In February 2026, the Shanghai Intellectual Property Court issued an appellate judgment in the trademark infringement case filed by Amer Sports Trading (Shanghai) Co., Ltd. against Ji Mou. The court revoked the first-instance judgment of ¥500,000 in compensation and ordered Ji Mou to pay a total of over ¥2.19 million in economic losses and reasonable expenses to Amer Sports, including the maximum 5× punitive damages.

This appellate reversal quickly drew industry attention and set a clear model for the application of punitive damages in trademark infringement cases.

The plaintiff, Amer Sports Trading (Shanghai) Co., Ltd., is a world-renowned sporting goods group owning many high-end brands such as Arc'teryx, Salomon and Wilson. The defendant, Ji Mou, actually operated a company that once had a business partnership with Amer Sports.

Back in 2018, Amer Sports signed an entrustment agreement with Ji Mou’s company, requiring Ji Mou to destroy the defective and out-of-season products of Amer Sports.

For brand owners, once defective products enter the market, they not only harm consumers’ interests but also severely damage brand reputation. Entrusting professional companies to destroy such products is a key means to protect trademark rights.

However, Ji Mou failed to perform the destruction obligation as agreed. From September 2018 to June 2020 (nearly two years), he secretly sold the products that should have been destroyed through hidden channels, making illegal profits of over ¥418,000. Meanwhile, he submitted false destruction certificates to Amer Sports to fraudulently obtain destruction fees.

After discovering the above acts, Amer Sports immediately filed a lawsuit.

The first-instance court held that Ji Mou’s acts constituted trademark infringement and ordered him to compensate Amer Sports ¥500,000 for economic losses.

However, Amer Sports appealed, arguing that Ji Mou had obvious subjective malice, long-term infringement and large illegal profits, and the ¥500,000 compensation was insufficient to punish the infringement.

The case was appealed to the Shanghai Intellectual Property Court, with the second-instance trial focusing on two core disputed issues.

Ji Mou argued that all products sold were genuine products produced by Amer Sports, not counterfeits. According to the exhaustion of rights principle in trademark law, a trademark owner’s rights are exhausted once products are legally placed on the market, and the owner has no right to control the subsequent circulation of such products.

In response, the Shanghai Intellectual Property Court clearly stated: although the products involved were genuine, they were defective or out-of-season products that should have been destroyed, and the right holder had explicitly excluded them from circulation channels. Unauthorized sale of such products undermines the quality assurance function of trademarks and constitutes infringement as "other acts causing damage to the exclusive right to use a registered trademark" prescribed in Article 57(7) of the Trademark Law.

The court further explained that the prerequisite for applying the exhaustion of rights principle is that products are "legally" placed on the market. The defective and out-of-season products in this case were never allowed to enter market circulation, and the right holder explicitly required their destruction, so the trademark owner’s rights were not exhausted. This ruling established an important judicial rule: even genuine products constitute trademark infringement if put on the market against the right holder’s will.

Pursuant to Article 63(1) of the Trademark Law, for malicious infringement of trademark exclusive rights with serious circumstances, compensation of 1 to 5 times the base amount calculated based on infringement profits may be awarded.

The second-instance court held that Ji Mou had obvious subjective malice: he clearly knew the products involved were not allowed to enter the market, yet systematically covered up the truth by issuing false destruction certificates; the infringement lasted nearly two years with concealed means and large profits. The facts met both requirements of "malice" and "serious circumstances".

For the calculation of the compensation base, the court adopted the infringement profit of ¥418,414 verified during criminal investigation and decided to apply the maximum 5× punitive damages.

The punitive damages amounted to ¥2,092,070, plus ¥100,000 in reasonable rights protection expenses, bringing the total compensation to approximately ¥2.19 million.

Accordingly, the second-instance court revoked the first-instance judgment and ordered Ji Mou to pay Amer Sports a total of over ¥2.19 million in economic losses and reasonable expenses.

Looking back at the case, it took nearly eight years from the 2018 entrustment destruction agreement, the exposure of infringement in 2020, to the appellate reversal in 2026.

The significance of this reversal lies not only in the surge of compensation from ¥500,000 to ¥2.19 million, but also in sending a clear signal to the market: the cost of maliciously infringing trademark rights has become higher than ever.

For brand owners, this case reminds them to establish a full-process supervision mechanism when entrusting third parties to destroy defective products, and to attach importance to the civil-criminal cross path for rights protection. For entrusted parties, unauthorized sale of products that should be destroyed will not only lead to high civil compensation, but also may involve criminal prosecution.