On November 11, 2024, the Guangdong Higher People's Court released five typical criminal cases related to intellectual property. These cases involve counterfeiting registered trademarks, selling goods with counterfeit registered trademarks, infringing trade secrets, and copyright infringement. This article will discuss two Trademark Counterfeiting cases and one Trade Secret case.

Here is a summary of the three cases:

1. Punitive Damages in Trademark Counterfeiting: This case combined the trademark holder's request for punitive damages with the criminal proceedings. When the exact profits from the infringement could not be determined, the court used available evidence to estimate the compensation base and granted the punitive damages claim.

2. Punitive Damages Combining Criminal and Civil Claims in Trademark Counterfeiting: Similar to the first case, this case also merged the trademark holder's request for punitive damages with the criminal process. The court, unable to precisely determine the infringer's profits, relied on available evidence to set a compensation baseline and approved the punitive damages. 

3. Case on Trade Secret Infringement in Data Information: This case involved misusing valuable and confidential business information in the biopharmaceutical sector. By assessing the information's secrecy, value, and confidentiality, the court recognized the customer information as a trade secret. This decision helped protect critical operational data for innovation-driven companies and served as a reminder to strengthen trade secret protections, supporting high-quality development in high-tech manufacturing industries.

Case 1: Trademark Counterfeiting of Famous International Cosmetics Brands

Case summary: From 2019 to 2021, defendants, without authorization from trademark holders, collaborated with Chen, who provided warehouse services, to re-label counterfeit cosmetics bearing registered trademarks such as "ESTEE LAUDER," "LANCOME," and "DIOR" and sold them at approximately 50% of the retail price of genuine products. By the time the case was discovered, the defendants had manufactured and sold counterfeit goods valued at 143 million RMB, with unsold counterfeit products valued at 2.07 million RMB and illegal profits of about 37 million RMB. In October 2021, defendants Zhuang and Chen, along with Zhang (handled in a separate case), rented a shop to label counterfeit cosmetics with trademarks like "LANCOME," "DIOR," "KIEHL'S," "LAMER," and "ESTEE LAUDER" and sold them through a Douyin platform online store, with illegal sales totaling approximately 560,000 RMB.

Court decisions: The Qingcheng District People's Court in Qingyuan City found in the first instance that the defendants, without permission from the trademark holders, used identical trademarks on the same type of goods and sold them, constituting particularly serious circumstances of trademark counterfeiting. Based on each defendant's role in the joint crime, the crime circumstances, and their remorse, defendant Lu was sentenced to eight years in prison and fined 20 million RMB; defendant Lin was sentenced to six years and fined 15 million RMB; defendant Chen was sentenced to five years and fined 5 million RMB; defendant Zhuang was sentenced to three years and fined 3.2 million RMB. Additionally, the court ordered the confiscation of illegal gains of 37 million RMB from defendants Lu, Lin, and Chen and ordered the destruction of counterfeit trademarked goods and related tools. The Qingyuan Intermediate People's Court upheld the original judgment on appeal.

Case 2: Application of Punitive Damages in Criminal Cases with Civil Claims

Case summary: Since August 2021, defendant Ma has rented a property and warehouse to conduct operations involving counterfeit "MEI XIN" brand mooncakes. Defendant Ma hired employees such as Zheng and Zhang to promote and ship the products on e-commerce platforms and WeChat, selling the counterfeit products as genuine MEIXIN mooncakes. During the raid, 2,335 boxes of counterfeit mooncakes bearing the "MEIXIN" registered trademark were seized, with a calculated market value of approximately 204,000 RMB based on actual sales prices. The counterfeit mooncakes sold amounted to 139,000 RMB, with gross profits estimated between 238,000 and 254,000 RMB. The trademark holder filed a civil claim, requesting punitive damages three times the economic loss of 1,695,000 RMB.

Court decisions: The Luohu District People's Court in Shenzhen found that defendant Ma, selling goods with a counterfeit registered trademark, had infringed on the trademark rights and committed the crime of selling goods with counterfeit registered trademarks. Ma was sentenced to two years in prison and fined 600,000 RMB. Punitive damages were applicable given the apparent intent and severe circumstances of Ma's infringement. However, the court found insufficient grounds to calculate the plaintiff's damages based solely on sales figures. Ma's profits were instead estimated at the higher end, 254,000 RMB, which served as the basis for punitive damages. As Ma had already compensated the plaintiff 200,000 RMB, the court ordered him to pay an additional 54,000 RMB, plus one-time punitive damages of 254,000 RMB.

Case 3: Criminal Acts of Infringing Trade Secrets Through In-depth Managed Customer Data

Case Summary: In 2018, defendant Bu, a marketing director at a biotech company, signed a confidentiality and non-compete agreement. He acquired around 43,000 customer records under business needs during his tenure and exported 6,777 customer records from the company's e-commerce system. After leaving the company in March 2020, Bu took a new position at another biotech company and used 1,354 customer records from his previous employer's data, compiling lists for marketing campaigns. The estimated value of the infringed information was 860,000 RMB, while the original company spent 1,373,000 RMB to restore and enhance its information system.

Court decision: The Huangpu District People's Court in Guangzhou ruled that the customer information constituted a trade secret due to its confidentiality, commercial value, and security measures. Bu's actions in acquiring, disclosing, and using the trade secrets without authorization caused significant losses to his former employer, constituting the crime of infringing trade secrets. He was sentenced to one year in prison and fined 30,000 RMB. The Guangzhou Intermediate People's Court upheld this judgment on appeal.