On March 3rd, 2021, the Supreme People's Court issued Interpretation of the Supreme People's Court on the Application of Punitive Damages in the Trial of Civil Cases of Infringement of Intellectual Property Rights (Hereinafter referred to as “the Interpretation”).
 
The Interpretation makes specific provisions on the application scope of punitive damages, the determination of intentional infringement and serious circumstances, and the determination of calculation bases and multiples, etc. in civil intellectual property cases. The Interpretation aims to guide courts at all levels to accurately apply punitive damages and punish serious infringements of intellectual property rights by clarifying judgment standards. The issuance of the Interpretation is a pivotal step towards the implementation of the punitive damages system, demonstrating the resolution of the people's courts to comprehensively strengthen the judicial protection of intellectual property rights. It is of great significance for further optimizing the legal environment for technological innovation.
 
The Interpretation of the Supreme People's Court on the Application of Punitive Damages in the Trial of Civil Cases of Infringement of Intellectual Property Rights was adopted at the 1831st meeting of the Judicial Committee of the Supreme People's Court on February 7, 2021, and is hereby promulgated, which shall come into effect as of March 3, 2021.
                                

The Supreme People's Court
March 2, 2021

Judicial Interpretation〔2021〕No.4
 
The Interpretation of the Supreme People's Court on the Application of Punitive Damages in the Trial of Civil Cases of Infringement of Intellectual Property Rights
 
 
 (Adopted at the 1831st meeting of the Judicial Committee of the Supreme People's Court on February 7, 2021, and shall come into effect as of March 3, 2021)

 
In order to correctly implement the punitive damages system for intellectual property rights, punish serious infringement of intellectual property rights in accordance with the law, and comprehensively strengthen intellectual property protection, pursuant to 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 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 combining with trial practice, the interpretation is formulated.
 
Article 1 Where the plaintiff claims that the defendant intentionally infringed the intellectual property rights he enjoys in accordance with the law, and the circumstances are serious, and requests to order the defendant to pay punitive damages, the people's court shall review and deal with it  according to law.
 
The term “intentional” indicated in this interpretation includes the “malicious” stipulated in Paragraph 1 of Article 63 of the Trademark Law and Paragraph 3 of Article 17 of the Anti-Unfair Competition Law.
 
Article 2 Where the plaintiff claims punitive damages, the amount of damages, the method of calculation, and the facts and reasons on which it is based shall be clarified at the time of filing the lawsuit.
 
Where the plaintiff adds the claim for punitive damages before the end of the debate in the court of first instance, the people's court shall approve it; if he claim for punitive damages is added during the second instance trial, the people's court may conduct mediation based on the principle of voluntariness. If the mediation fails, the parties shall be notified to file a separate lawsuit.
 
Article 3 For the determination of intentional infringement of intellectual property rights, the people's court shall comprehensively consider the factors include the type of the infringed intellectual property rights, the rights status and the popularity of related products, the relationship between the defendant and the plaintiff or the interested party.
 
In the following situations, the people's court can preliminarily determine that the defendant has the intention to infringe intellectual property rights:
 
1. The defendant continues to commit the infringement act after being notified or warned by the plaintiff or the interested party;
 
2. The defendant or its legal representative or manager is the legal representative, manager or actual controller of the plaintiff or interested party;
 
3. The defendant is in employment, labor, cooperation, licensing, distribution, agency, representation, etc. relationships with the plaintiff or the interested parties, and has the access to the infringed intellectual property rights;
 
4. The defendant has business relationships with the plaintiff or interested parties or has negotiated for reaching a contract, and has access to the infringed intellectual property rights;
 
5. The defendant committed acts of piracy and counterfeiting of registered trademarks;
 
6. Other situations that can be considered intentional
 
Article 4 For the determination of serious circumstances of the infringement of intellectual property rights, the people's court shall comprehensively consider the factors include the infringement method, frequency, the duration of the infringement, the geographical scope, the scale, the consequences, and the infringer's behavior in the lawsuit.
 
If the defendant has any of the following circumstances, the people's court may determine that the circumstances are serious:
 
1. Commit the same or similar infringement act again after being punished by an administrative penalty or a court decision ordering him to bear the liability;
 
2. Take infringement of intellectual property rights as a business;
 
3. Forge, destroy or conceal evidence of infringement
 
4. Refuse to fulfill the preservation rulings;
 
5. Make huge profits from infringement or cause huge losses to the right holder;
 
6. Infringement may endanger national security, public interest or personal health;
 
7. Other circumstances that can be determined as serious.
 
Article 5 When determining the amount of punitive damages, the people’s court shall use the actual loss of the plaintiff, the amount of the defendant’s illegal gains, or the benefits obtained due to infringement as the base for calculation in accordance with relevant laws. This base does not include the reasonable expenses paid by the plaintiff to stop the infringement; if the law provides otherwise, such provision shall prevail.
 
If it is difficult to calculate the actual amount of losses, the amount of illegal gains, and the benefits obtained due to the infringement as indicated in the preceding paragraph, the people's court shall reasonably determine it by referring to the multiple of the license fee for the right in accordance with the law, and use this as the base for calculating the amount of punitive damages.
 
Where if the people’s court orders the defendant to provide the account books and materials that are under his control and related to the infringement act according to law, if 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 base for calculating the amount of punitive damages. If the circumstances provided 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 multiple of punitive damages in accordance with the law, the people’s court shall comprehensively consider factors including 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 act 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 it can be taken into consideration comprehensively when determining the multiple indicated 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.

 
Source: the Supreme People's Court
Date: March 3, 2021