its affiliates in different Chinese cities to seek injunction against the defendants’ use of LEGO’s intellectual property as well as their activities of unfair competition, and to claim damages and legal expenses.

In the trademark infringement and unfair competition lawsuit filed in Guangdong Province, the court of the first instance, the Guangzhou Intellectual Property Court, found that Guangdong Meizhi and its affiliates had cloned LEGO toys since 2015 and produced numerous copycat versions under the LEPIN trademark and some other fraudulent trademarks, which are confusingly similar with those of LEGO’s. Their acts constituted trademark infringement and unfair competition. The Guangzhou Intellectual Property Court ruled that Guangdong Meizhi and the other three defendants should pay the maximum amount of statutory damages, i.e., CNY3 million (USD456,000).[3] Dissatisfied with the amount of damages awarded by the first instance court, both parties — the plaintiff and the defendants — appealed to the court of the second instance, the Guangdong High Court.

On February 26, 2021, the Guangdong High Court handed down the final judgment in this case. The Guangdong High Court multiplied by 10 times the initial damages awarded to LEGO. Guangdong Meizhi and three other defendants who are behind the clone brand LEPIN infringing upon trademark rights held by LEGO must now pay CNY30 million (USD4.56 million) as punitive damages, a large sum of damages award rarely rendered in previous trademark infringement cases.

Why Punitive Damages work in LEGO vs. LEPIN


To explain the awarding of the aforesaid punitive damages, the Guangdong High Court highlights the following elements of “culpability” on the part of the defendants:

1.    'LEPIN' infringement lasted for a long time, in large scale, and with high profitability.

2.    'LEPIN' infringed upon a series of the plaintiff’s commercial designations and logos. With an infringing network rich in design and organization, the defendants’ acts demonstrated an obvious malice of imitating and free riding 'LEGO', which should be categorized as a serious infringement, and should be given a heavy punishment.

3.    According to the sales data of 'LEPIN' provided by Zhejiang Taobao Network Company, it can be reasonably presumed that the sales amount of the infringing products exceeds CNY500 million. Based on the reasonable estimation of the profit rate of related industries, the overall profit of the infringing products involved should be far more than CNY160 million.

4.    The strength of judicial relief should match the reputation of the plaintiff’s involved intellectual property. After long-term use and publicity, the 'LEGO' trademark has a high popularity in the toy market and has already become the main logo used by the relevant public to identify LEGO products. Guangdong Meizhi and its affiliates had used 'LEPIN' logo for multiple times, which is very similar to 'LEGO' in terms of color combination, form of expression, overall visual effect, etc., and can easily lead to confusion among the public, thus weakening the distinctness of 'LEGO' trademark and damaging its market reputation.

5.    During the process of litigating the case before the courts, the evidence production of the two parties showed that the plaintiff was trying their best to prove the sales records of the defendants and the profits gained by them while the defendants were attempting to evade liabilities who shall then bear the unfavorable consequences of their dishonest acts during the litigation.

Therefore, LEGO's claim for compensation in the amount of CNY30 million (USD4.56 million) has been fully upheld the Guangdong High Court as the Court finds that the defendants are willful, malicious and highly reprehensible and the circumstances of the case at bar are severe.

How Punitive Damages Came into Play under the Chinese IP Laws


In China, intellectual property litigations especially trademark infringement litigations almost always end up with low damages awards which have long been a shared concern for intellectual property right holders. Therefore, to establish a system where awarding punitive damages would become possible has been one of the central themes of China's major intellectual property law reforms over the past decade.


In 2013, the China Trademark Law was amended and made the first attempt to establish a system of punitive damages for malicious infringement by providing under Article 63: “[I]f the infringement is committed in bad faith with serious circumstances, the damages shall be determined in accordance with the aforesaid method[4] based on one to three times of the determined amount.”


In 2019, Article 63 of China Trademark Law was amended for the damages to be ranged from “one to three times” to “one to five times”. In addition, the punitive damages system was added to the Anti-Unfair Competition Law which was amended in the same year. Furthermore, a policy-type Regulations on Improving the Operation of Business promulgated and implemented in 2019 established a punitive compensation system for infringement upon intellectual property rights.


In 2020, the China Patent Law and the China Copyright Law, which were amended in the same year also explicitly formulated a system of punitive damages.


