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Determination of Trademark Infringement Damages in China

Foshan Intermediate People’s Court in guangdong province recently created a ruling to award the luxury brand alfred Dunhill ten million yuan (US$1.5 million) for damages in trademark infringement and unfair competition.

Similar rulings were ascertained in 2016 where Beijing ip Court imposed ten million yuan damages in the case Meichao group v. beijing Xiujie, in 2017 where the Supreme Court ordered ten million yuan indemnity to Huiyuan, in 2018 where Suzhou Intermediate People’s Court awarded NewBalance ten million in damage.

These cases reflected China’s continuing effort on crackdown ip infringement and supply us an opportunity to explore the judicial standards for determining damages and to grasp the evidential rules.

Article 63 of the Chinese Trademark Law stipulates the legal basis for infringement compensation and the basis of penitentiary compensation for damages.

[A63: the number the amount for infringement of the exclusive right to use a registered trademark shall be assessed on the idea of the actual losses suffered by the right holder as a result of the infringement; where it’s tough to determine the actual losses, the amount could also be assessed on the basis of the profits the infringer has earned  because of the infringement. where it’s tough to determine the losses the right holder has suffered or the profits the infringer has earned , the amount could also be assessed by respect to the suitable multiple of the {amount|the quantity|the number} of using the registered trademark underneath a contractual license. where the infringement of the right to use a registered trademark is committed in bad faith and also the circumstance is serious, the amount of damage shall be over just one occasion but 3 times of the number assessed by referring to the above calculation. the amount of the damage shall additionally include the reasonable expenses of the right holder incurred for stopping the infringing act.

Where it’s tough to see the losses suffered by the right holder, the profits the infringer has earned  and the fees of licensing a registered trademark, the people’s court shall grant a compensation not exceeding RMB 3,000,000 yuan, in line with the circumstances of the act of infringement.]

According to the above, the amount of compensation is usually determined within the following order:

  1. notice actual loss suffered by the right holder as a results of the infringement;
  2. wherever the actual loss is tough to ascertain, determine it in accordance with the profits obtained by the infringer from the infringement;
  3. wherever higher than 2 area unit tough to determine, reference to the suitable multiple of the trademark license.

When determining the amount of compensation, the court(s) usually take into account factors like the nature and duration of the conduct, consequence, name of the trademark, the amount of royalty, the type, term, and scope of license, and also the reasonable expenses on stopping the infringement. In addition, in applying penitentiary compensation, the court(s) usually take into account factors like

  1. renown of the trademark;
  2. whether or not the infringer knew the trademark and/or the relevant rights; as an example, whether or not the infringer is within the same industry, whether or not the infringer filed a trademark application which was rejected by the Trademark office by citing the trademark of the plaintiff;
  3. whether or not the amount of sold infringing goods was huge;
  4. how long did the infringement take place In summary, so as to get higher compensation, it’s necessary to produce proof in related to losses, particularly those with wilfulness.

 

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