Court: Refunding to Customer and Compensating Three Times the Payment for Fraud

[Case Review]

Lately, the Shanghai Jinshan District People's Court ("Shanghai Jinshan") concluded a case over sales contract dispute, in which a piano store was ordered to refund the customer and make a compensation three times the payment for selling pianos with a counterfeit registered trademark.

Ms. Li loved to play the piano, and as she became more skillful at it, she decided to buy one so that she could practice at home any time she wanted. When she was browsing the piano shops online, Ms. Li found a shop selling authentic brand-new Yamaha pianos. Through communication, the shop asked Ms. Li to go to its offline store in Shanghai for a look, and Ms. Li agreed with pleasure.

So, Ms. Li and her husband went to the shop called German Piano Store, and bought a Yamaha U3 upright piano at a price of RMB 60,000. They paid a deposit of 10,000 yuan at the store and got the receipt, and agreed to pay the remaining when the piano was delivered to their home. And Ms. Li did so upon the piano¡¯s arrival at her home. A few days later, the seller issued an invoice to Ms. Li, wrote on it the product number of the piano as required by Ms. Li, and sent over a piano tuner to Ms. Li¡¯s. When tuning the piano, the tuner told Ms. Li that he wondered if her piano was a real Yamaha. Ms. Li and her husband immediately contacted Yamaha and asked the company to verify whether the piano they bought was real. After identification, Yamaha issued a certificate to Ms. Li, saying that their piano bought was a counterfeit. Ms. Li was so angry that she reported it to the public security organ. After investigation, the public security organ arrested, after the approval of the procuratorial organ, WU, the actual operator of the store, on suspicion of counterfeiting a registered trademark. After hearing the case, the court sentenced WU to 11 months in prison and imposed a fine upon him for selling commodities with a counterfeit registered trademark.

After that, Ms. Li filed a lawsuit in the Shanghai Jinshan Court, claiming that the store had committed fraud by selling the piano involved with a counterfeit registered trademark, and requesting the store to return her the payment of RMB 60,000 for the piano and compensate her three times the payment, which shall be RMB 180,000.

[Case Study]

After hearing the case, the Shanghai Jinshan Court held that the store had committed fraud by dealing in pianos without authorization of Yamaha and knowingly selling to Ms. Li a piano with a counterfeit registered trademark. Ms. Li's request for returning the payment for the piano and compensating her three times the payment has factual and legal bases and shall be supported by the court.

Accordingly, the Shanghai Jinshan Court made a first-instance judgment, ordering the store to return Ms. Li RMB 60,000 for the piano and compensate her RMB 180,000.

The sale of goods with a counterfeit registered trademark is theft of the registrant's reputation and it also seriously damages the interests of consumers. It goes against the national regulations on trademark management, infringes on others¡¯ right to exclusive use of the registered trademark, and disrupts the market order. Where the amount of illegal gains is relatively large or the circumstances are serious, the infringer shall be held accountable by law.

Below are some tips for consumers to protect their rights and interests:

1. You should buy well-known products through official channels, and remember to check if the product matches what the operator says in the promotion and description materials when you buy.

2. You should fix and retain evidence such as receipts, payment vouchers, contracts, brochures, and packaging. If necessary, you may entrust a qualified institution to authenticate the product, or reserve the product to apply for authentication in the lawsuit. In this case, the receipt and invoice retained by Ms. Li when she bought the piano are important evidence to claim from the store.

3. When your rights and interests are infringed upon, you can protect your rights and interests through a variety of ways. In this case, Ms. Li has set up a good example of protecting her rights by applying for authentication, calling the police and filing a lawsuit.

[Relevant Laws]

I. Law of the People¡¯s Republic of China on the Consumption of Consumer Rights and Interests

Article 52 Where a business operator causes damage to the property of a consumer by providing a commodity or service, it shall, in accordance with the provisions of the law or the agreement of the parties concerned, bear civil liabilities for repairing, remaking, replacing, or returning the commodity, making up the quantity of the commodity, returning the payment for the commodity and the service fees, or compensating for losses.

Article 55 Where a business operator commits any fraudulent act in providing a commodity or service, it shall, at the request of the consumer, increase the compensation for the losses the consumer has suffered. If the amount of the increased compensation is less than 500 yuan, it shall be 500 yuan. If the law provides otherwise, such provisions shall prevail.

Where a business operator knowingly offers consumers with defective commodities or services, thus causing death of or serious damage to the consumer or other people, the victim shall have the right to claim from the business operator in accordance with the provisions of Articles 49 and 51 hereunder and also claim for punitive damages of less than twice the losses incurred.

II. Civil Procedure Law of the People¡¯s Republic of China

Article 64 A party shall have the burden to provide evidence for its claims.

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Article 144 If, having been served with a summons, the defendant refuses to appear in court without justified reasons, or if, without the permission of the court, he withdraws from the court during the proceedings, a judgment may be made by default.

Article 253 If the person subject to enforcement fails to perform his pecuniary obligation within the period specified in the judgment or written order or any other legal documents, he shall pay double interest on the debt for the delayed period. If the person subject to enforcement fails to perform other obligations within the period specified in the judgment or written order or other legal documents, he shall pay a fee for delay in performance.

                                     (By Lu Yebo, Cui Jie, Shanghai Jinshan Court)