| Comparison between the original and the revised 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 | |
| Original articles | Revised articles |
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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 handle the case 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 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 |
| As the Anti‑Unfair Competition Law of 2025 and the 2025 Draft Revised Trademark Law (for soliciting opinions) both adopt the term “intentional” as the subjective requirement for punitive damages, this Interpretation deletes the provision equating “malicious” with “intentional”. As both the 2025 Anti‑Unfair Competition Law and the 2025 Draft Revised Trademark Law (for soliciting opinions) have unified the subjective requirement for punitive damages to “intent”, this Interpretation removes the provision that equates “malicious” with “intentional”. | |
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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 his 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 2 Where the plaintiff claims punitive damages, Article 3 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 his 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, Article 4 Where the plaintiff claims compensation for damages but does not claim punitive damages in intellectual property infringement proceedings, and still does not assert such a claim after the people’s court has given an explanation, a separate action claiming punitive damages instituted after the conclusion of the proceedings based on the same infringing act shall not be accepted by the people’s court. Article 5 Where the plaintiff claims punitive damages for unfair competition conducts of the defendant other than intentional trade secret infringement, the people’s court shall not approve it, unless otherwise specified by the law. |
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1. This article has been substantially revised. The second paragraph of original Article 2 has been separated as Article 3, and Articles 4 and 5 are newly added on this basis. 2. According to the specific revisions, it is no longer required to explicitly state the claim for punitive damages and the method of calculation in the complaint; but the claim shall still be raised before the conclusion of court debate in the first instance. If a claim for punitive damages is added in the second instance and mediation fails, such claim would no longer be supported. 3. With regard to the added articles, Article 4 is supplementary explanation for Article 3 and specifies that if the plaintiff does not make a claim after the court explains the punitive damages, there will be no other chances to make such a claim in a separate action. 4. Article 5 emphasizes Paragraph 3 of Article 22 of the Anti‑Unfair Competition Law, while leaving room possible application of punitive damages to new types of unfair competition acts that may emerge in the future. |
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Article 3 For the determination of intentional infringement of intellectual property rights, the people's court shall comprehensively consider the factors include the type, the legal status, and the popularity of related product of the infringed intellectual property right, the relationship between the defendant and the plaintiff or the interested party. In the following circumstances, the people's court may preliminarily find that the defendant has the intent 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 labor, service, cooperation, licensing, distribution, agency, representation, and other relationship with the plaintiff or the interested party, and has accessed the infringed intellectual property right; 4. The defendant has business relationships with the plaintiff or interested party or has negotiated for reaching a contract, and has accessed the infringed intellectual property right; 5. The defendant committed acts of piracy and counterfeiting of registered trademarks; 6. Other circumstances under which intent to infringe may be found. |
Article 6 For the determination of intentional infringement of intellectual property rights, the people's court shall comprehensively consider the factors include the type, the legal status, and the popularity If the defendant is under any of 1. Continues 2. Is 3. In 4. Has 5. Has 6. Commits the same or similar infringing act again after reaching a settlement with the plaintiff and agreeing to cease the infringing act; 7. Establishes affiliated enterprises, changes legal representatives or controlling shareholders, secretly establishes enterprises to conceal the actual control relationship, or signs exemption agreements to evade legal liability for infringing the intellectual property right involved in the case; 8. Other circumstances under which intent to infringe may be found. |
| Apart from minor semantic adjustments, this article takes into account the typical circumstances emerging in practice. For example, Item 2 explicitly provides that a defendant (or its legal representative/manager) who concurrently serves as the legal representative, manager or actual controller of the plaintiff or an interested party, and knows or should have the knowledge of the infringed intellectual property right, shall be found to have “intent” when siphoning or transferring the plaintiff’s interests. Items 6 and 7 add various typical scenarios that constitute “intent”, including repeated infringement after settlement, concealing actual control relationship, or entering successive exemption agreements. In particular, Item 7 describing the approach in evading liabilities by controlling a “puppet company” and making it a scapegoat when the time comes provides new perspectives and requirements for right holders to adduce evidence. | |
