Shanghai Court Applies Punitive Damages in LEGO Trademark Case Worth RMB 35 Million
Published 11 September 2025
Yu Du
On 4 September 2025, the Shanghai High People’s Court released the final judgment in a high-profile case involving malicious trademark infringement of the famous “LEGO” brand. The case, brought by LEGO Juris A/S against Tenggu Company and its franchisees, resulted in a total damages award of RMB 35 million, including punitive damages, and was hailed as a landmark decision strengthening trademark protection in China.
Case History
LEGO Juris A/S [ https://www.lego.com ] owns registered trademarks for LEGO, LEGO EDUCATION, and their Chinese characters in Class 41, covering education-related services. These marks have long been used globally and enjoy a high level of recognition and reputation.
In China, LEGO Education’s business includes both in-school and out-of-school services. From 2012 to October 2019, LEGO Education authorized a distributor, Nanrang Company, to operate LEGO Education centers and resell related products and services. Nanrang was permitted to authorize third parties, including Tenggu Company, for in-school product distribution.
Starting in 2013, Tenggu signed multiple distribution and agency contracts with Nanrang, which explicitly prohibited Tenggu from using phrases like LEGO Education or similar labels for unauthorized promotion or misleading advertising. These agreements expired in February 2020.
However, between 2015 and 2022, Tenggu Company launched an aggressive national franchising scheme under the banners of “LEGO Education” and “LEGO Curriculum”. Charging RMB 130,000 per franchise over three years (including RMB 30,000 for brand usage), it built a vast network of over 200 outlets across China.
Tenggu’s official website and WeChat pages were titled “LEGO Robot Toy Education Franchise”, heavily featuring LEGO trademarks in promotional materials and store branding, including signboards, posters, uniforms, and décor , creating the impression of an official LEGO Education franchise.
Despite receiving repeated cease-and-desist notices from Nanrang starting in 2016, Tenggu continued using LEGO’s trademarks and claimed it had not authorized its franchisees to use them, though evidence suggested otherwise.
First Instance Judgment
The Shanghai Qingpu District People’s Court found that Tenggu Company and its franchisees had extensively used the “LEGO” marks beyond what would be considered descriptive or referential use. The court ruled that such use had distinctive source-identifying function and was highly likely to cause confusion among consumers.
Key findings include:
1) Tenggu demonstrated bad faith, having received repeated warnings yet continued to use the marks in official filings and publicity materials.2) The infringement was systematic and nationwide, with over 200 franchisees and a heavy reliance on the “LEGO” brand to solicit business.3) The infringement spanned over 7 years, amplifying the impact on LEGO’s brand value and consumer trust.4) Franchise closures harmed consumers, leading to further brand dilution and confusion.
The court ordered Tenggu to disclose financial records, but Tenggu refused to submit key evidence such as financial statements and contracts. As a result, the court calculated the base compensation based on an estimated RMB 2.4 million per store × 200 stores = RMB 24 million in unlawful gain.
Applying a 3x punitive multiplier, the court awarded RMB 35 million in damages. Additionally, Tenggu was ordered to pay RMB 350,000 in legal expenses, and various franchisees were held jointly liable in amounts ranging from hundreds of thousands to several million yuan.
Appeal and Final Ruling
Tenggu appealed the decision to the Shanghai High People’s Court, arguing that the use of the marks was authorized and merely descriptive. However, the appellate court dismissed the appeal and upheld the original ruling in full, confirming that the facts, evidence, and legal reasoning of the first instance court were sound.
The decision is now final and legally effective.
Comment
This case represents another powerful precedent in which Chinese courts have provided substantive protection for well-known foreign trademarks. In the face of malicious, large-scale, and long-term infringement, the courts demonstrated strong support for the trademark owner. Notably, in the absence of financial records, the court reasonably inferred the infringer’s profits and applied a threefold punitive damages multiplier, reflecting a firm stance against bad-faith infringement. For international brands operating in China, it underscores the importance of maintaining clear and controllable authorizations with proper oversight, and of taking proactive legal action when infringement occurs - making full use of punitive damages and joint liability to safeguard brand integrity.
Case History
LEGO Juris A/S [ https://www.lego.com ] owns registered trademarks for LEGO, LEGO EDUCATION, and their Chinese characters in Class 41, covering education-related services. These marks have long been used globally and enjoy a high level of recognition and reputation.
In China, LEGO Education’s business includes both in-school and out-of-school services. From 2012 to October 2019, LEGO Education authorized a distributor, Nanrang Company, to operate LEGO Education centers and resell related products and services. Nanrang was permitted to authorize third parties, including Tenggu Company, for in-school product distribution.
Starting in 2013, Tenggu signed multiple distribution and agency contracts with Nanrang, which explicitly prohibited Tenggu from using phrases like LEGO Education or similar labels for unauthorized promotion or misleading advertising. These agreements expired in February 2020.
However, between 2015 and 2022, Tenggu Company launched an aggressive national franchising scheme under the banners of “LEGO Education” and “LEGO Curriculum”. Charging RMB 130,000 per franchise over three years (including RMB 30,000 for brand usage), it built a vast network of over 200 outlets across China.
Tenggu’s official website and WeChat pages were titled “LEGO Robot Toy Education Franchise”, heavily featuring LEGO trademarks in promotional materials and store branding, including signboards, posters, uniforms, and décor , creating the impression of an official LEGO Education franchise.
Despite receiving repeated cease-and-desist notices from Nanrang starting in 2016, Tenggu continued using LEGO’s trademarks and claimed it had not authorized its franchisees to use them, though evidence suggested otherwise.
First Instance Judgment
The Shanghai Qingpu District People’s Court found that Tenggu Company and its franchisees had extensively used the “LEGO” marks beyond what would be considered descriptive or referential use. The court ruled that such use had distinctive source-identifying function and was highly likely to cause confusion among consumers.
Key findings include:
1) Tenggu demonstrated bad faith, having received repeated warnings yet continued to use the marks in official filings and publicity materials.2) The infringement was systematic and nationwide, with over 200 franchisees and a heavy reliance on the “LEGO” brand to solicit business.3) The infringement spanned over 7 years, amplifying the impact on LEGO’s brand value and consumer trust.4) Franchise closures harmed consumers, leading to further brand dilution and confusion.
The court ordered Tenggu to disclose financial records, but Tenggu refused to submit key evidence such as financial statements and contracts. As a result, the court calculated the base compensation based on an estimated RMB 2.4 million per store × 200 stores = RMB 24 million in unlawful gain.
Applying a 3x punitive multiplier, the court awarded RMB 35 million in damages. Additionally, Tenggu was ordered to pay RMB 350,000 in legal expenses, and various franchisees were held jointly liable in amounts ranging from hundreds of thousands to several million yuan.
Appeal and Final Ruling
Tenggu appealed the decision to the Shanghai High People’s Court, arguing that the use of the marks was authorized and merely descriptive. However, the appellate court dismissed the appeal and upheld the original ruling in full, confirming that the facts, evidence, and legal reasoning of the first instance court were sound.
The decision is now final and legally effective.
Comment
This case represents another powerful precedent in which Chinese courts have provided substantive protection for well-known foreign trademarks. In the face of malicious, large-scale, and long-term infringement, the courts demonstrated strong support for the trademark owner. Notably, in the absence of financial records, the court reasonably inferred the infringer’s profits and applied a threefold punitive damages multiplier, reflecting a firm stance against bad-faith infringement. For international brands operating in China, it underscores the importance of maintaining clear and controllable authorizations with proper oversight, and of taking proactive legal action when infringement occurs - making full use of punitive damages and joint liability to safeguard brand integrity.