Punitive damages refer to an enhanced award, on top of the damages base determined by actual losses, infringer's profits, or a multiple of the license fee, of one to five times that base against an infringer who maliciously infringes the exclusive right to a trademark under serious circumstances. It does more than make the rights holder whole—it also punishes and deters intentional infringement.
Legal Basis and History
The 2013 amendment to the Trademark Law first introduced punitive damages (one to three times); the 2019 amendment raised the multiplier to one to five times and lifted the statutory damages cap from RMB 3 million to RMB 5 million—see Article 63(1). Article 1185 of the Civil Code likewise confirms the right to claim punitive damages for intentional infringement of intellectual property.
Conditions for Application
Both elements are indispensable:
- Subjective malice: knowingly infringing another's registered trademark. Typical circumstances include continuing the infringement after receiving a warning or lawyer's letter, repeating the infringement after an administrative penalty or judgment, squatting or free-riding where there was a prior cooperation or agency relationship, and completely copying packaging and trade dress to pass off fakes as genuine;
- Serious circumstances: long duration, wide territory, large scale, or high profits of the infringement, or making a business of infringement, counterfeiting registered trademark labels, or infringing goods implicating food or drug safety.
Calculation
Punitive damages = base × multiplier. The base can only be determined by the three methods of actual losses, infringer's profits, or a license-fee multiple; statutory damages cannot serve as the base. The ability to prove directly determines whether punitive damages can be obtained—the rights holder should try to lock down the base through platform data, audit reports, and account books seized in administrative enforcement, while the multiplier (one to five) is discretionary with the court based on the malice and seriousness.
Practical Significance
Punitive damages markedly raises the cost of intentional infringement, and it likewise reminds rights holders: sending warning letters and preserving evidence of the other side's knowledge are both enforcement moves and the groundwork of bad-faith evidence for future punitive damages.
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.