Recently, the Shanghai Intellectual Property Court issued the appellate civil judgment for the case Giorgio·Armani and GIORGIO ARMANI v. two individuals surnamed Yang and Zhang re unfair competition dispute. The appellate judgment supported all of our claims, including the damages in the amount of over 3 million RMB.

Giorgio·Armani is a world famous fashion designer who established GIORGIO ARMANI in 1975. Through several decades of operation, the Armani brand enjoys extremely high reputation in around the world.

The individual Yang asserted to be a designer of GIORGIO ARMANI and issued authorizations to others in the name of Giorgio·Armani and GIORGIO ARMANI. The individual Zhang was a partner with Yang. He advertised Yang’s falsified identity through his Weibo and blog and published an autobiography of Yang entitled Flawless (in Chinese “天衣无缝”); also, he worked with Yang through his own company and developed collaborators and alliance businesses, and even provided customized services for fake “Armani” clothing products. After their wrong doings were discovered, Zhang reported Yang to the public security bureau, alleging Yang’s crime of contract fraud for the purpose of clearing his own liability in the case. Yang was then sentenced to jail for the crime of contract fraud by Beijing Changping District People’s Court.

The trial court held that Yang and Zhang’s conduct had constituted unfair competition by their false advertisement and unauthorized use of the other parties’ influential enterprise name and personal name. Zhang then filed an appeal on the ground that he was a victim in Yang’s criminal case and that he had exercised due care during the process.

The Shanghai Intellectual Property Court held after trial that although Zhang was a victim in Yang’s criminal case, in view of the high reputation of the disputed trademark and the high personal reputation of Giorgio·Armani, and considering that Zhang was well-educated and had been practicing within the clothing industry for years, he should have the ability and obligation to review and verify Yang’s identity and her authorizations. While Yang’s authorizations contained obvious defects, Zhang failed to exercise his due care and even carried out advertising and provided services by using Yang’s falsified identity. The Court held that the two individuals did cooperate and should be jointly liable for the civil compensation, and therefore dismissed Zhang’s appeal and upheld the trial judgment.

Our firm provided sufficient and convincing evidence to support our claim for joint liability of the two defendants. Also, we proved and explained to the court the fact that the two defendants collaborated during the process and Zhang failed to exercise his due care. All of our claims were finally supported by the appellate court.

[Significance of the Case]

1. In a case involving both criminal and civil elements, the criminal liability and the civil liability should be identified under their respective legal systems. Although an individual may be a victim in a criminal case, it does not necessarily mean that he or she can be completely exempted under the civil law system. In terms of the civil liability, where the individual (like Zhang in this case), shows his true intention in collaboration, clarifies a definite profit-sharing rate in the cooperation agreement, fails to exercise his due care in reviewing and verifying the relevant facts and results in expanded consequences and influences of the infringement, he should also bear civil liability; in other words, his being a victim in the criminal case cannot exempt him from the civil liability.

2. In order to grasp unjustified profits, the wrong doers usually try to conceal their illegality by various cunning means. In this case, the individuals falsified the identity as a brand designer, used without authorization the rights holders’ enterprise name and personal name in advertising and business activities, causing a great confusion among the relevant public; further, it was to some extent difficult to investigate their wrong doings, which greatly jeopardized the rights holders’ legitimate business interests in fact. The appellate court combined the evidence produced in this case and held that the two defendants had the intention to cooperate in the false advertisement and confusion among the public, and therefore should be jointly liable for the compensation. The judgment is of great significance for curbing unfair competition and maintaining the order for fair business competition.

Our firm acted on behalf of the rights holders in this case. The main lawyers working on this case are Joe Liu and Mengfei Yu.