In January 2021, the Civil Code of China, which came into effect on the very first day of 2021, provides that “[I]n case of intentional infringement of another party's intellectual property rights and under serious circumstances, the infringed party shall have the right to request the corresponding punitive damages.”


In March 2021, the Supreme Court of China issued the Interpretation on the Application of Punitive Damages in the Trial of Civil Cases involving Infringement of Intellectual Property Rights and timely published six typical cases of punitive damages applied in civil cases involving infringement of intellectual property rights.


Practical Tips on Presenting Punitive Damages Cases at Trial


As demonstrated in the above, with respect to trademark infringement litigation, punitive damages are only possible in exceptional cases, where the “malicious intention” of the infringer and the “serious circumstances” of the infringement could be well established. Here are some practical tips on presenting punitive damages cases at trials concerning trademark infringement:


·         Gather information from websites, social media and online or offline sales platforms to show method and frequency of the infringement, the duration of the infringement, the geographical scope, scale and consequences of the infringement, the unit price of the infringing products, the annual sales records of the infringer, and the average profit rates in the same or related industries.  

·         Raise evidence to show the reputation of the plaintiff’s involved trademarks or products, the duration of the use, the geographical scope, scale and popularity of any advertising activities, records of being protected by any previous administrative or judicial actions and comparable licensing fees of the involved trademarks.

·         Show to the judge that the defendant still commits infringement upon intellectual property rights after being notified or warned by the plaintiff or party of interest. 

·         Consider having communications with the defendant notarized and bringing notaries to meetings with the defendant.  

·         Review the defendant’s trademark filings for evidence that it has applied for illegitimate trademarks, a fact that increases the possibility that a court will find bad faith.  

·         Check the defendant’s litigation history to see if it has a prior record of being sued by other legitimate brand owners.  

·         Review corporate records to see if the defendant was a previous trading partner of the plaintiff’s business.  

·         Consider bringing the following facts to the judge: the defendant forges, destroys or conceals any evidence of infringement; the defendant obtains huge benefits from the infringement or causes huge loss to the plaintiff’s business due to the infringement.

·         Seek a court order asking the defendant to provide its sales records, account books and original receipts relating to the infringement, and if the defendant refuses to provide them without any justified reason or provides any false account book or other documents, the court may determine the base number for calculating the amount of punitive damages by referring to the plaintiff’s claim and evidence.  

·         Notarized evidence of bad faith has a unique and important probative value before the court.

·         With preliminary evidence of infringement, a preservation action seeking to preserve evidence of infringement including sales records, account books and original receipts can be an effective weapon. 




In China, the call for awarding punitive damages has been intensified due to the increase in malicious infringement, the importance for adequately compensating the plaintiff and the need for deterrence.


The LEGO vs. LEPIN judgement of the Guangdong High Court is a crucial milestone in the long struggle by brand owners and advocates to remedy the bitter fact of “high enforcement costs of the IPR owners and low infringement costs of the infringers”. This decision and the continued amendments to the China Trademark Law and other major IP laws strengthen the position of legitimate IPR owners against malicious copycats and counterfeiters. 


[1] Lego Group vs Guangdong Meizhi, etc., Guangdong High Court: (2020) Yue Min Zhong No. 1642.

[2] The Third Branch of Shanghai Municipal People's Procuratorate of the People's Republic of China vs Li Haipeng, etc., Shanghai High Court: (2020) Hu Ling Zhong No. 105. Under this criminal judgment, nine principals of LEPIN were heavily fined and sentenced to jail due to their criminal acts of copyright violation upon various LEGO toys.

[3] Lego Group vs Guangdong Meizhi, etc., Guangzhou IP Court: (2016) Yue 73 Min Chu No. 1692.

[4] “The aforesaid method” means: “[T]he amount of damages for infringement upon the right to exclusively use a registered trademark shall be determined according to the actual losses suffered by the right holder from the infringement; where it is difficult to determine the amount of actual losses, the amount of damages may be determined according to the benefits acquired by the infringer from the infringement; where it is difficult to determine the right holder's losses or the benefits acquired by the infringer, the amount of damages may be a reasonable multiple of the royalties”, as provided under Article 63 of the China Trademark Law.

