Featuring three essential Q&As on proving “intent”, assessing “serious circumstances”, and identifying punitive factors in statutory damages.
This chapter focuses on key issues in punitive damages for intellectual property infringement, providing a clear breakdown of the necessary elements for liability and how damages are calculated. By analyzing recent landmark cases, we summarize how courts determine the existence of “intent” and “serious circumstances,” and how the judiciary decides the base amount, applicable multiplier, and total compensation. The aim is to offer practical guidance for IP rights holders.
With this in mind, we have selected three essential Q&As from Chapter 10: Punitive Damages for Intellectual Property Rights of the Practical Q&A Guide to Cutting-Edge Intellectual Property Issues, co-authored by Wolters Kluwer, Lusheng Law Firm, and its strategic partner Rouse.
Regarding the difference between “intentionally” and “maliciously”, the Trademark Law and the Anti-Unfair Competition Law use “maliciously”, while the Civil Code, Patent Law and Copyright Law use “intentionally”. Regarding this, paragraph 2, Article 1 of the Punitive Damages Interpretation stipulates that “intentionally” includes “maliciously” as provided in the Trademark Law and the Anti-Unfair Competition Law.
In addition, Article 3 of the Punitive Damages Interpretation stipulates the criteria for determining “intentionally”. That is, the determination of “intentionally” requires comprehensive consideration of factors, including the type of object of the infringed intellectual property right, the status of the right, the popularity of the relevant product, and the relationship between the infringer and the rights holder.
This section lists in detail the circumstances under which the infringer can be preliminarily determined to have intent to infringe. Based on the experience of specific cases, the right holder may collect evidence of “intentionally” from the following perspectives:
1. Continued infringement after receiving a valid notice or warning
This includes cases where the infringer continues the infringement even after receiving a formal notice or warning from the right holder, an authorized agent, or the intellectual property administration.
To be considered valid, a notice or warning must meet the following criteria:
2. Knowledge of the right holder’s intellectual property due to prior relationships
The infringer is aware of the right holder’s intellectual property through contractual, cooperative, or other relationships, such as:
3. Awareness of the right holder’s intellectual property through legal proceedings
The infringer proceeds with infringement despite prior awareness of the right holder’s rights through judicial, administrative, arbitration, or regulatory proceedings, such as:
4. Acts of piracy or counterfeiting
If the infringer has deliberately targeted the right holder’s intellectual property, intent can be presumed. The right holder may provide evidence related to: Product quality and anti-counterfeiting markings; Design details copied from the original; Sales price and sales methods indicating piracy or counterfeiting. For example, the infringer obscure or remove the right holder’s mark in advertisements or on infringing goods
5. Infringement of well-known intellectual property rights such as well-known trademarks and well-known film and television works.
This includes the unauthorized use of a well-known trademark on the same or similar goods, or the bad-faith registration and use of a well-known trademark. If the right holder can prove that its intellectual property is widely recognized in the industry or region, the infringer may be presumed to have acted with intent, given the higher duty of avoidance and care in such cases.
Article 4 of the Punitive Damages Interpretation stipulates the criteria for determining “serious circumstances”. That is, the determination of “serious circumstances” must comprehensively consider factors such as the means and times of infringement, the duration, territorial scope, the scale and consequences of the infringement, and the acts of the infringers in the litigation and other procedures.
