In February 2025, the Shanghai Higher People's Court delivered a second-instance judgment on the trademark infringement and unfair competition case filed by BMW AG against Hebei Beiduoqi Children's Toy Co., Ltd., upholding the first-instance ruling that ordered the defendant to pay 10 million yuan in compensation and bear 800,000 yuan for reasonable litigation expenses. This landmark case applying punitive damages in the toy industry has come to a close, which not only demonstrates China's judicial attitude of strictly protecting intellectual property rights (IPR), but also provides an important reference for enterprises in IPR protection and compliant operation.
I. Case Recap: Comprehensive Copycatting for Free-Riding
As a world-renowned automobile manufacturer, BMW AG has long registered a series of trademarks such as "寶馬" and "BMW" in China on Class 12 motor vehicles and Class 28 toy cars, among which some have been recognized as well-known trademarks. Starting from 2011, BMW AG has licensed Chinese enterprises to use its trademarks on baby carriages, toy cars and other products, establishing a sound brand authorization system.
Hebei Beiduoqi Children's Toy Co., Ltd., a baby carriage manufacturer, claimed to be the "official licensee of BMW and Mercedes-Benz" in its factory promotions, and used identical and similar marks to BMW's trademarks on various of its children's electric four-wheelers and motorcycles. Worse still, the company's "Beiduoqi-Z4" children's four-wheeler is basically identical in model to BMW's well-known Z4 roadster, constituting an infringement of trade dress.
After receiving the infringement lawyer's letter from BMW AG, Beiduoqi not only refused to cease the infringement, but also replied arguing that its acts did not constitute infringement, and continued to sell the alleged infringing products on a large scale through offline factories and online stores on multiple e-commerce platforms. According to notarized evidence, the cumulative sales of the infringing products in 14 online stores exceeded 100,000 units, with unit prices ranging from 599 yuan to 1,299 yuan, showing a shocking scale of infringement.
II. Key Judgment Points: Precise Application of Punitive Damages
After trial, the Shanghai Intellectual Property Court held that Beiduoqi's acts constituted trademark infringement and unfair competition, and were deemed as malicious infringement of trademark rights with serious circumstances, thus warranting the application of punitive damages in accordance with the law. The judgment highlights of this case are reflected in three dimensions:
First, the objectification of malice determination. The court pointed out that the defendant, being fully aware of the high popularity of the right holder's trademarks, still carried out comprehensive copycatting, and continued to produce and sell the infringing products through multiple channels after receiving the infringement notice, showing obvious subjective intent. Such a pattern of "knowingly violating the law and refusing to stop" meets the constitutive elements of "malicious infringement" as stipulated in Article 63 of the Trademark Law.
Second, the rationalization of the compensation base. Since Beiduoqi refused to provide sales vouchers and other evidence, the court adopted the plaintiff's claim, calculated the sales volume based on the unit prices, cumulative sales and evaluation numbers displayed on e-commerce platforms, and determined a 7% profit margin based on the license agreement between BMW AG and a third party, resulting in a compensation base of more than 3.3 million yuan. This method of "determining compensation based on sales volume" effectively solves the evidentiary difficulty caused by infringers concealing account books.
Third, the appropriate setting of the punitive multiple. Comprehensively considering the duration of infringement, wide scope, and omni-channel sales both online and offline, the court supported the plaintiff's claim of a double punitive multiple, and finally determined the compensation amount at 10 million yuan. For the seller, Mouying Company, in the absence of evidence showing its malicious intent, the court applied statutory damages and ordered it to bear joint and several liability of 50,000 yuan, reflecting the refined distinction of liabilities.
III. Typical Significance: A Bellwether for IPR Protection
This case is a vivid practice of the punitive damages system introduced after the amendment of the Trademark Law in 2019, and has multiple demonstrative values:
First, the judicial wisdom to solve the "evidentiary difficulty". When the right holder has difficulty obtaining the infringer's complete financial data, the court allows the calculation of sales volume based on public data from e-commerce platforms and the presumption of profit margin based on industry licensing rates, which greatly reduces the right holder's burden of proof. This practice provides an operable calculation paradigm for similar cases.
Second, the governance thinking of full-chain crackdown. The judgment not only targets the manufacturer, but also holds the seller liable; it not only orders the cessation of infringement and elimination of adverse effects, but also supports high compensation and reasonable expenses, forming a dual punishment of "civil liability + economic damages".
Third, an open attitude of equal protection. As a foreign-invested enterprise, BMW AG's IPR has received the same strict protection as that of domestic enterprises in China, demonstrating China's determination to optimize the law-based business environment and serve high-level opening up.
IV. Compliance Insights for Enterprises
The warning of this case to market entities is clear: trademark rights are the core assets of enterprises, and speculative acts such as "piggybacking on famous brands" will pay a heavy price under the punitive damages system. For manufacturing enterprises, an IPR compliance review mechanism should be established to avoid using marks identical or similar to others' well-known trademarks; for sellers, the duty of reasonable care should be fulfilled to review the authorization chain of upstream suppliers. Once receiving an infringement warning, enterprises should immediately launch a compliance review and stop losses in a timely manner, rather than taking chances and continuing the infringement.
There is no "safe haven" for IPR protection, only "high-voltage lines". With the in-depth implementation of the punitive damages system, malicious infringers will face the legal consequence of "compensating to the point of shutdown". Only by respecting innovation and operating with integrity can enterprises go far and steady in market competition.
