JointLiabilityofLegalRep.forTrademarkInfringement

The operational activities of the legal representative of a company are usually considered as activities of the company and the civil liabilities arising from them shall be borne by the company. But recently, Jiangsu Higher People's Court made a judgment in which the legal representative was held to bear joint and several liability with the company in a trademark infringement case.
In this case (case number: (2015)苏知民终字第00179号), Sakura Bath & Kitchen Products (China) Co., Ltd. (hereinafter referred to as “Sakura”), a famous company in the field of Bath & Kitchen which is the holder of the registered trademark “樱花Sakura” (No.1209675) in China, filed a lawsuit against Suzhou Sakura Technology Development Co., Ltd. (hereinafter referred to as “Suzhou Sakura”) and two other companies as well as Mr. Tu Rongling and Mr. Yu Liangcheng, both legal representatives of the defendant companies respectively, for unfair competition and trademark infringement.
The court stated in its verdict that the activities of Suzhou Sakura constituted unfair competition by using “Sakura” as its company name, and infringed the trademark rights of Sakura by using a similar trademark on the same products. As to Mr. Tu, the court held the opinion that Mr. Tu was obviously intentional and malicious: he set up Suzhou Sakura after his another company had been punished due to infringement of the trademark rights of Sakura in an earlier case; Mr. Tu had huge influence on Suzhou Sakura for he was its shareholder with 90% equity; the main business of Suzhou Sakura was involved in infringement activities all the time since its establishment for which Mr. Tu shall be responsible. For above reasons, the court considered that, in the case of being fully aware of the registered trademark and the reputation of Sakura, Mr. Tu’s activities of infringement through his company constituted joint infringement with his company. The same ruling is also applicable to Mr. Yu for similar facts and reasons. Therefore, Jiangsu Higher People's Court ruled in its final judgement that Mr. Tu and Mr. Yu shall bear joint and several liability with the defendant companies for the liquidated damages of RMB 2 Mio. to be paid to Sakura.
Although the argument in the above verdict as to why the legal representative shall be held liable for activities of the company might be controversial in the aspect of company law, this case may become a milestone in protecting trademark rights. In practice, it is quite often that infringers set up several companies to perform infringement acts. For the right holder of trademark, it is expensive and time-consuming to take actions against every company. Even when the right holder of trademark wins the lawsuits, the infringers behind the companies may setup another new company to continue the infringing activities.
The current case may serve as guidance and set a precedence both for trademark owner and court when facing above “cat and mouse” scenario: it provides trademark owner with a new option under which both the infringing company and the mastermind behind the scene can be targeted at the same time, while the verdict of a higher people's court may encourage other courts to take a more aggressive approach against trademark infringements.