On September 3, 2025, the Shanghai High Court announced it affirmed an earlier decision by the Qingpu District People’s Court of Shanghai to award LEGO 35 million in a trademark infringement litigation.  LEGO holds registered trademark rights in China for “乐高,” “乐高教育,” “LEGO,” and “LEGO EDUCATION” under Class 41 educational services.

LEGO Education Company previously authorized Nanrang Company (pseudonym) to distribute LEGO educational products and services, including authorization to operate LEGO education activity centers from 2012 to October 2019. From April 2013, Nanrang Company signed multiple distribution and agency contracts with Tenggu Company (pseudonym), authorizing sales of LEGO educational products through school channels only, with authorization valid until February 2020. The contracts prohibited Tenggu Company from using “LEGO Activity Center” or “LEGO Education” branding in any manner that could mislead customers or for unauthorized promotion and recruitment activities .

From 2015 to 2022, Tenggu Company operated franchise recruitment activities using “LEGO Education” and “LEGO Courses” as core selling points, charging ¥130,000 per store over three years, including ¥30,000 in brand usage fees and ¥10,000 deposits. The company built a network of over 200 stores nationwide .

Tenggu Company registered its official website name as “LEGO franchise toy robot education franchise” and used “LEGO” and “LEGO Education” trademarks extensively on its official website and social media. Marketing materials included phrases such as “LEGO toy education free trial hotline,” “imported LEGO education curriculum system,” and “providing complete LEGO international curriculum.” Franchise stores displayed LEGO trademarks prominently on storefronts, signage, decorations, background walls, posters, and employee uniforms .

Starting in 2016, Tenggu Company received multiple notices from Nanrang Company prohibiting use of LEGO trademarks. Tenggu Company issued statements claiming it never authorized franchisees to use “LEGO” marks, sent warning letters to franchisees, and terminated cooperation with some franchisees.

The court found that defendants’ use of trademarks identical or highly similar to LEGO’s registered trademarks in prominent positions on websites and store signage exceeded the necessary limits for indicating product origin. The court determined this use had service source identification functions and could easily cause consumer confusion, constituting trademark infringement.

The court identified several factors supporting punitive damages. Tenggu Company received multiple notices from Nanrang Company prohibiting use of LEGO trademarks but continued associating its website registration name with LEGO and using infringing marks extensively through its channels even after authorization expired. The company’s main business relied heavily on the “LEGO” brand for recruitment and operations. Infringement lasted over seven years with a franchise network covering the country, generating substantial profits through high franchise fees of ¥120,000 per store . Some stores closed suddenly, damaging consumer interests and causing confusion, harming both LEGO’s trademark rights and brand value .

When the court ordered Tenggu Company to submit financial records, bank statements, and franchise contracts, the company refused to provide this evidence . The court calculated the base amount for damages as ¥24 million, based on 200 franchise stores paying ¥120,000 each in franchise fees. Considering factors including significant subjective malice, particularly serious infringement circumstances, refusal to submit evidence, and serious consequences, the court applied a 3x punitive damages multiplier within the statutory range.

The court ordered certain franchisees to cease trademark infringement activities. Tenggu Company was ordered to pay LEGO ¥35 million in economic damages, with franchisees bearing joint liability up to millions of RMB each. Tenggu Company was also ordered to pay ¥350,000 in reasonable litigation costs, with franchisees bearing joint liability for litigation costs ranging from thousands to tens of thousands of yuan each .

Tenggu Company appealed the decision. The second instance court rejected the appeal and upheld the original judgment. The case is now final.

The decision was based on Civil Code Article 1185, which allows punitive damages for intentional intellectual property infringement with serious circumstances, and Trademark Law Article 57, which defines trademark infringement including unauthorized use of identical or similar marks.

Judge Chen Qiang stated,

“Borrowing a boat to go to sea” will eventually “run aground.” Clinging to others’ well-known brands, building a franchise system, and using others’ trademarks as core business resources constitutes malicious trademark infringement. Punitive damages are calculated based on the actual losses suffered by the infringed party, the illegal gains of the infringer, or the profits gained from the infringement. The compensation multiplier is determined based on the maliciousness of the infringement and the resulting damages. The final amount of compensation may be several times the profit gained.

Enterprises should keep in mind the “three musts and three taboos” : ensure that the authorization chain is complete and the authority is clear and unambiguous, and avoid trusting in “borderline” cooperation or allowing franchisees to abuse the brand; strictly manage and supervise franchisees’ use of brand logos, and avoid merely issuing written warnings while neglecting actual control; establish and improve the intellectual property review mechanism, and avoid using other people’s well-known trademarks directly as investment gimmicks or core store logos.

Regarding franchisees, the Judge stated,

Carefully examine the “brand halo.” Before joining, thoroughly verify the authenticity, specific content, and validity period of the brand’s so-called “authorization.” Ask for complete authorization documents, and verify through official channels.

Be wary of “contract traps.” Carefully review the terms regarding brand use in the franchise contract, clearly stipulate the scope, method, and responsibilities of trademark use, and be wary of vague or implied terms in the contract.

Pay attention to “legal risks.” Even as a franchisee, if you use infringing logos in actual operations at the request of the brand owner or under its inducement, you will still constitute infringement and be held jointly and severally liable for compensation. The profits you earn may not be enough to cover the compensation for the infringement.

For consumers, the Judge stated,

Look for “official authorization.” When choosing education and training services, be sure to verify whether the institution has official brand authorization. You can request to see proof of authorization or check the brand’s official website for authorized store information.

Resist “confusion and misleading.” If you discover suspected counterfeiting of well-known brands, report it to market regulators or intellectual property management departments. If service doesn’t meet your expectations or your rights are damaged due to counterfeiting, be sure to preserve evidence such as promotional materials, contracts, and payment receipts, and file a complaint with the Consumer Association or file a lawsuit in the People’s Court in accordance with the law.

The full text of the announcement is available here (Chinese only).