Amid growing emphasis on intellectual property protection, some operators still take chances by free-riding on the goodwill of well-known brands through edge-ball tactics.
Recently, the People’s Court of Baiyun District, Guangzhou handed down a first-instance judgment in a typical repeat trademark infringement case. The court found that Wu Moumou, after being sued for infringement multiple times, continued to produce and sell tile adhesives under the name “Degao Binfen” by controlling several affiliated companies. Such conduct constituted repeat infringement with obvious subjective malice. The court applied the punitive damages principle in accordance with the law and ordered the defendants to jointly compensate Degao Company more than 440,000 yuan for economic losses and reasonable rights-protection expenses.
Basic Facts of the Case
The plaintiff, Degao (Guangzhou) Building Materials Co., Ltd., is a famous enterprise in the domestic building materials industry. Its “Degao” trademark and trade name enjoy a high reputation in the home decoration material market including waterproof materials and tile adhesives, and has won many honors such as “Top Ten International Brands” and “Green Products”.
The defendants include 8 entities such as a hardware store and a Foshan-based company, covering enterprises in Dongguan, Jieyang, Huizhou and other places. The actual controller behind all these entities is Wu Moumou. The case was heard by the People’s Court of Baiyun District, Guangzhou, and the first-instance judgment has now taken effect.
Notably, this is not the first dispute between Degao Company and the defendants.
Since 2019, the hardware store and several affiliated companies have been repeatedly sued for infringing Degao’s exclusive right to use registered trademarks, and were ordered by courts to stop infringement and pay compensation through mediation or judgments. However, the operators did not learn lessons, but intensified their acts and resorted to evasive tactics.
During a recent market inspection, Degao Company found a large number of tile adhesive products marked “Degao Binfen”. Despite the new name, their packaging, fonts and design were highly similar visually to genuine Degao products, easily causing consumers to mistake them for Degao’s series products.
Degao Company immediately initiated rights-protection proceedings. After thorough investigation, it found that the production and sales chain of these infringing products involved companies in Dongguan, Jieyang, Huizhou and other regions, all under the actual control of Wu Moumou. Degao then sued all infringing parties in the People’s Court of Baiyun District, Guangzhou.
During the trial, the defendants argued that they held the registered trademark “Degao Binfen” and used it legally, thus not constituting infringement. Such defense is common in trademark infringement cases, where infringers often claim legality by virtue of holding a registered trademark.
Court Findings
The People’s Court of Baiyun District analyzed the case in detail from the following aspects:
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Identification of similarity of signs
The court compared the sign “Degao Binfen” with Degao’s registered trademark “Degao” and found they were highly similar visually and used on identical goods (tile adhesives). Although the defendants claimed ownership of the “Degao Binfen” trademark, the court pointed out that their actual use exceeded the scope of standardized use, a typical act of free-riding on others’ goodwill.
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Identification of repeat infringement
This was the core dispute. The court found that multiple defendants including Wu Moumou, after the entry into force of previous mediations or judgments, clearly knew their obligation to avoid infringement but still persisted, constituting “repeat infringement” under the law. This finding became the key premise for applying punitive damages in this case.
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Identification of subjective malice
The court focused on the following factors: Wu Moumou controlled multiple affiliated companies to cover up infringement through decentralized operation; and changed operators during litigation to evade legal liability. These acts fully proved that the defendants committed infringement objectively with clear subjective malice, acting knowingly and refusing to repent despite repeated penalties.
Infringement Tactic: Split and Combined Use of Trademarks
The defendants’ tactic was typical and concealed: they registered trademarks containing “Degao” such as “Degao Binfen”, but exceeded the approved scope in actual use or combined multiple trademarks to free-ride on the well-known brand’s goodwill. The court therefore confirmed the defendants’ subjective intent to “free-ride”.
Application of Punitive Damages
Based on the above findings, the People’s Court of Baiyun District ruled in accordance with the law: the eight defendants must immediately stop infringement, jointly compensate Degao Company more than 440,000 yuan for economic losses and reasonable rights-protection expenses, with punitive damages explicitly applied.
The presiding judge stated that the punitive damages system is designed to deter malicious infringers who “forget the pain after the wound heals”. In this case, the infringers tried to cover up repeat infringement by setting up multiple affiliated companies and decentralized operation. However, the court identified the actual controller behind the scenes through penetrating trial and made them pay a heavier price than the first infringement.
This not only strongly protects the legitimate rights of the right holder, but also sends a strong signal to society: infringement must be punished, and those who refuse to reform will face severe penalties.
