Case Brief

Baidu Online Network Technology (Beijing) Co., Ltd. (hereinafter referred to as Baidu Company), which is mainly engaged in Internet search engine services, applied for the registration of the trademark "Baidu" on the services "providing computer information through computer information network" and the like in Class 42 on March 16, 2000. After years of continuous publicity and use, the trademark "Baidu" has gained high popularity in the field of Internet search. Beijing Jingbaidu Catering Management Co., Ltd. (hereinafter referred to as Jingbaidu Company) was established in January 2012. After that, it has successively set up its third branch, eighth branch and other branches, covering catering services, catering management, etc. Jingbaidu Company and its branches highlight the use of "Baidu" and the logo containing "Baidu" as characters on storefront signboards, decorative plaques, beverage cabinets, menus, advertising, packaged chopsticks, tissue boxes, billing receipts, ceiling lights, etc. at the site for business operation, and also use the aforementioned logo on WeChat official account and Meituan APP. Baidu Company claimed that its trademark "Baidu" constituted a well-known trademark, and Jingbaidu and its branches infringed its trademark ownership, and requested to order Jingbaidu Company and its branches to stop the infringement and eliminate the impact. The applicable punitive compensation was calculated as three times of the infringement profits, thus the amount of compensation was 4.95 million yuan and the reasonable expenses were 50000 yuan.

The court of first instance held that the evidence on record could prove that the trademark "Baidu" of Baidu Company had become a well-known trademark known to the relevant public in China at the time of the sued act. Jingbaidu Company and its branches have highlighted the use of "Baidu" related logos in their business activities, which has infringed on Baidu's trademark ownership. With regard to this part of infringement, the court of first instance supported Baidu's request for punitive compensation. According to the annual and monthly profit statements and other financial data submitted by Jingbaidu Company and its branches related to the sued acts from October 2016 to September 30, 2019, the total business profit was calculated to be 926,710.61 yuan, and the average annual business profit was 308,903.54 yuan. The duration of the sued behavior was 5.25 years. Considering the significance and popularity of the trademark "Baidu" and the specific circumstances of the sued behavior, it was determined that the contribution rate of the trademark "Baidu" to the infringement profit was 35% as appropriate. The amount of punitive compensation shall be calculated by three times based on the comprehensive consideration of the subjective fault degree of infringement, the duration of infringement, the profit brought by infringement and the damage caused on Baidu Company. Calculation formula: 308,903.54 yuan × 5.25 years × 35% × (1+3) = 2,270,441 yuan. In the first instance, Jingbaidu Company and its branches were ordered to pay a compensation of 2,270,441 yuan for Baidu Company's economic losses. The second instance upheld the calculation method and amount of punitive compensation in the first instance.

Typical Significance

This case is a typical case to standardize the calculation of punitive compensation. The calculated amount of punitive compensation shall be the sum of the amount of filling-up compensation and punitive compensation, that is, the total amount of compensation applicable to punitive compensation shall be the sum of the cardinal and the product of the cardinal and multiple. First, the cardinal should be determined. The court of first instance of this case calculated the cardinal based on the profit from infringement according to Baidu Company's request. The profit from infringement can be calculated according to the business profit of the infringer. Moreover, the contribution of intellectual property should be taken into consideration. Second, the multiple of punitive compensation should be determined. The application of punitive compensation should emphasize the principle of application by law, positivity and prudence, and pay attention to the relative accuracy of the compensation cardinal and the rationality of the multiple.

(Source: Higher People's Court of Beijing)