CHANG TSI
Insights
The Client is a well-known Japanese fashion brand offering a wide range of products, including apparel, accessories, and lifestyle goods. It owns and continuously uses several well-known trademarks in China. The Client maintains a zero-tolerance policy toward trademark infringement and actively takes legal action to combat counterfeit products.
Since 2020, the defendant, without authorization, purchased counterfeit apparel bearing the Client’s trademark at low prices and sold them through a Taobao online store. In 2023, the Client engaged Chang Tsi & Partners to enforce its rights. A complaint was filed with the Changshu Municipal Administration for Market Regulation, and enforcement actions were carried out with the firm’s assistance.
Authorities seized over 17,000 counterfeit garments bearing the Client’s trademark on-site, with a total value exceeding RMB 1.8 million. Following investigation, after deducting returns and sham transactions, the defendant’s illegal sales amount exceeded RMB 5 million. The case was subsequently transferred to the Changshu Public Security Bureau for criminal investigation and prosecuted by the Changshu People’s Procuratorate. Upon judgment, the court sentenced the defendant to three years and nine months imprisonment, imposed a fine of RMB 3.3 million, and ordered the confiscation and destruction of more than 17,000 pieces of clothing bearing the Client’s trademark.
During the process of prosecution and trial, the defendant proactively communicated with Chang Tsi. Eventually, an agreement was reached on the compensation plan, under which the defendant would provide economic compensation to the Client and undertook to cease all infringing activities. In the event of repeated infringement, he shall pay compensation in the amount of millions to the rights holder.
The case presented several challenges due to the large volume of counterfeit goods and the significant monetary value involved. Infringement occurred in multiple forms, including inventory, completed sales, and fake transactions, which made fact-finding and the calculation of illegal gains particularly complex. Additionally, within the framework of criminal prosecution, securing substantial economic compensation for the rights holder required a carefully coordinated strategy and strong negotiation capabilities.
Building on the criminal enforcement action, the Chang Tsi team assisted the Client in initiating parallel civil compensation negotiations. Through comprehensive analysis of the case facts, the defendant’s ability to pay, and overall litigation risks, the team leveraged a solid evidentiary foundation and the pressure created by criminal liability to conduct multiple rounds of rational negotiations. This resulted in the defendant’s voluntary lump-sum compensation payment and a written undertaking, effectively reducing the risk of repeat infringement and lowering enforcement costs.
Given the high value involved, the infringer was sentenced at first instance to a substantial term of imprisonment and a fine of RMB 3.3 million. It was foreseeable that, after the conclusion of criminal proceedings, the defendant’s ability and willingness to compensate would significantly diminish. Drawing on years of experience in trademark enforcement, Chang Tsi & Partners accurately identified the optimal timing for negotiations. The strategy not only punished the criminal conduct but also helped the client recover part of its economic losses, eliminated the risk of repeat infringement, and achieved a highly satisfactory outcome for the client.