This section lists in detail the circumstances that can be determined to be serious, and based on the experience of specific cases, the right holder’s evidence on the elements of serious circumstances can be carried out in the following aspects:
( I ) Means, Methods and Frequency of Infringement
Typical behaviours include:
1. Repeating the same or similar infringement after receiving an administrative penalty or ruling
2. Repeating the same or similar infringement despite an effective judgment, mediation document, or arbitration award
3. Repeating the same or similar infringement after signing a settlement agreement with the right holder acknowledging infringement
4. Continuing infringement by establishing a new enterprise, changing the enterprise name, changing the legal representative, or using an affiliated enterprise
5. Using multiple channels and diverse methods of infringement
( II ) Scale, Duration, and Territorial Scope of Infringement
Typical behaviours include:
1. Engaging in intellectual property infringement as a business, where evidence proves it is a primary source of profits. The focus should be on actual business operations rather than the registered business scope
2. Large-scale production or sales of infringing goods, prolonged infringement, and widespread territorial coverage
3. Generating significant profits from infringement
( III ) Consequences of Infringement
Typical behaviours include:
1. Selling large quantities of infringing products, causing substantial damage to the right holder’s market share, commercial value, and business reputation
2. Mixing genuine and counterfeit goods—providing both legitimate and infringing goods or services under the same intellectual property
3. Disclosing trade secrets due to infringement
4. Distributing infringing works without authorisation before or during the early stage of the right holder’s public release
5. Endangering national security, public interest, or personal health—such as infringing products in the food or pharmaceutical sectors
( IV ) Conduct During Infringement Litigation and Administrative Investigations
Typical behaviours include:
1. Forging, destroying, or concealing evidence related to infringement, including proof of infringement and damages
2. Using violence, coercion, or other improper means to obstruct officials from investigating and collecting evidence
3. Refusing to comply with preservation rulings related to acts or evidence
4. Refusing to comply with effective judgments, rulings, or verdicts confirming infringement
The applicable standard for punitive damages is high. The plaintiff needs to prove “subjective intent” and “serious circumstances”. The plaintiff must also provide evidence to prove a clear calculation base of punitive damages.
In practice, it is typically challenging to ascertain the losses of the right holder and the profits of the defendant. Moreover, the available evidence, such as licensing fees, is rarely perfectly aligned with the specific type of infringement. As a result, it may be complicated for the rights holder to accurately calculate and claim the calculation base amount of punitive damages, and it is thus difficult for the court to apply punitive damages.
If the calculation base for punitive damages cannot be determined, or if the right holder has not explicitly filed a claim for punitive damages, they may still estimate an amount based on the methods outlined above. If the infringer has shown clear intent to infringe and the circumstances are serious, the right holder can request the court to consider this estimated amount – along with punitive factors – when determining the total compensation. This approach can lead to a final compensation amount exceeding the statutory limit if the evidence is sufficient.
For example, in the trademark infringement dispute case of Guangdong Yongquan Valve Technology Co., Ltd., Yongquan Valve Co., Ltd., the High People’s Court of Guangdong Province held that if an infringer demonstrates clear subjective malice and the infringement circumstances are severe, punitive damages may still be factored into the compensation calculation. This applies even if the right holder has not explicitly claimed punitive damages or if the compensation base cannot be determined. In such cases, the court may weigh the infringer’s intent and the severity of the infringement as punitive considerations. Within the scope of statutory compensation, the court may increase the awarded amount, potentially reaching the statutory ceiling. In this case, the final judgment required the infringer to pay 10 million yuan in compensation for economic losses and reasonable enforcement costs.
Importantly, although it is often difficult to determine the exact punitive damages calculation base, some courts have not imposed excessively strict requirements on its accuracy. When certain data required for calculating compensation are supported by evidence, courts may exercise discretion to estimate other necessary data based on case facts. This approach allows them to establish a fair and reasonable calculation base and apply punitive damages, thereby reducing the burden on rights holders seeking legal protection.
For example, in a case involving the infringement of the right to a new plant variety, brought by a seed science and technology company in Liaoning against Linghai and an agricultural technology company in Qingdao, the Supreme People’s Court overturned the first-instance ruling, which had rejected the punitive damages claim on the grounds that the compensation base could not be determined. Instead, the court ruled in favour of the seed science and technology company in Liaoning, awarding 3 million yuan in damages. This case clarified that punitive damages can be determined based on available evidence, and that statutory damages should not be applied simply because calculating the base amount is difficult.
Moreover, when the full punitive damages base cannot be ascertained, some courts do not reject the application of punitive damages entirely. Instead, they coordinate different methods of calculating damages within the same case. If part of the plaintiff's actual losses or the defendant's profits from infringement can be determined but the remaining portion cannot, punitive damages may still be applied to the ascertained part, while the rest is compensated separately.