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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 the following circumstances, the people's court may determine that the circumstances are serious: 1. Commits the same or similar infringement act again after being subject to administrative penalty or ordered by a judicial judgment to bear liability for infringement; 2. Engaging in infringement of intellectual property rights as a business; 3. Forges, destroy or conceal evidence of infringement 4. Refuses to fulfill the preservation rulings; 5. Makes 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 7 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 awareness and basic attitude toward its infringing act If the defendant has any of the following circumstances, the people's court 1. Commits the same or similar infringement act again after being subject to administrative penalty or ordered by a judicial judgment to bear legal liability for infringement; 2. 3. Forges, destroys or conceals evidence of infringement 4. 5. Makes huge profits from infringement or causes 6. Commits an infringing act that endangers or 7. Other circumstances that can be determined as serious. |
| Apart from minor semantic adjustments, this article provides specific instances of “engaging in infringement of intellectual property rights as a business”. That is, “engaging in infringing acts as its main business” or “taking infringement profits as its main source of income”, or equivalents thereof shall be determined as “engaging in infringement of intellectual property rights as a business”. | |
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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 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 calculation of 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 8 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. If it is difficult to calculate the actual amount of losses, the amount of illegal gains, and the benefits obtained due to the infringement The statutory damages may not serve as the base for calculation of the punitive damages. Article 9 Where the amount of the defendant’s illegal gains or the benefits obtained due to infringement is used as the base for calculation of the punitive damages, reference may be made to the operating profit. Where the defendant takes infringement of intellectual property rights as a business, the calculation may be made by reference to sales profit. Where the profit rate cannot be determined, the calculation may be made by reference to the average profit rate of the industry in the same period published by statistical authorities or industry associations, or by reference to the right holder’s profit rate. Article 10 Where the people’s court orders the defendant to provide the account books, |
| Apart from minor semantic adjustments, this article provides that statutory damages may not serve as the base for calculation of punitive damages; that is, the base for calculation shall be the plaintiff’s actual losses, the defendant’s illegal gains, or the benefits derived from infringement. In addition, the revised Interpretation takes into account the base for calculation of punitive damages discussed in previous cases, clarifying that operating profit may be referred to in ordinary circumstances and sales profit may be referred to where the defendant “engages in intellectual property infringement as a business”. Further, it clarifies that the average profit rate of the industry in the same period published by statistical authorities, industry associations, etc. may be used as a reference when the profit rate cannot be determined. | |
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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 11 When determining the multiple of punitive damages Article 12 The total amount of damages determined by the people’s court in applying punitive damages shall not exceed five times the base for calculation. Reasonable expenses paid by the right holder to stop the infringing act shall be calculated separately in addition to the said total amount. Article 13 Where an administrative fine or criminal fine has been imposed for the same infringement act and the execution has been completed, |
| Apart from minor semantic adjustments, this article takes into account the typical circumstances emerging in practice where the multiple of punitive damages is determined to be 1.5, 2.5, or the like and clarifies that the multiple may be a non-integer and specifies that the total amount of damages determined by applying punitive damages shall not exceed five times the base for calculation. That is, punitive damages shall not be added separately to the base for calculation but shall be integrated when determining the multiple. However, reasonable expenses paid to stop the infringing act are not included in the total amount of damages. | |
| 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. |
Article 14 This interpretation shall come into effect on May 1, 2026. Upon the implementation of this Interpretation, 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 (Fa Shi [2021] No. 4) shall be repealed simultaneously. For cases in which effective judgments have been rendered before the implementation of this Interpretation, this Interpretation shall not apply to applications for retrial by parties or retrials conducted in accordance with the trial supervision procedure after the implementation of this Interpretation. |
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