Trademark Infringement Dispute｜Midea Group Co., Ltd. v. Shandong Xiangmai Electric Appliance Co., Ltd., Guo Hongzhi

This case was selected as one of the 2024 Annual Typical IP Cases by the Guangdong Intellectual Property Protection Association

Case Overview

Founded in 1968, Midea Group is a global technology conglomerate integrating five core business sectors: smart home, building technology, industrial technology, robotics and automation, and innovative businesses. In 2021, the Group achieved a total operating income of RMB 242.4 billion. It operates approximately 200 subsidiaries, 35 R&D centers and 35 major production bases worldwide, with business coverage across more than 200 countries and regions.

Midea Group owns a portfolio of Class 11 registered trademarks including No. 15713570, No. 14910307 and No. 5478887, covering range hoods, gas stoves, water heaters and other kitchen electrical appliances. Among them, Trademark No. 5478887 has been granted well-known trademark protection by the Beijing Higher People’s Court.

The defendant Shandong Xiangmai Electric Appliance Co., Ltd. (hereinafter “Xiangmai Company”) was established in 2018. The defendant Guo Hongzhi serves as its legal representative, executive director and sole shareholder. Its business scope covers home appliance production and sales, kitchen and bathroom supplies retail, refrigeration and air conditioning equipment sales, and other related businesses.

On December 12, 2018, Xiangmai Company filed an application for Trademark No. 35254373, designated for use on Class 11 goods such as gas stoves, kitchen range hoods and water dispensers. Midea Group initiated trademark invalidation proceedings, followed by first and second-instance administrative litigation. Ultimately, the Beijing Higher People’s Court held that the stylized “M” graphic constitutes a prominent and unique distinctive design of Midea’s cited trademarks. Trademark No. 35254373 fully copied Midea’s stylized “M” design, and the disputed “FM Fangmai” trademark was highly similar to Midea’s prior trademarks. The National Intellectual Property Administration (CNIPA) subsequently ruled the trademark of Xiangmai Company invalid.

On April 22, 2021, Xiangmai Company further filed two additional trademarks, No. 55462096 and No. 55477855, designated for Class 11 and Class 7 goods. Midea Group filed opposition applications. The CNIPA ruled that Midea’s stylized “M” graphic had obtained high market visibility through long-term promotion and use, and rejected the registration of the two disputed trademarks.

Through investigation, Midea Group confirmed that Xiangmai Company used the infringing mark on product bodies and outer packaging of its manufactured and sold products, as well as in product displays, store pages and delivery videos on official websites, Douyin, Kuaishou and WeChat platforms. Xiangmai Company began publishing advertisements for infringing products on WeChat Moments as early as February 2019, and the continuous infringement lasted for 4 years and 4 months until Midea filed the lawsuit in April 2023.

In the first-instance trial, the court held that the defendant’s use of the disputed mark prior to the trademark invalidation ruling did not constitute infringement, and the infringing conduct did not meet the statutory criteria for serious circumstances applicable to punitive damages. The court only imposed statutory damages of RMB 125,000. Dissatisfied with the factual findings and legal application of the first-instance judgment, Midea Group filed an appeal.

In the second-instance trial, the Shandong Higher People’s Court clarified two core legal issues: (1) whether the pre-invalidation use of a trademark constitutes infringement under Article 47 of the Trademark Law; (2) whether the defendant’s conduct qualifies for punitive damages. The court fully upheld all claims of Midea Group and revised the total compensation award to RMB 1.02 million.

Judgment Results

First-Instance Judgment

1. Shandong Xiangmai Electric Appliance Co., Ltd. shall immediately cease all infringements upon Midea Group’s exclusive rights to Trademarks No. 15713570, No. 14910307 and No. 5478887, including the production, sales and promotion of Class 11 goods (gas stoves, range hoods, water dispensers and other products) bearing the infringing “Fangmai” mark, and terminate all promotional activities using the disputed mark on official websites, Douyin, Kuaishou, WeChat and other online platforms;

2. The defendant shall compensate Midea Group for economic losses and reasonable enforcement expenses of RMB 125,000 within ten days from the effective date of the judgment;

3. Guo Hongzhi shall bear joint and several liability for the above compensation payment;

4. All other claims of Midea Group are dismissed.

Second-Instance Judgment

1. The first-instance civil judgment No. (2023) Lu 13 Min Chu No. 112 rendered by the Linyi Intermediate People’s Court of Shandong Province is revoked;

