Interpretation on Applying Punitive Damages in Cases of Hearing Cases of Intellectual Property Rights Infringement

Promulgation Date: 2021-3-2
Title: 最高人民法院关于审理侵害知识产权民事案件适用惩罚性赔偿的解释
Document Number:法释〔2021〕4号
Expiration date: 
Promulgating Entities: Supreme People's Court
Source of text: http://www.court.gov.cn/fabu-xiangqing-288861.html

　　In order to correctly implement the system of punitive compensation for intellectual property rights, punish serious infringement of intellectual property rights in accordance with the law, and comprehensively strengthen the protection of intellectual property rights, this interpretation is formulated in accordance with the relevant laws and regulations, such as the Civil Code of the People's Republic of China, the Copyright Law of the People's Republic of China, the Trademark Law of the People's Republic of China, the Patent Law of the People's Republic of China, the Seed Law of the People's Republic of China, and the Civil Procedure Law of the People's Republic of China.

Article 1: Where plaintiffs claim that a defendant intentionally violated the intellectual property rights they enjoy in accordance with law, and the circumstances are serious, and they demand a judgment for the defendant to bear responsibility for paying punitive damages, the people's courts shall review and handle it in accordance with law.

The intent referred to in this Interpretation includes malice provided for in the first paragraph of article 63 of the Trademark Law and in the third paragraph of article 17 of the Unfair Competition Law.

Article 2:Where plaintiffs demand punitive damages, the amount and how it was calculated shall be clearly indicated when litigation is initiated, as well as the facts and reasoning on which it is based.

Where the plaintiff adds a demand for punitive damages before the conclusion of courtroom debate, the people's court shall allow it; and where the demand for punitive damages is added during the second-instance trial, the people's court may conduct mediation in accordance with the principle of the parties' voluntariness, and where mediation is unsuccessful, notify the parties to initiate a separate lawsuit.

Article 3: In determining the intent in a violation of intellectual property rights, the people's courts shall comprehensively consider factors such as the type of intellectual property rights violated, the status of the rights, the recognizability of the products, and the relationships between the defendants, plaintiffs, or stakeholders.

In the following circumstances, the people's courts may make a preliminary finding that the defendant has the intent to violate intellectual property rights:

(1) The defendant continues to commit the infringing acts after being notified or warned by the plaintiff or an interested party;

(2) The defendant or its legal representatives or managers are the legal representative, manager, or actual controller of the plaintiff or interested party;

(3) There are relationships such as for labor, service, cooperation, licensing, distribution, agency, or representation between the defendants and plainitffs or interested parties, and they have had contact with the infringed intellectual property rights;

(4) The defendant has business dealings with the plaintiff or interested parties or they have had contract negotiations and have been in contact with the infringed intellectual property rights;

(5) The defendant committed acts pirating or counterfeiting registered trademarks;

(6) Other circumstances that where intent can be found.

Article 4: In determining that the circumstances of intellectual property rights infringement were serious, the people's courts shall comprehensively consider factors such as the means, number of violations, the duration the violation continued, the geographic scope, scale, and consequences of the infringement, and the conduct of the violator during the proceedings.

Where defendants have the following circumstances, the people's court may find that the circumstances were serious:

(1) After being given an administrative penalty or a court judgment finding responsibility for infringement, they commit the same or similar infringement again;

(2) They are in the business of infringing intellectual property rights;

(3) They fabricate, destroy, or conceal evidence of infringement;

(4) Refusal to perform on a preservation ruling;

(5) The gains from the infringement or the harm suffered by the rights holder is huge;

(6) The infringing acts might endanger national security, the public interest, or physical health;

(7) Other situations where the circumstances may be found to be serious.

Article 5: When determining the amount of punitive damages, the people's courts shall use either the actual losses of the plaintiff, the amount of the defendant's unlawful gains, or the benefits obtained due to infringement as a base amount for calculations in accordance with relevant laws. This base amount does not include reasonable expenses paid by the plaintiff to stop the infringement; but where the law provides otherwise, follow those provisions.

Where it is difficult to calculate the amount of actual losses, unlawful gains, or benefits from the infringement as provided in the preceding paragraph, the people's court is to make a reasonable determination in accordance with a multiple of licensing fees and use this as the base amount for calculating punitive damages.

Where the people's court orders defendants to provide account books and materials related to the infringement that are in their control, and the defendants refuse to provide them without legitimate reasons or provide false account books or materials, the people's courts may refer to the plaintiff's claims and evidence to determine a base amount for calculating the amount of punitive damages. Where the situations provided for in Criminal Procedure Law article 111 are established, legal responsibility is to be pursued in accordance with law.

Article 6: When people's courts determine the multiple for punitive damages, they shall comprehensively consider the extent of defendants' subjective fault, the seriousness of the infringing conduct, and other such factors.

Where an administrative or criminal fine has already been enforced for the same infringing conduct and the defendant proposes reducing or waiving responsibility for punitive damages, the people's courts are not to support it, but it may be part of the comprehensive considerations in determining the multiple provided for in the preceding paragraph.

Article 7: This interpretation will come into effect on March 3, 2021. Where related judicial interpretations previously released by the Supreme People's Court are inconsistent with this Interpretation, this Interpretation is controlling.