  • 相关资讯 More
  • 点击次数: 13
    2023 - 03 - 24
    作者:金涟伊信息时代的来临带来了更多机会与市场,其中意见领袖、平台主播等自媒体是这一浪潮中最突出的弄潮儿。但不论是在什么领域,对其品牌的培养都是自媒体运营的重点。运营自媒体账户培育品牌有以下注意事项。 一、 品牌名称选取 对于自媒体相关主体,不论在哪个平台建立账号,一个好的昵称是成功的一半。该昵称也会在未来成为意见领袖、up主或主播的重要品牌,成为吸引用户的最突出的标志之一。因此对昵称的选择是非常重要的。昵称的风格可以千变万化,可以简约,可以标识重点,可以抽象或单纯富有趣味,但不论是何风格都需遵守当地法律法规以及平台规定。 以某平台为例,在平台用户服务协议明确约定,用户所设置的账号不得违反国家法律法规及平台的相关规则,用户账号名称、头像和简介等注册信息及其他个人信息中不得出现违法和不良信息,未经他人许可不得用他人名义(包括但不限于冒用他人姓名、名称、字号、头像等或采取其他足以让人引起混淆的方式)开设账号,不得恶意注册平台账号(包括但不限于频繁注册、批量注册账号等行为)。同时,用户在账号注册及使用过程中需遵守相关法律法规,不得实施任何侵害国家利益、损害其他公民合法权益,有害社会道德风尚的行为。平台有权对用户提交的注册信息进行审核,这也是平台的义务。 概括而言,注册账户名称应关注: 1、 符合法律法规及平台的规定以及公序良俗2、具有可识别性——昵称及特色3、不侵犯他人在先权利 二、 重视品牌维护 自媒体运营的领域除了其频道主要内容涉及的方向外,也应当注意广告、娱乐教育服务方面的品牌维护。自媒体账户通常盈利方式包括:1、平台分成或签约;2、广告;3、衍生产品。对以上不同盈利方式应当各有注意要点。 对于通过平台分成或签约形式盈利的自媒体,应当注意签约合同中对知识产权的约定,...
  • 点击次数: 11
    2023 - 03 - 10
    作者:刘艳玲当专利申请人向多个国家/地区提交专利申请时,如果希望专利申请加快审查进程,我们知道专利审查高速路(PPH)是一个可以利用的方式。PPH是专利审查机构直接开展的审查结果共享的业务合作,旨在帮助申请人的他国同族专利申请早日获得授权。当申请人在一国审查局提交的专利申请中有一项或多项权利要求被确定为可授权时,可以以此为基础向他国审查局就同族专利申请提出加快审查请求。除了可以加快审查以外,答复审查意见通知书的次数也可能会减少,并且申请被授予专利权的可能性也能增加。同族专利申请的审查结果除了上述应用以外,还有其他的利用方式。在此根据实践经验进行相应介绍。 美国根据美国专利相关法规,专利申请的申请人及密切相关人员在该美国专利申请的过程中有义务将对该申请的专利性重要的现有技术文件(包括专利文献和非专利文献)提交给美国专利商标局以供审查员在审查时考虑。这个程序也称IDS(Information Disclosure Statement,信息公开声明提交)。申请人如果没履行IDS提交义务会导致授权专利无法执行(unenforceable)。美国专利实施细则37CFR1.97-1.98以及专利审查指南MPEP609中给出了IDS文件的具体内容提交要求和时限要求,读者可进一步检索查看。这其中包括申请人及相关人员需要向美国专利商标局提交外国同族专利申请的审查意见/审查结果中引用的对比文件,而且需要在收到审查意见/审查结果后3个月内提交且该期限不可延长。对于以PCT方式进美国的国家申请,审查员审查时会考虑美国专利商标局IFW系统中的所有美国专利文献;如果美国专利商标局下发的PCT/DO/EO/903表中指出了国际检索报告和相关文件的副本已经在国家阶段文件包中,审查员审查时会考虑这些对比文件。由于存在法律适用的不同情形,处理申请时请就提交细节向代理专利申请的合作专利律师/代理师咨询。印度 根...
  • 点击次数: 9
    2023 - 02 - 24