For example, in Zhejiang Jukai Sewing Technology Co., Ltd. v. JUKI Co., Ltd., the Shanghai Pudong New Area People's Court ruled that since punitive damages can be applied when the entire base amount is determined, they can also be applied when only part of it is ascertainable. This decision was upheld by the Shanghai Intellectual Property Court on appeal.
- Annex -
Based on the analysis of the above, we have presented the typical cases of punitive damages in recent years, summarized the factors considered by the court when determining the elements of “intentionally” and “serious circumstances”, and listed the method of determining the calculation base, the multiples and the final total amount of damages.
- No.1 -
Case name: Dispute over infringement of invention patent rights between Babyzen Company and Yidatong Company, etc.
Case number: (2019) Jin 03 Zhi Min Chu No. 1262
Court: Tianjin Third Intermediate People’s Court
Determination of ‘intentionally’: The legal representative of the infringer acted as an agent ad litem in another patent infringement case, the same patent as the object of rights in the present case.
Determination of ‘serious circumstances’: The infringer manufactures and sells infringing products on a large scale, with a single transaction volume of nearly 2,000 units, a wide sales area, online and offline sales channels, and markets at home and abroad.
Multiple: 3 times
Calculation base: The plaintiff’s actual loss = total sales of infringing patented products × profit of each patented product × contribution rate of the patent
Amount of damages (excluding reasonable expenses): 1.5 million yuan
- No.2 –
Case name: Dispute over copyright ownership and infringement of compiled works of historical documents between Xu and a book company Co., Ltd.
Case number: (2022) Jing 73 Min Zhong No. 4681
Court: Beijing Intellectual Property Court
Determination of ‘intentionally’: The infringer uses the work of the right holder without authorization after consultation with the right holder, but no agreement has been reached.
Determination of ‘serious circumstances’: The infringer uses the work in a high proportion, makes huge profits, and has a wide impact.
Multiple: 1 time
Calculation base: The plaintiff's actual loss = the expenses specified in the application of the publishing fund project involved in the case × the proportion of the use of the right work
Amount of damages (excluding reasonable expenses): 1.4 million yuan
- No.3 -
Case name: Dispute over trademark ownership between Fila Sports Co., Ltd. and Tang Qianqian, Nanjing Xinyue Qianqian Cosmetics Co., Ltd.
Case number: (2024) Su Min Zhong No. 590
Court: Jiangsu High People’s Court
Determination of ‘intentionally’: The right holder’s trademark has been recognized as a well-known trademark, and the right holder has many stores nationwide. The infringer, as an operator in the same industry, should be aware of it.
Determination of ‘serious circumstances’: The amount of the alleged infringing goods is substantial, and the outsider who supplied the infringing goods has been found to constitute a criminal offense, and the criminal judgment also states that the infringer is a fugitive.
Multiple: 1.5 times
Calculation base: Defendant's profit from infringement = sales amount of infringing products × operating profit margin of the right holder
Amount of damages (excluding reasonable expenses): 3.57 million yuan
- No.4 -
Case name: Dispute over trademark infringement between CHARLES & KEITH and CHERLSS & KEICH
Case number: (2023) Su Min Zhong No. 220
Court: Jiangsu High People's Court
Determination of ‘intentionally’:
1. The right holder’s trademark has a wide reputation, and the infringer, as an operator in the same industry, should be aware of it.
2. The infringer registers marks similar to the right holder's trademark in multiple classes.
3. After being rejected for trademark registration or declared invalid by the trademark for several times, the infringer continues to sell infringing products on multiple mainstream e-commerce platforms.
Determination of ‘serious circumstances’:
1. Offline infringing stores are located in many places across the country, with a wide range of sales and long operating time; Online infringing stores have opened stores on multiple mainstream e-commerce platforms.
2. A number of news reports reflect that the infringing stores and franchise stores are operating well, and many consumers make purchases by mistake.
