CHINA Trends and Developments Contributed by: James Luo and Angie Guo, Lawjay Partners
Lawjay Partners 1009, Tower 1, Prosper Centre 5 Guanghua Ave., Chaoyang District Beijing 100020 China
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Several Issues on the Punitive Damages System in China’s Trade Mark Regime Overview of the punitive damages system Concept of punitive damages Within China’s intellectual property legal frame- work, punitive damages serve as a supplemen- tary compensation mechanism. This system empowers courts to award damages exceeding the actual losses incurred by the rights-holder, thereby severely penalising intentional infringers and acting as a deterrent to potential violators. This approach significantly bolsters the overall protection of intellectual property rights. Compared to compensatory damages, punitive damages, characterised by their substantial amounts and potent deterrent effect, significant- ly increase the costs associated with infringe- ment. Consequently, this provides rights-holders with more robust legal protection. Advances in punitive damages legislation in China The evolution of punitive damages legislation in China reflects a strategic response to the chal- lenges posed by intellectual property infringe- ment. The system’s development began with the 2013 amendment to the Trademark Law, which initially established punitive damages for malicious infringement, allowing for compensa-
tion at one to three times the loss. The 2019 amendment raised the multiplier to five times the loss, amplifying the legal deterrent effect. The Civil Code, effective from 2021, expanded the application of punitive damages to all intellectual property rights, refining the criteria from “mali- cious infringement” to “intentional infringement”, which target infringing actions more precisely. The Supreme People’s Court has subsequently issued judicial interpretations that clarify the conditions for the application of punitive damag- es, the calculation methods for the base amount and the multiplier, providing guidance for practi- cal implementation. Local people’s courts have also introduced relevant guiding documents, further refining the punitive damages process. These legislative refinements and judicial inter- pretations have established a solid foundation for punitive damages as a key instrument in the protection of intellectual property rights in Chi- na. They provide rights-holders with a powerful legal tool and demonstrate China’s resolve to enhance the protection of intellectual property. Judicial application of punitive damages The application of punitive damages is contin- gent upon the satisfaction of specific legal con- ditions, which encompass the infringer’s sub-
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