201912.11

Red Bull Trademark Case in China: How 18.8 million in court fees was calculated?

On 25 November 2019, the Beijing People’s High Court ordered Red Bull Beijing to pay 18.8 million RMB (2.41 million Euro) in court fees in a case — one of the highest court fees ordered for IP cases in China. One may feel surprised and wonder: How did the court arrive at this amount?

Before answering this question, brief facts of the case: Petitioner Red Bull Beijing filed suit against Defendant T.C. Pharmaceutical Industries, a Thai company that officially owns a portfolio of Red Bull trademarks in China. Petitioner requested the Beijing People’s High Court to acknowledge the ownership of its trademarks and for the Defendant to pay 3.753 billion RMB (480 million Euros) for its advertising expenses.

The litigation was closed to the public due to the various trade secrets involved. The Court rejected all requested of Petitioner and ordered them to pay a sky-high court fee.

In China, regulations on court fees are laid down in the Civil Procedure Law of PRC (中华人民共和国民事诉讼法) and the Litigation Cost Payment Method (诉讼费用交纳办法).

It is a general principle prescribed in the former that court fees1 shall be borne by the losing party, except in instances where the winning party voluntarily pays it. More specifically, Article 6 of the latter indicates that the court fees shall include:

1. Filing fee;

2. Application fee (for enforcing judgment); and

3. Miscellaneous costs.

The application fee for enforcing judgment does not apply to this case at this stage. On the other hand, miscellaneous costs include transportation, accommodation and living expenses, and lost-time allowances incurred by witnesses, appraisers, translators, and so on, whose presence is required by the court on a date specified. These tend to be negligible in terms of its percentage to the whole amount. Thus, the most significant part of the three types of court fees is the filing fee.

Pursuant to Article 13 of the Litigation Cost Payment Method, filing fees of property cases shall be paid in stages and shall be based on the amount of claims made by the Petitioner. For example, if the amount or value does not exceed 10,000 RMB, 50 RMB shall be paid. If the amount is between 10,000 RMB to 100,000 RMB, 2.5% of the amount shall be paid. Lastly, if the amount exceeds 20 million RMB, 0.5% shall be paid as filing fees.

In the current at bar, Petitioner Red Bull Beijing requested Defendant to pay 3.753 billion RMB. Since this request was rejected in toto by the court, Red Bull needs to bear 0.5% of the amount which is equivalent to 18.765 million RMB as filing fees.

On 28 November 2019 Red Bull Beijing announced on their website their intention to appeal this decision. The case is highly likely to proceed in the appeals court and the result of who shall bear the fees will be pending until a final the decision of the appeals court is final or the period for appeal has lapsed.