Most brand owners operating in China have heard of its “first-to-file” system and the value of customs recordal.
However, the availability of punitive damages for IP infringement is less well known, despite having been implemented for more than ten years now.
Under this system, the Courts may order heavier penalties against parties that have committed “malicious” or “severe” infringing acts, including paying damages of up to five times the “standard” amount (potentially in excess of 1 million USD).
Punitive damages may be ordered in circumstances that involve:
- Pre-existing relationships – this benefits brand owners with errant local distributors, manufacturers or partners that would have been well aware of the brand owner’s rights when they committed the infringing acts.
- Repeated infringement – in situations where a brand owner has already issued multiple warning letters, or received a decision or judgment in its favour, further acts of infringement would weigh in favour of punitive damages being ordered.
- Flagrant and extensive copying – this includes scenarios where an infringing party not only uses a registered mark, but even copies the brand owner’s packaging, taglines, website get-up etc.
Significant improvements have been made to the Chinese legal system to encourage brand owners to pursue action when they believe their rights have been infringed. The availability of punitive damages for IP infringement is one example.
With appropriate support and advice, brand owners do find it well worth their while in taking action against infringing parties in China.
Please do not hesitate to contact us at eseow@dcc.com if you have questions. We would be happy to discuss available options.