Finnish Company Awarded Capped Statutory Damages in China


Haoyu Zhou (Elliot), Xinglan Luo (Rebecca)


Metso (Plaintiff) is a Finland-based mining machinery company and the owner of the well-known registered Chinese trademark "美卓" (the transliteration of Metso).


Shenyang Sanland (Defendant), a Chinese mining machinery company, alleged that they have signed licensing agreement with Metso and are able to manufacture Metso's product. Shenyang Sanland used phrases such as "same quality with half price of Metso" and "Sanland has everything that Mesto has" in its advertisement. Moreover, Metso found that the trademark "美卓" was used by Sanland in their official website, Wechat official account, Facebook account, product picture watermark, exhibition poster and product brochure. Metso therefore requests Shanghai Pudong court to impose an injunction to Shenyang Sanland and claims for damages amounting to 3 million RMB for economic loss and 100 thousand RMB for reasonable expenses in unfair competition lawsuit and trademark infringement lawsuit, respectively.

 

During the hearing, Shenyang Sanland admitted that they used false propaganda, but argued that since Metso cannot prove the actual economic loss, the claims for damages shall be deemed unfounded.

 

Shanghai Pudong court ruled in favor of the plaintiff, concluding that the defendant conducted unfair competition and trademark infringement. The judge was also aware that it was difficult to determine the actual loss suffered by Metso and the economical profits gained by Shenyang Sanland. Nevertheless, the judge found that Shenyang Sanland has advertised in their Wechat official account that the products have been exported and sold for more than 80 times to countries such as the U.S., Japan, Russia, Canada, etc. Thus, the scale of production and sales would be presumably high.

 

In view of the above, the court decided to award a total of 6 million RMB damages for unfair competition and trademark infringement conducted by the defendant, as well as a total of 200 thousand RMB as reasonable cost expended by the plaintiff. This is the capped statutory damages set forth in unfair competition law and trademark law when the actual loss or economical profit cannot be determined.

 

This case again shows the steadfast resolution of Chinese judicial institutes in providing equal protections for both foreign and domestic enterprises. It also served as a good example in which capped statutory damages in lieu of actual damages or profits can be awarded even for cases where the actual loss or the economic profits cannot be determined.