Multiple: 3 times
Calculation base: Defendant's profit from infringement = total sales of a single store × profit margin of the industry × number of stores
Amount of damages (excluding reasonable expenses): 3.3 million yuan
- No.5 -
Case name: Dispute over trademark infringement and unfair competition between BURBERRY and BANEBERRY
Case number: (2022) Su Min Zhong No. 432
Court: Jiangsu High People’s Court
Determination of ‘intentionally’:
1. The brand of the right holder is very well-known, and the infringer, as an operator in the same industry, is obviously aware of it.
2. After the court of first instance made a ruling on act preservation, the infringer still did not stop the infringement.
Determination of ‘serious circumstances’:
1. The accused offline stores are in a state of rapid expansion and cover a wide range of regions, which highly overlap with the sales channels of the right holder.
2. The accused online stores cover multiple mainstream platforms, and online dealers are located in 14 provinces.
Multiple: 2 times
Calculation base:
The first calculation method:
Defendant's profit from infringement = minimum unit profit of genuine products× average number of transactions in a single store × number of offline stores
The second calculation method:
Defendant's profit from infringement = profit margin of the industry × number of transactions in the store × average transaction amount per order
Amount of damages (excluding reasonable expenses): 6 million yuan
- No.6 -
Case name: Dispute over trademark infringement and unfair competition between a winery and Nanjing Jin Liquor Co., Ltd.
Case number: (2022) Zui Gao Fa Min Zhong No. 313
Court: The Supreme People’s Court
Determination of ‘intentionally’:
1. The awareness of the right holder's goods and brand are extremely high.
2. The infringer applies for registration of a mark similar to the trademark of the right holder and continues to use the trademark after the trademark dispute is filed.
3. The infringer continues to operate, continuously expands the scale of production and sales, and continues to free ride the popularity of the right holder's products in publicity activities.
Determination of ‘serious circumstances’:
1. The infringer uses the alleged infringing mark for a long time.
2. Each infringer has established a complete distribution system for importing, producing and selling the alleged infringing products, with relatively high profits from infringement and a wide range of influence.
3. The alleged infringing product is a food related to the health of the people, and there are negative reports that the product packaging is unqualified, which damages the goodwill of the right holder.
Multiple: 2 times
Calculation base: Defendant’s profit from infringement = sales of the accused product × profit margin of the defendant
Amount of damages (excluding reasonable expenses): 79.17 million yuan
- No.7 -
Case name: Dispute over technical secret of new energy vehicle between Zhejiang Ji Holding Group Co., Ltd. and Zhejiang Ji Automobile Research Institute Co., Ltd., etc.
Case number: (2023) Zui Gao Fa Zhi Min Zhong No. 1590
Court: The Supreme People's Court
Determination of ‘intentionally’: The legal representative of the infringer used to be the vice president of the right holder, and he knew that there was a competitive relationship between the infringer and the right holder. In this case, the infringer induced nearly 40 people, including the employees of rights holder, to resign from their original company to take up a position with the infringer and its affiliates, and the above-mentioned departing personnel signed a confidentiality agreement or confidentiality contract with the right holder, and they were all aware that their conduct violated the confidentiality provisions of the original company.
Determination of ‘serious circumstances’:
1. The infringer induced nearly 40 people to leave their jobs on a large scale and join the infringer and its affiliates. Before leaving the company, the relevant employee also intentionally collected and downloaded relevant technical materials and documents in batches, and disclosed the technical secrets involved in the case to the infringer after working with the infringer. Moreover, the alleged infringement of technical secrets has not been stopped after the right holder has filed a lawsuit.
2. The infringer has obtained a greater competitive advantage since using the technical secrets involved in the case, and the project construction agreement of the right holder cannot be continued to perform, resulting in huge losses.
Multiple: 2 times
Calculation base: Defendant's profit from infringement = sales volume × average sales price× profit margin on sales in the same industry × contribution rate of technical secrets
Amount of damages (excluding reasonable expenses): More than 640 million yuan
- No.8 -
Case name: Dispute over trademark infringement between Spin master Co., Ltd. and Yiwu Romeo E-commerce Co., Ltd., etc.
