How to apply punitive damages in civil cases of intellectual property rights infringement: Supreme Court issues judicial interpretation

Today (the 20th), the Supreme People’s Court issued the “Interpretation of the Supreme People’s Court on the Application of Punitive Damages in Civil Cases Involving Infringement of Intellectual Property Rights” (hereinafter referred to as the “Interpretation”). The “Interpretation” will come into effect on May 1, 2026. The “Interpretation” adheres to the principle of strictly punishing serious infringements of intellectual property rights according to law, focusing on key and difficult issues in the application of punitive damages in judicial practice related to intellectual property rights, further refining and improving legal standards, enhancing the operability of judicial application of punitive damages, unifying case judgment standards, providing clear litigation guidance for parties, setting clear behavioral expectations for the market, and ensuring the effectiveness of the intellectual property punitive damages system.

First, it further clarifies the criteria for “intentional” and “serious circumstances.” It adds situations such as “after reaching a settlement with the plaintiff and agreeing to cease infringement, the defendant again commits the same or similar infringement,” which can be recognized as intentional infringement of intellectual property rights, further clarifying the connotation of “engaging in intellectual property infringement as a business,” and legally refining the rules for identifying serious infringement behaviors.

Second, it further clarifies the calculation method for the base amount. It specifies that the punitive damages can be based on the defendant’s illegal income or infringement profits, which can be determined with reference to operating profits; if the defendant engages in intellectual property infringement as a business, sales profits can be used as a reference; if profit margins cannot be determined, the average profit margin of the same period and industry published by statistical departments, industry associations, or the rights holder can be used for calculation. It clarifies that statutory damages cannot be used as the base for punitive damages. These provisions help address the practical problem of “difficulty in determining the base amount.”

Third, it improves the method for determining the multiplier. Based on the principle of proportionate punishment, it clarifies that if the same infringement has already been fined or penalized and the penalty has been executed, the people’s court should consider this when determining the multiplier for punitive damages, without requiring the parties to make a request. (CCTV News)