Judicial Interpretation [2021] No. 4
(Adopted at the 1831st meeting of the Judicial Committee of the Supreme People's Court on February 7, 2021 and effective as of March 3, 2021)
In order to correctly implement punitive damages system for intellectual property rights, lawfully punish serious intellectual property infringement and comprehensively strengthen the protection of intellectual property, this interpretation is formulated in accordance with the Civil Code, the Copyright Law, the Trademark Law, the Patent Law, the Anti-Unfair Competition Law, the Seed Law and the Civil Procedure Law and other relevant laws and regulations of the People’s Republic of China, and in combination with judicial practice.
Rule 1 Where the plaintiff claims that the defendant intentionally infringes on the intellectual property lawfully enjoyed by the plaintiff and the circumstances are serious, and requests that the defendant be ordered to bear punitive damages liability, the people's court shall try it in accordance with the law.
The term “intentionally” in this Interpretation includes bad faith as stipulated in Paragraph 1 of Article 63 of the Trademark Law and in Paragraph 3 of Article 17 of the Anti-Unfair Competition Law.
Rule 2 Where the plaintiff requests punitive damages, he/she/it shall specify the amount of compensation, the calculation method, and the facts and reasons on which the request is based when filing the lawsuit.
Where the plaintiff adds a request for punitive damages before the end of the debate in the court of first instance, the people's court shall allow it. Where a request for punitive damages is added in the second instance, the people's court may conduct mediation based on the principle of voluntariness of the parties. If the mediation fails, the court shall notify the parties to file a separate lawsuit.
Rule 3 For the determination of intentional intellectual property infringement, the people's court shall comprehensively consider factors such as the type of the infringed intellectual property, the status of the rights, the fame of the related products, and the relationship between the defendant and the plaintiff or the interested parties.
Under the following circumstances, the people's court may preliminarily determine that the defendant has the intention of infringing on the intellectual property:
(1) The defendant continues to commit the infringing act after being notified or warned by the plaintiff or the interested parties;
(2) The defendant or his/her/its legal representative or manager is the legal representative, manager or actual controller of the plaintiff or the interested parties;
(3) The defendant has a labor, service, cooperation, licensing, distribution, agency, representative or any other relation with the plaintiff or the interested parties, and had access to the infringed intellectual property;
(4) The defendant has business dealings, or has negotiated for reaching a contract, etc., with the plaintiff or the interested parties, and had access to the infringed intellectual property;
(5) The defendant commits an act of piracy or counterfeiting a registered trademark; or
(6) Other circumstances that can be determined as intentional.
Rule 4 For the determination of serious circumstance for intellectual property infringement, the people's court shall comprehensively consider factors such as the means and frequency of the infringement, the duration, geographical scope, scale and consequences of the infringing act, and the behavior of the infringer in the litigation procedure.
If the defendant has any of the following circumstances, the people's court may determine that the circumstance is serious:
(1) Committing the same or similar infringement again after being administratively punished or being held liable by a people’s court;
(2) Committing intellectual property infringement as a business;
(3) Forging, destroying or concealing evidence of infringement;
(4) Refusing to fulfill a preservation ruling;
(5) Making huge gains or causing the rights holder to suffer huge losses due to the infringement;
(6) Endangering national security, public interests or personal health with the infringing act;
(7) Other circumstances that can be determined as serious.
Rule 5 When determining the amount of punitive damages, the people's court shall, in accordance with relevant laws, take the amount of the plaintiff’s actual loss, the amount of the defendant’s illegal gain or benefit obtained due to infringement as the calculation basis. This basis does not include the reasonable expenses paid by the plaintiff to stop the infringement; if the law provides otherwise, such provisions shall prevail.
If the amount of actual loss, the amount of illegal gain and the benefit obtained due to infringement mentioned in the preceding paragraph are all difficult to calculate, the people's court shall reasonably determine them by reference to the multiples of the license fee of the right in accordance with the law, and use the same as the basis for calculating the amount of punitive damages.
If the people's court orders in accordance with the law the defendant to provide the infringement-related books and materials that are in the control of the defendant, but the defendant refuses to provide them without justifiable reasons or provides false books and materials, the people's court may refer to the plaintiff's claim and evidence to determine the basis for calculating the amount of punitive damages. Those whose acts constitute the circumstances stipulated in Article 111 of the Civil Procedure Law shall be investigated for legal liabilities in accordance with the law.
Rule 6 When determining the multiple of punitive damages in accordance with the law, the people's court shall comprehensively consider the degree of the subjective fault of the defendant, the seriousness of the infringement and other factors.
If an administrative fine or a criminal fine has been imposed for the same infringement and the execution is completed, the people's court shall not support the defendant's claim for reduction or exemption of punitive damages, but can comprehensively consider it when determining the multiple mentioned in the preceding paragraph.
Rule 7 This interpretation shall come into force on March 3, 2021. If relevant judicial interpretations previously issued by the Supreme People's Court are inconsistent with this interpretation, this interpretation shall prevail.
