What should the law do when infringers are no longer satisfied with "selling counterfeits" but start to "create a brand"?
In February 2026, the Higher People's Court of Zhejiang Province issued a highly watched intellectual property judgment—Case (2025) Zhe Min Final No.367. In this case, French luxury giant Dior sued Gaomole (France) Business Co., Ltd., Kemude (Dalian) Technology Development Co., Ltd. and other defendants for trademark infringement and unfair competition. Ultimately, the court upheld the first-instance judgment of 5 million yuan in joint and several damages in the second instance.
This case has attracted widespread attention not only because it involves the rights protection of an internationally renowned luxury brand, but also because it reveals a new form of infringement—the "fake brand project". Different from traditional "counterfeit sales", the defendants in this case built a complete commercial system of "Dior Trendy Toys", attempting to "systematically siphon off" the goodwill of others.
When "Dior" Meets "Dior Trendy Toys"
The plaintiffs in this case are Christian Dior Couture SAS (hereinafter referred to as "Dior Company") and its Chinese affiliated company Christian Dior Business (Shanghai) Co., Ltd. The defendants include Gaomole (France) Business Co., Ltd. (registered in Hong Kong), Kemude (Dalian) Technology Development Co., Ltd., He'muan (Shenyang) Brand Management Co., Ltd., etc.
The focal point of the case is the No.G610601 "Dior" trademark, which is approved for use on Class 25 goods such as clothing, while the alleged infringing acts occurred on Class 28 non-similar goods such as toys and sports equipment.
This means that ordinary trademark protection cannot cover the alleged acts, and the plaintiff must prove that "Dior" constitutes a well-known trademark to achieve cross-class protection.
Beyond Selling Goods: Building a "Brand"
Unlike traditional trademark infringement cases, the infringing acts of the defendants in this case show obvious systematic characteristics. After trial, the court found that the defendants had committed a series of infringing acts:
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Trademark infringement: Unauthorized use of signs such as "Dior" and "CD";
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Corporate name confusion: Use of trade names containing "Dior", misleading consumers into believing there is an affiliation with French Dior;
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False advertising: Claiming to have "signed with top French designers" to create the illusion of "official authorization";
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Domain name infringement: Registration and use of the domain name "diortoy.com", whose core identifiable part completely copies the well-known trademark "Dior".
More notably, these acts are not isolated. There is an obvious subjective intent and division of labor among Gaomole Company, Kemude Company and He'muan Company—from malicious registration and transfer of trademarks, to website construction, social account operation, packaging of promotional words, and organization of "Dior Trendy Toys" activities, forming a sustainable "brand parasitism" commercial shell.
As an industry insider commented: "It does not pursue one-time shipments, but the long-term benefits of 'brand parasitism', taking others' goodwill as its own customer acquisition channel."
Recognition of the Well-Known Trademark
During the trial, the defendants argued that the alleged infringing products were toys, which differ from the "clothing" and other goods approved for the use of the involved trademark in terms of functional use and consumer groups, and thus should not be protected across classes.
However, after trial, the court held that the involved No.G610601 "Dior" trademark constituted a well-known trademark on Class 25 wearing apparel both at the time of the registration of the alleged infringing trademark (February 22, 2011) and the occurrence of the infringing acts (2022).
The court's basis for the determination includes: the continuous use time of the trademark, its market sales scale in China, the breadth of its promotion, previous records of protection as a well-known trademark, and its market reputation among the public.
The court clearly pointed out that Gaomole Company, He'muan Company and Kemude Company, being fully aware of the extremely high popularity of "Dior", still changed their corporate names to similar ones and carried out large-scale promotion and operation of "Dior Trendy Toys", showing obvious subjective intent to free-ride on the brand's goodwill. The three parties had subjective intent and division of labor, constituting joint infringement.
Why 60 Million Yuan Claim Became 5 Million Yuan?
In this case, the plaintiff claimed a base of 10 million yuan from infringing profits and applied for five times punitive damages, with a total claim of up to 60 million yuan. However, the court ultimately upheld the first-instance judgment of 5 million yuan and did not support the claim for punitive damages.
The Plaintiff's Claim
The plaintiff argued that the defendants' infringing profits exceeded 10 million yuan, mainly based on: the revenue data of the "Dior Trendy Toys" business promoted by Kemude Company, relevant entrusted processing contracts, etc.
The plaintiff held that the defendants had obviously copied and imitated the "Dior" trademark and corporate trade names with the intent to free-ride; they failed to cease the infringement even after receiving infringement warnings, and even continued the infringement after the infringing trademark was declared invalid, showing obvious subjective malice and serious infringement circumstances, which met the conditions for the application of punitive damages.
However, the court did not adopt the plaintiff's claim, and its reasons are thought-provoking:
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Unascertainable base: The defendants' revenue data mainly relates to the "Dior Trendy Toys" business, which cannot be accurately corresponding to the alleged infringing acts in this case, making it difficult to accurately calculate the infringing profits.
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Circumstances not reaching serious level: The alleged infringement in this case was mainly the act of "promotion on websites and social platforms and sale of some infringing products", which did not reach the "serious circumstances" required for the application of punitive damages.
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Avoid excessive inference: Applying punitive damages on the premise of an unascertainable base will amplify the risks caused by the uncertain base and may lead to an imbalance of interests.
This sends a clear judicial signal: "Malice" is not an automatic trigger for the application of punitive damages. The application of punitive damages still requires the double threshold of "calculable base + sufficiently serious circumstances".
This case offers profound insights for right holders. In the past, the core capability of infringement was to find factories, build channels and deliver goods quickly. The new form of infringement revealed in this case, however, is to build account matrices, register domain names, design activity packaging, create "brand narratives", turn trademarks into traffic entrances, and transform infringement into "operable assets".
For brand right holders, the future battlefield of rights protection will take place less and less on the "shelf" and more and more on the "entrances"—search terms, domain names, account names, hashtags, brand narratives and authorization chains. Guarding these "entrances" may be the key for brands to cope with the era of "brand parasitism".