2. Shandong Xiangmai Electric Appliance Co., Ltd. shall immediately cease infringing the exclusive rights of Midea Group’s registered trademarks No. 15713570, No. 14910307 and No. 5478887;

3. Shandong Xiangmai Electric Appliance Co., Ltd. shall pay RMB 1.02 million to Midea Group for economic losses and reasonable enforcement expenses within ten days, with Guo Hongzhi bearing joint and several liability;

4. All other claims of Midea Group are dismissed.

Typical Case Significance

1. Implementing Refined Litigation Strategies to Fully Support Appellate Claims and Curb Malicious Trademark InfringementThe legal team constructed a comprehensive evidence system based on standardized trademark infringement litigation logic. It refined and extracted valid evidence from administrative confirmation proceedings to verify infringement facts, conduct scale and subjective malice. By reorganizing and sorting evidentiary materials and court statements from prior administrative cases covering trademark ownership, brand reputation, infringing acts and serious infringement circumstances, a complete and rigorous evidence chain was formed to fully substantiate the infringement findings.

During the litigation, targeted explanatory documents were repeatedly submitted focusing on trial focus issues and judicial concerns, including legal analysis on the applicability of punitive damages, verification of the plaintiff’s profit margin, and detailed elaboration of the defendant’s continuous infringing use. The refined litigation strategy ensured all claims were fully supported with solid legal and factual grounds, securing a high-value revised judgment in the second instance. The ruling effectively restrains the prevalent malicious market behavior of frequent speculative malicious squatting + low-cost continuous repeated infringement.

2. Accurately Applying Legal Provisions to Clarify Post-Invalidation Legal Consequences and Unify Infringement Determination StandardsThe Shandong Higher People’s Court corrected the first-instance court’s erroneous legal application regarding the protection of the infringer’s reliance interest prior to trademark invalidation. The court clarified that the non-retroactivity provision under Paragraph 2 of Article 47 of the Trademark Law applies only to judicial rulings and administrative decisions that have been finalized and enforced based on the registered trademark right. Since the present civil infringement litigation was pending during the administrative invalidation procedure, no exception to non-retroactivity applies, and pre-invalidation infringing use constitutes valid trademark infringement.

In addition, the second-instance judgment revised the first-instance standard that ties infringement determination to the infringer’s subjective knowledge or foreseeability. It explicitly confirms that trademark infringement adjudication does not require proof of the infringer’s subjective awareness of illegality. Any conduct satisfying the objective constitutive elements of trademark infringement under the Trademark Law shall be deemed infringing, providing precise judicial guidance for similar cases.

3. Strictly Enforcing Punitive Damages with Segmented Calculation Rules to Establish a Benchmark for Malicious Infringement SanctionsThe legal team fully adduced evidence regarding the infringement mode, coverage, illegal profits and the defendant’s continuous prominent use of infringing marks after trademark invalidation, and submitted detailed legal arguments for punitive damages application. The Shandong Higher People’s Court confirmed that trademark infringement constituted the defendant’s core business and major profit source, qualifying the defendant as an IP-infringement-for-profit operator, and overruled the first-instance refusal of punitive damages.

Given the defendant’s refusal to submit authentic and complete financial data, the court adopted the defendant’s self-admitted annual sales volume of less than RMB 1 million in administrative proceedings as the calculation base, and discretionarily determined an annual sales benchmark of RMB 700,000. Based on Midea’s official annual report, a 30% profit margin was applied. The court defined the valid calculation period starting from the defendant’s continuous infringement after receiving the administrative invalidation judgment, and applied a 1.5-fold punitive multiplier, fully upholding Midea’s compensation claims.

This case sets a replicable judicial model for high-value damage awards through refined litigation, accurate legal application and standardized punitive damages calculation. It strongly safeguards the legitimate rights and interests of high-reputation trademark owners, effectively suppresses the speculative and repeated malicious infringement model prevalent in the industry, and reinforces the confidence of trademark owners in protecting brand rights via administrative invalidation and civil litigation. Meanwhile, it provides a typical and referable litigation solution for IP rights enforcement and offers solid judicial support for building a fair, standardized and orderly market competition environment.