Chinese Supreme Court Issues Interpretation to Clarify Application of Punitive Damages in Civil IP Infringement Cases
On 3 March 2021, the Supreme People’s Court of China (SPC) issued the Interpretation on the Application of Punitive Damages in the Trial of Civil Cases Involving Intellectual Property Infringement, which has come into effect upon its issuance.
The Interpretation, comprising 7 articles, was formulated on the basis of China's Civil Code, Patent Law, Copyright Law, Trademark Law, Anti-Unfair Competition Law, Seed Law, and Civil Procedure Law as well as taking reference from trial practice of the Chinese courts, to provide guidance for the courts of various levels in the application of punitive punishment when hearing IP infringement cases.
The first article of the Interpretation affirms that "intent" and "serious circumstances" are the two prerequisites for the application of punitive damages in IP civil cases, and clarifies the relationship between "故意" (intent/intentional) and "恶意" (bad faith/malicious), both terms being used in the Chinese IP laws. By stating that "故意" in the Interpretation encompasses the "恶意" as employed in the Trademark Law and the Anti-Unfair Competition Law, it implies that the two terms carry the same implication in the Chinese IP laws.
The Interpretation also provides for the factors and scenarios for establishing "intent" and "serious circumstances" respectively, as well as touches upon the calculation of punitive damages. Specifically, Article 5 of the Interpretation states that "reasonable expenses paid by the plaintiff to stop the infringement" should not be included in the calculation, unless it is provided otherwise in specific laws, and in that case such specific provisions shall apply.
