On April 20, 2026, the Shanghai Intellectual Property Court rendered a second-instance judgment in the trademark infringement case brought by Honor Terminal Co., Ltd. ("Honor") against Shenzhen Chuang XX Company and six other defendants. The court reversed the first-instance ruling of RMB 12 million in damages, fully granted Honor's claim for RMB 30 million, and explicitly applied punitive damages.

Case Background

Honor asserted ownership of the well-known Trademark No. 10638363 "荣耀" (Honor), registered for use on mobile phones, tablet computers, and other goods. The mark has been repeatedly recognized as a well-known trademark and enjoys substantial reputation. Honor discovered that the seven defendants, including Chuang XX and Mai XX, were selling laptops bearing the mark "荣耀剑舞" (Honor Sword Dance) online. Honor filed a trademark infringement lawsuit, requesting a multiplier of two for punitive damages and seeking joint and several liability among the seven defendants in the amount of RMB 50 million.

First-Instance Decision

The court of first instance held that three of the seven defendants (Ao XX, Xue XX, and Ge XX) were not liable for damages: Ao XX supplied only bare-bone products without knowledge of potential infringement; there was no evidence of infringing conduct by Xue XX; and Ge XX, as an internet service provider, had fulfilled its duty of care. Defendant Mai XX had assigned the disputed Trademark No. 30502169 "荣耀剑舞" from a third party and licensed it to Chuang XX and others. Chuang XX sourced bare-bone products, affixed the mark, and acted as the manufacturer of the accused products. Wu XX and Ci XX displayed and sold the accused products through their online stores.

After the "荣耀剑舞" trademark was subsequently invalidated, the court found that the four defendants had infringed Honor's registered trademark rights and should bear liability. However, because the "荣耀剑舞" mark had once been a registered trademark, the court declined to apply punitive damages. It ordered Mai XX and Chuang XX to jointly pay Honor RMB 12 million in damages, with Wu XX and Ci XX jointly liable for RMB 10,000 and RMB 70,000 of that amount, respectively.

Second-Instance Decision

Honor appealed, challenging not only the amount of damages but also arguing that the first-instance court had failed to assess the defendants' standalone use of the textual mark "荣耀剑舞" and had not granted an injunction. Honor requested the appellate court to order all seven defendants to cease infringement, apply punitive damages, and award a total of RMB 30 million in economic damages and reasonable expenses.

The Shanghai Intellectual Property Court held that while the first-instance court had correctly found the underlying facts, it had erred in its application of the law. The appellate court found that the first-instance court had omitted to review the defendants' standalone use of the textual mark "荣耀剑舞", which also constituted infringement of Honor's registered trademark rights. Moreover, absent evidence that Mai XX and Chuang XX had ceased manufacturing and selling the accused products, both companies remained subject to an injunction.

Regarding punitive damages, the appellate court noted that the infringing entities were affiliated companies, some of which manufactured and sold tablets bearing the accused mark. In 2022, Honor filed a complaint with the Shenzhen Administration for Market Regulation; in 2023, the parties entered into a settlement and release agreement, and Honor withdrew the complaint. After Trademark No. 30502169 was declared invalid, Mai XX filed an administrative appeal. Nevertheless, in light of the well-known status of Honor's mark and the 2023 settlement agreement with Honor concerning infringing tablet products, Mai XX and Chuang XX should have had reasonable expectations as to the stability of Trademark No. 30502169's validity.

 After Mai XX received the CNIPA's invalidation ruling, Mai XX and Chuang XX continued to manufacture and sell the accused products. The appellate court found that their conduct after that date demonstrated clear subjective intent to infringe. Total sales of the accused products exceeded RMB 180 million, of which sales after Mai XX received the invalidation ruling amounted to over RMB 28.97 million, resulting in substantial infringing profits. Accordingly, the court held that punitive damages should apply to the infringing conduct occurring after Mai XX received the invalidation ruling.

Based on the sales volume of the accused products, and taking into account the profit margin asserted by Honor and the multiplier for punitive damages, the appellate court calculated the damages with and without the application of punitive damages. The total amount thus calculated exceeded Honor's appellate claim of RMB 30 million. Consequently, the appellate court granted Honor's request for the full RMB 30 million and further ordered Mai XX and Chuang XX to cease their trademark infringement.