On Nov.30, 2020, President Xi pushed for implementing the punitive compensation system while presiding over 25th group study session of the Political Bureau of the CPC Central Committee. In the fields of trademark, patent, copyright and other major types of intellectual property rights, China has established a comprehensive system of punitive damages of intellectual property rights. The two applicable conditions of "intentional infringement" and "serious circumstances" have been adopted by relevant laws, and the compensation multiple of "more than one times and less than five times" have been clarified. This system drew wide attention. On June 24th, the Patent and Innovation Committee (PIC) of QBPC invited Dentons Law Office partner Hu Hong, who represented the right holder on the MOTR case, to share with members his thoughts and insights at a PIC luncheon. QBPC Chair Michael Ding, Committee Chair Alvin Deng, Vice Chairs Frank Liu and Wang Dazhi, and more than 40 member representatives participated. The event was moderated by PIC Vice Chair Paul Lu.
Dentons Law Office Partner, Hu Hong
In the first part of his presentation, Mr. Hu explained the facts of the MOTR case in details, and introduced how the right holder had collected and organized the evidence, the proceeding of the trial, and the punitive compensation which was the highlight of the case. According to Article 63 of the Trademark Law, the following two conditions shall be met for the application of punitive damages: when the defendant intentionally commits the tort, and his or her tort meets the standard of serious circumstances. In this case, the court supported the plaintiff's claim for punitive damages for the following reasons: the mark used by the defendant was exactly the same as that used by the plaintiff in terms of location, color and other elements, which was sufficient to prove its subjective intention of infringement; although the defendant once received a warning from the plaintiff for infringement several years before, he was found again to be producing and selling products that violated the exclusive right to use of the plaintiff's registered trademark. This was a violation of the principle of honesty and credit, and the malicious intent of infringement was extremely serious; the defendant had a large scale of production and operation, multiple product sales channels and a wide geographical range, so the infringement had a great impact; the infringing products were of poor quality and had a negative impact on the business reputation accumulated by the plaintiff through long-term efforts.
Then, Hu combed the recent typical cases of punitive damages. According to his analysis over the cases, the presumption of subjective intent, the confirmation of serious circumstances and the determination of the multiple of punitive damages were the core elements. They were also the important references for the application of punitive damages.
At the end of the meeting, QBPC members raised issues including evidence collection methods and their legitimacy, shift of burden of proof, connecting the civil and criminal proceedings, and punitive damages. Hu responded to these questions. The luncheon came to a successful conclusion.