    作者:常春引言:  最高人民法院近日公开的(2021)最高法知民终1363号案件的判决书给出了关于侵犯技术秘密的侵权获利计算的新方式,即可以将侵权人在特定项目上的全部获利作为侵权获利只要侵权人有明显过错且该侵权行为直接决定商业机会的得失。这一计算方式是对技术秘密侵权案件中侵权获利计算方法的一种细化,也为其他知识产权侵权的计算方法提供了参照和启示。 案情概述:  A公司与Y公司同时参加某项目招投标,Y公司以相对较低价格中标。A公司发现中标的Y公司实际为其前核心员工组建且均与A公司签署有保密协议,保密协议约定对他们知悉的A公司技术秘密保密。A公司起诉Y公司商业秘密侵权。法院在审理认为Y公司核心员工李某的电脑中保存的该项目的标书、中期报告等文件中包含A公司的技术秘密,而且因为Y公司使该等技术秘密的行为使得其以低价中标,进而使得A公司错失了在该项目中的交易机会。因此,法院基于Y公司在该项目中的营业利润判定给与A公司赔偿。 铭盾分析:反不正当竞争法规定了侵犯技术秘密的赔偿述额需要按实际损失、侵权获利、法定赔偿的顺序确定。其中,侵权获利的计算方法可以参照确定侵犯专利权的损害赔偿额的方法进行。而专利侵权的侵权获利的计算方法则包括侵权人因侵权所获得的利益可以根据该侵权产品(服务)在市场上销售的总数乘以每件侵权产品(服务)的合理利润所得之积计算。侵权人因侵权所获得的利益一般按照侵权人的营业利润计算,对于完全以侵权为业的侵权人,可以按照销售利润计算,但其中应当合理扣除因其他权利所产生的利益,即应当考虑专利在利润中的贡献率。按照上述的计算方法,对于并非以侵权为业的侵权人技术秘密侵权行为的获利可以按以下方式计算:侵权获利=侵权产品(服务)量X侵权产品(服务)营业利润X技术秘密对利润的贡献率;其中,营业利润=销售利润-管理费用-财务费用。但在本案中,法院认为招投标项目有其特殊性,...
  • 点击次数: 12
    2023 - 02 - 17
    作者:金涟伊现如今,品牌对于企业发展的重要性已经无可非议,大型企业甚至成立专门的知识产权公司以统一管理、运营、保护其知识产权。而对于中小企业,品牌保护对自身发展有着更重要的意义。能否另辟新径,避开企业规模的劣势,令其品牌直面消费者,使自身获得相应市场地位,成为中小企业树立优质品牌的工作重点。然而,中小企业品牌在面对猖獗的恶意抢注行为时显得更为脆弱,由于自身规模及可调用资源的限制,通常难以与怀有恶意的商标抢注人,甚至同行业竞争者相抗争。本文将简要介绍目前常见的打击恶意商标申请的办法,为中小企业打击恶意商标申请提供思路参考。 一、 何为恶意商标注册申请及法律相关规定 实践中常见的恶意商标注册申请主要可分为两类:以囤积倒卖商标为目的的恶意商标注册申请;侵犯他人在先权利的恶意商标注册申请。 (一)以囤积倒卖商标为目的的恶意商标注册申请 以囤积倒卖商标为目的的恶意商标注册申请,是指申请人在多个类别大量申请商标,明显超出实际生产经营活动所需。商标法第四条规定,“自然人、法人或者其他组织在生产经营活动中,对其商品或者服务需要取得商标专用权的,应当向商标局申请商标注册。不以使用为目的的恶意商标注册申请,应当予以驳回。”该条规定了向国家知识产权局商标局申请注册的商标应当是生产经营活动所需,不以使用为目的的商标注册申请是恶意商标注册申请,国家知识产权局将予以驳回。 国家知识产权局对不以使用为目的、囤积商标的恶意注册申请的打击力度较重,一旦发现此种申请,将对该申请人所申请的全部商标均予以驳回。此种驳回目前公示在国家知识产权局商标局官网的商标注册审查决定文书栏目中。 尽管国家知识产权局会依职权主动对此种恶意注册商标行为采取行动,但在审查中仍可能存在漏网之鱼。由于此种恶意注册申请会侵占大量商标资源,可能导致企业在申请自创商标时遭遇...
× 扫一扫,关注微信公众号
Copyright© 2008 - 2020北京市铭盾律师事务所京ICP备09063742号-1犀牛云提供企业云服务