Case number: (2023) Zhe 07 Min Zhong No. 3033
Court: Jinhua Intermediate People’s Court, Zhejiang
Determination of ‘intentionally’:
1. The right holder's trademark has a high reputation and multiple registered trademarks have been infringed.
2. Repeated infringement and subjected to administrative punishment twice.
Determination of ‘serious circumstances’:
1. The infringement lasted for a long time, from 2019 to 2022.
2. The sales products have a wide territorial scope, and they are sold at home and abroad through cross-border e-commerce platforms.
Multiple: 2 times
Calculation base: Defendant's profit from infringement = sales amount × profit margin of infringing products
Amount of damages (excluding reasonable expenses): 2 million yuan
- No.9 -
Case name: Dispute over trademark infringement between the retrial applicant Opple Lighting Co., Ltd. and the respondent Guangzhou Huasheng Plastic Products Co., Ltd.
Case number: (2019) Yue Min Zai No. 147
Court: Guangdong High People’s Court
Determination of ‘intentionally’:
1. The trademark of the right holder is a well-known trademark, and the infringer, as an operator in the same industry in the same region, knowingly imitate or use multiple trademarks similar to the well-known trademark involved and use them on the same goods.
2. The infringer applied for a bad faith trademark and was rejected by the State Intellectual Property Office.
Determination of ‘serious circumstances’:
1. The infringer sells the accused products in multiple online shopping malls, with a huge number of sales and a long infringement period.
2. The infringer not only used the allegedly infringing trademark on the goods, but also operated under the name of ‘Ou Pu Te Official Flagship Store’ on the website, and continuously expanded the production scale and established a new company.
3. The infringement not only causes market confusion, but also the infringing products are punished because producing the unqualified products. The lamp products belong to the national compulsory certification products, and the unqualified product is very easy to cause safety accidents, damage the interests of consumers, and affect social and public safety.
Multiple: 3 times
Calculation base: Reasonable multiple of the royalty = the average annual royalty of the trademark involved × the duration of infringement × the reasonable multiple
Amount of damages (excluding reasonable expenses): 3 million yuan
- No.10 -
Case name: Dispute over trademark infringement and unfair competition between Guangdong Wanhe New Electric Co., Ltd., Guangdong Wanxian Electric Co., Ltd., Yang Mouhu and Nanning Hongjing Trading Co., Ltd.
Case number: (2021) Yue Min Zhong No. 4278
Court: Guangdong High People's Court
Determination of ‘intentionally’:
1. The infringer deliberately imitates the well-known trademark of the right holder.
2. The infringer applies for the registration of a similar trademark and uses it on the same goods as the goods approved for use by the right holder's well-known trademark.
Determination of ‘serious circumstances’:
1. The infringer has carried out similar business activities in the same way for a long time and has been engaged in infringing intellectual property rights for a long time.
2. The infringer's infringement endangers personal safety and human health.
Multiple: 1 time
Calculation base: Reasonable multiple of the license fee = average annual trademark license fee × the infringement duration × the reasonable multiple
Amount of damages (excluding reasonable expenses): 5 million yuan
In collaboration with our strategic partner Lusheng in China and Wolters Kluwer, Rouse has developed a valuable resource for rightsholders: “The Practical Q&A Guide to Cutting-Edge Intellectual Property Issues in China”. This guide, compiled by over 30 senior China IP experts from the two leading IP firms, addresses the key concerns of businesses by providing insights on patents, trade marks, copyright, trade secrets, internet unfair competition, intellectual property investment, and punitive damages in an accessible Q&A format. It offers readers the latest legal interpretations, case studies, and practical guidance applicable to their operations.
To request a full copy, please complete the form through the link here.
Alice Yu, Head of Shanghai Litigation Team, Lusheng Law Firm, ayu2@lushenglawyers.com
Susie He, Associate, Lusheng Law Firm, she@lushenglawyers.com
Eve Cheng, Associate, Lusheng Law Firm, echeng@lushenglawyers.com