Damages for trademark infringement are determined step by step under Article 63 of the Trademark Law: first the rights holder's actual losses, then the infringer's profits, then by reference to a multiple of the license fee; where all three are hard to prove, the court awards statutory damages of up to RMB 5 million according to the circumstances; and for malicious infringement under serious circumstances, punitive damages of one to five times may apply.
Order of Determination
- Actual losses: the rights holder's losses caused by the infringement, commonly proven by reduced sales, price erosion, and goodwill damage;
- Infringer's profits: where actual losses are hard to determine, the infringer's gains from the infringement are used; the court may order the infringer to produce account books, and refusal or falsification allows the court to determine by reference to the rights holder's claims and evidence;
- License-fee multiple: where both of the above are hard to determine, a reasonable multiple of the trademark license fee is referenced;
- Statutory damages: where all are hard to determine, the court awards damages of up to RMB 5 million according to the circumstances of the infringement.
Punitive Damages
For malicious infringement of the exclusive right to a trademark under serious circumstances, damages may be set at one to five times the amount determined by the first to third methods above. Malice and serious circumstances are usually found from repeat infringement, making a business of infringement, continuing after a warning, and the scale and duration of the infringement.
Do Not Forget Reasonable Expenses
The damages amount should also include the rights holder's reasonable expenses in stopping the infringement, such as notarization fees, attorney fees, and investigation costs—keep the receipts and write them into the claims.
Practical Tips
To bring the award closer to expectations, focus on preparing two blocks of evidence: your own trademark's fame and license-fee level (raising the calculation baseline), and the other side's infringement scale (sales pages, platform data, administrative enforcement records). The stronger the evidence, the more the court's discretion moves toward the high end.
When facing such situations, you are advised to consult a filed trademark agent on MyTMBee first to assess whether trademark monitoring should be arranged before deciding on the next step.