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Interpretation of the Supreme People's Court on the Application of Punitive Damages to the Trial of Civil Cases of Infringement of Intellectual Property Rights(2021)

To correctly implement the punitive compensation system for intellectual property rights, lawfully punish serious infringements of intellectual property rights, and comprehensively strengthen intellectual property protection, the present interpretation is formulated, in accordance with 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 Anti-Unfair Competition Law of the People's Republic of China, the Seed Law of the People's Republic of China, the Civil Procedure Law of the People's Republic of China and other relevant legal provisions, and in combination with trial practice.

 

Article 1 Where the plaintiff claims that the defendant has intent to infringe on the intellectual property rights it enjoys in accordance with the law and the circumstances are serious, and requests that the defendant be ordered to bear punitive damages, the people’s court shall review and deal with such request in accordance with the law.

The term “intent” as mentioned in this Interpretation includes the bad faith stipulated in Article 63 Paragraph 1 of the Trademark Law and Article 17 Paragraph 3 of the Anti-Unfair Competition Law.

Article 2 Where the plaintiff requests punitive damages, the amount of compensation, the compute method, and the facts and reasons based thereupon shall be clarified at the time when filing the lawsuit.

Where the plaintiff adds the request for punitive damages before the end of the debate in the court  of first instance, the people's court shall approve it; where the request for punitive damages is added in the court of second instance, the people's court may conduct mediation based on the principle of the parties' voluntariness. If the mediation fails, the people's court shall notify the parties to file a separate suit.

Article 3 For the determination of the intent in infringement of intellectual property rights, the people's court shall comprehensively consider factors such as the type of the infringed intellectual property rights, the status of rights and the reputation of related products, the relationship between the defendant and the plaintiff or interested parties.

In the following situations, the people's court can preliminarily determine that the defendant has the intent to infringe on intellectual property rights:

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

(2) The defendant or legal representative or manager thereof is the legal representative, manager or actual controller of the plaintiff or interested party;

(3) The defendant and the plaintiff or the interested parties have relationships in terms of labor, service, cooperation, licensing, distribution, agency, representative etc., and have accessed to the infringed intellectual property rights;

(4) The defendant has business with the plaintiff or interested parties or has negotiated for reaching a contract, etc., and has accessed to the infringed intellectual property rights;

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

(6) Other circumstances that can be determined as intent.

Article 4 For the determination of serious infringement of intellectual property rights, the people's court shall comprehensively consider the infringement means and frequency, the duration of the infringement, the geographical scope, the scale, the consequences, and the infringer's behavior in the lawsuit.

Where the defendant has the following circumstances, the people's court may determine that the circumstances are serious:

(1) After being punished in an administrative penalty or a court decision for infringement, committing the same or similar infringement again;

(2) Committing the infringement of intellectual property rights as its primary business;

(3) Forging, destroying or concealing evidence of infringement;

(4) Refusal to abided by the preservation ruling;

(5) Infringement gains or the right holder’s losses being huge;

(6) Infringements likely to endanger national security, public interests or personal health;

(7) Other circumstances that can be determine as serious.

Article 5 When determining the amount of punitive damages, the people’s court shall use the actual loss suffered by the plaintiff, the amount of the defendant’s illegal gains, or the profits obtained due to infringement as the basis for compute in accordance with relevant laws. This basis does not include the reasonable expenses paid by the plaintiff to stop the infringement; if the law provides otherwise, that provision prevails.

If it is difficult to compute the actual amount of losses, the amount of illegal gains, and the profits obtained due to infringement as mentioned in the preceding paragraph, the people's court shall reasonably determine by reference to the multiple of the license fee for the right in accordance with the law, and use this as the basis for computing the amount of punitive damages.

Where the people’s court orders, in accordance with the law, the defendant to provide the account books and materials related to the infringement but the defendant refuses to provide without justifiable reasons or provides false account books and materials, the people’s court may refer to the plaintiff’s claims and evidence to determine the basis for computing the amount of punitive damages. If the circumstances provided for in Article 111 of the Civil Procedure Law are constituted, legal liabilities shall be investigated in accordance with the law.

Article 6 When determining the multiples of punitive damages in accordance with the law, the people’s court shall comprehensively consider factors such as the degree of the defendant’s subjective fault and the severity of the infringement.

Where an administrative fine or criminal fine has been imposed for the same infringement and the execution has been completed, and the defendant claims to reduce or exempt punitive damages, the people's court shall not support it, but can be considered comprehensively when determining the multiples mentioned in the preceding paragraph.

Article 7 This interpretation shall come into effect on March 3, 2021. If the relevant judicial interpretation previously issued by the Supreme People's Court is inconsistent with this interpretation, this interpretation shall prevail.