Recently, the Intellectual Property Court of Shenzhen Intermediate People's Court issued a "Guideline on the Application of Punitive Damages in Civil Infringement Disputes on Intellectual Property Rights", which detailed the specific situations of "intentional" and "serious circumstances".
"Intentional" in this Guideline means that an infringer knows, subjectively, that his action will cause an infringement result, but hopes or allows such result to happen. It is generally not deemed as "intentional" if an infringement is caused by an infringer due to negligence.
The People's court may consider the following factors to identify whether an infringer is "intentional" to carry out an infringement:
- (1) the infringer repeated the same infringement after an effective decision is made,
- (2) the infringer continued carrying out the infringement after being warned by the right holder repeatedly or after being punished by the administrative authority;
- (3) there was a relationship such as labor, agency, license, distribution, cooperation, etc. between the right holder and the infringer, or they have conducted consultations, and the infringer is fully aware of the existence of the intellectual property rights of the right holder;
- (4) the infringer continued carrying out related acts without a proper reason after receiving a warning letter from the right holder;
- (5) the infringer used a famous trademark of the right holder on the same or similar goods;
- (6) the infringer pre-emptively registered the famous trademark of the right holder, or the trademark registration application was deemed to be similar to the previous trademark, and continued using it after being rejected;
- (7) the infringer took measures to cover up the infringement, fabricated or destroyed infringement evidence;
- (8) other circumstances.
In addition, the Guideline showed that an infringement can be identified as "serious circumstances" if it has one of the following circumstances:
- (1) the main business of the infringer is infringement;
- (2) the infringement has occurred for a long duration;
- (3) The amount of benefits obtained from the infringement was enormous or the infringement caused major economic losses to the right holder;
- (4) the infringement caused serious damages to the right holder's reputation, market share and other legitimate rights and interests;
- (5) the infringement caused damages to consumers' personal safety, ecological environment and consumers' other interests and public interest;
- (6) the infringement had serious adverse effects on the industry or society;
- (7) the infringer refused to execute legal documents such as rulings of behavior preservation or the like made by the court;
- (8) other serious circumstances.
This Guideline clearly provides an effective guidance on the application of punitive damages in judicial practice. For example, a right holder may actively send out a warning letter to the infringer when there is an infringement activity, and if the infringer does not respond to the warning letter properly and continues with the infringement, such an infringement activity may be considered as "intentional" and may be applicable to "punitive damages" in any subsequent court proceedings.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.