HONOR Trademark Infringement Case: Damages Raised from ¥12 Million to ¥30 Million, Precise Application of Punitive Damag
On April 20, 2026, the Shanghai Intellectual Property Court handed down the second-instance judgment in the trademark infringement dispute filed by Honor Device Co., Ltd. against multiple Shenzhen tech companies and natural persons. The court drastically raised the compensation award from the first-instance ¥12 million to ¥30 million, fully supporting HONOR’s appeal claims.
This case drew widespread attention for its rulings on well-known trademark protection and the applicable scope of punitive damages.
Four Years of Brand Free-Riding
Honor Device Co., Ltd. holds the exclusive right to registered trademark No. 10638363 "荣耀 (HONOR)", registered for goods including mobile phones, computers and tablet PCs. Originally an internet sub-brand under Huawei, HONOR spun off independently to focus on R&D and sales of smart terminals. Long-term commercial operation has rendered the trademark extremely famous; it has been repeatedly recognized as a well-known trademark in judicial rulings and included in Guangdong Provincial Key Trademark Protection List.
From 2022 to 2023, HONOR discovered seven defendants opened numerous stores on mainstream e-commerce platforms including JD, Douyin and Kuaishou. They prominently displayed marks containing the Chinese character "荣耀" across store names, product titles and promotional pages, selling large volumes of notebooks labeled with the mark Rongyao Jianwu (荣耀剑舞).
Investigation showed Shenzhen Company B (Mai Company) acquired registered trademark No. 30502169 Rongyao Jianwu (荣耀剑舞) from a third party in August 2022, then licensed it to Shenzhen Company C (Chuang Company). Company C purchased bare notebooks, affixed the Rongyao Jianwu mark and sold them as the manufacturer.
Total sales of infringing products exceeded RMB 180 million. Mass consumers mistakenly purchased counterfeit goods due to trademark confusion, triggering numerous consumer complaints and severely damaging HONOR’s brand reputation and market interests.
First Instance: Infringement Confirmed, Punitive Damages Denied
The first-instance court found three defendants (Ao Company, Xue Company, Ge Company) exempt from compensation liability for separate reasons: only supplying bare devices without knowledge of potential infringement; insufficient evidence proving infringement; the network service provider fulfilled its duty of care.
Mai Company transferred the Rongyao Jianwu trademark and licensed it to Chuang Company for production and sales. Wu Company and Ci Company displayed and sold infringing goods in their stores. Later, the Rongyao Jianwu trademark was declared invalid, and Mai Company received the invalidation ruling on November 9, 2023.
The first-instance court confirmed trademark infringement by relevant defendants, yet refused to apply punitive damages. It held the defendant held a valid registered trademark during litigation, so subjective intent to infringe could not be fully confirmed; meanwhile, exact losses and illegal profits were hard to calculate. The court ordered Mai Company and Chuang Company to jointly pay ¥12 million compensation, with Wu Company and Ci Company bearing joint and several liability for ¥10,000 and ¥70,000 respectively.
Dissatisfied with the ruling, HONOR filed an appeal, requesting punitive damages and total compensation of ¥30 million covering economic losses and reasonable legal expenses.
Second Instance: Clear Boundaries for Punitive Damages Application
The Shanghai Intellectual Property Court held the first-instance judgment factually accurate yet flawed in legal application, with core rulings as follows:
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Standalone use of Rongyao Jianwu also constitutes trademark infringement
The first-instance court overlooked standalone use of Rongyao Jianwu on store names and product titles, which independently infringes HONOR’s exclusive trademark rights.
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Continued cessation obligation
No evidence proved Mai Company and Chuang Company halted production and sales, so they must cease all infringing acts.
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Time boundary for punitive damages
The court set November 9, 2023 (receipt date of trademark invalidation ruling) as the critical dividing line:
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Before receipt: The defendant relied on administrative trademark registration without obvious malicious intent, no punitive damages applicable;
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After receipt: The trademark’s legal foundation was deemed nonexistent ab initio. Continued production and sales constituted intentional infringement, warranting punitive damages.
Even though Mai Company filed administrative litigation against the invalidation ruling, the high popularity of the HONOR trademark plus a prior settlement agreement between both parties meant the defendants should have foreseen instability of the Rongyao Jianwu mark.
4. Malicious intent and severe infringement circumstances
In 2022, HONOR filed a complaint with Shenzhen market supervision bureau, and both sides reached a settlement in 2023 with the defendant promising to stop infringement. The defendant nevertheless continued manufacturing and selling counterfeit goods, constituting repeated infringement. After receiving the invalidation ruling in November 2023, the defendants kept selling infringing products through 2024, generating additional sales of nearly ¥28.97 million.
The court deemed the infringement severe: total product sales hit ¥180 million with huge illegal profits. Defendants also took measures to evade liability, including transferring preserved funds, concealing illegal gains and changing store operators.
5. Application of independent corporate personality
Though affiliated companies shared shareholders and legal representatives, no sufficient evidence proved asset mixing, so they shall not be jointly liable. Core production and sales entities bear full compensation, while single-store sellers only bear limited joint liability.
Final Second-instance Judgment (April 20, 2026)
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Mai Company and Chuang Company must immediately stop all trademark infringement acts;
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Fully uphold HONOR’s claim for ¥30 million total compensation;
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Retail operators bear joint and several liability for ¥10,000 and ¥70,000 respectively.
The court calculated damages by combining total sales volume, HONOR’s claimed 30% profit margin and a 3x punitive damage multiplier. The calculated total exceeded ¥30 million, so the full claim was supported.
Core Case Takeaways
This landmark electronic consumer goods trademark case fully upheld the trademark owner’s punitive damage claim, forming clear judicial reference for well-known trademark protection and punitive damage rules.
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Clear starting point for subjective malice identification
Trademark invalidation rulings serve as key legal documents to fix the starting time of intentional infringement; receipt of the invalidation notice is the critical threshold to judge whether the infringer acts with full knowledge.
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Settlement agreements serve as core evidence of malice
Signing a settlement to promise ceasing infringement yet repeating identical violations directly triggers punitive damages, proving systematic, repeated malicious infringement.
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Industry profit margins can be adopted when defendants withhold accounting records
If infringers refuse to submit financial books, courts may adopt the trademark owner’s profit calculation standard. The court adopted a 30% profit margin based on bare machine cost of RMB 950 and terminal selling price ranging from RMB 1,299 to 1,718, greatly lowering the plaintiff’s burden of proof.
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Defined scope of independent corporate personality rule
Affiliated companies with shared stakeholders are not automatically joint tortfeasors without proof of asset mixing; core production and sales entities bear full compensation, while minor retail participants only take limited joint liability.
