1. Punitive Damage System of Trademark Law
Punitive damages refer to the penalty imposed on the perpetrator when the perpetrator maliciously commits a certain act, or is grossly negligent for the act. For the purpose of punishing and pursuing a general inhibitory effect, the court may order the perpetrator to pay the victim compensation higher than the actual loss while ordering the perpetrator to pay ordinary compensation. Punitive damages not only declare a denial of the defendant's behavior, but are also intended to deter the perpetrator from repeating the behavior and may further deter others from imitating the behavior.
Before the amendment of the current Trademark Law, the Trademark Law did not have clear provisions on punitive damages. Article 56 of the Trademark Law amended in 2001 stipulates that the amount of compensation for infringement of the exclusive right to use a trademark shall be the benefits obtained by the infringer due to the infringement during the infringement period, or the losses suffered by the infringed party due to the infringement during the infringement period. Including reasonable expenses paid by the infringer to stop the infringement. If it is difficult to determine the benefits gained by the infringer from the infringement, or the losses suffered by the infringer due to the infringement, the people's court shall award a compensation of not more than 500,000 yuan based on the circumstances of the infringement. However, in judicial practice, when the court applies statutory compensation, the subjective fault of the infringer is considered an important factor that reflects the "circumstances of the infringement" and must be considered. If the infringer is found to have committed intentional infringement, the amount of compensation determined by the court will be relatively high. In addition, a series of guiding documents issued by the Supreme People's Court also reflect the judicial policy of applying punitive damages. For example, Article 13 of the 2007 "Opinions of the Supreme People's Court on Comprehensively Strengthening Intellectual Property Trial Work to Provide Judicial Guarantee for Building an Innovative Country" points out that the principle of comprehensive compensation should be implemented and the subjective fault of the parties concerned should be considered to determine the corresponding liability for compensation. Article 5 of the 2009 "Opinions of the Supreme People's Court on Several Issues Concerning the Implementation of the National Intellectual Property Strategy" points out that we must adhere to the principle of comprehensive compensation, increase compensation in accordance with the law, and aggravate serious infringements such as malicious infringement, repeated infringement, and large-scale infringement. Liability?. Article 16 of the 2009 "Opinions of the Supreme People's Court on Several Issues Concerning Intellectual Property Trials Serving the Overall Situation under the Current Economic Situation" points out that it is necessary to "enhance the compensation, punishment and deterrence effects of damage compensation". As explained above, although the original Trademark Law did not explicitly stipulate punitive damages, it already implicitly implied the principle of punitive damages. Judicial practice and judicial policies also reflect the principle of punitive damages.
The current Trademark Law, which was revised in 2013, not only clearly stipulates the originally implicit punitive damages in practice, but also stipulates specific calculation methods. According to Article 63, Paragraph 1 of the Law, the amount of compensation for infringement of the exclusive right to use a trademark shall be determined based on the actual losses suffered by the right holder due to the infringement; if the actual losses are difficult to determine, they may be determined based on the benefits gained by the infringer due to the infringement; If it is difficult to determine the loss of the right holder or the interests of the infringer, it shall be reasonably determined by reference to the multiple of the trademark license fee. For malicious infringement of trademark exclusive rights and the circumstances are serious, the amount of compensation may be determined to be between one time and three times the amount determined according to the above method.
There is a view in judicial practice that the principle of punitive damages according to the above provisions only applies to situations where the right holder has suffered losses, the infringer has made profits, or the trademark license fee can be determined. In other words, the principle of punitive damages does not apply to statutory damages. I believe that past judicial practice and judicial policies tell us that the principle of punitive damages before the implementation of the current Trademark Law is mainly reflected in the application process of statutory compensation. Paragraph 3 of Article 63 of the current Trademark Law also stipulates statutory compensation. Except for the significant increase in the upper limit of compensation to 3 million yuan, its provisions are not substantially different from the original Trademark Law. Therefore, when applying statutory compensation under the current trademark law, the court should also consider the subjective fault of the infringer and cannot exclude the principle of punitive damages.
According to the current trademark law, the four calculation methods for the amount of compensation follow a certain order, namely the loss of the right holder, the profit of the infringer, a reasonable multiple of the trademark license fee, and statutory compensation. Therefore, the application of punitive damages can be divided into two types: the first three calculations are based on punitive damages that are more than one time and less than three times applicable; punitive damages that are applicable when statutory compensation is applied.
2. Situation in which the Guangzhou Intellectual Property Court applies punitive damages of more than one time but not more than three times
From the establishment of the Guangzhou Intellectual Property Court in December 2014 to August 2016,** *Accepted 578 trademark cases (basically civil infringement disputes) and concluded 504 cases.
Among the cases concluded, no case was found where punitive damages of more than one time and less than three times were applicable. As a specialized intellectual property court and the one with the most infringement cases among the three intellectual property courts in China, it has not found a single relevant case in judicial practice in the past two years, which is worth thinking about.
3. Analysis of reasons
(1) The applicable proportion of statutory compensation is too high
100 trademark infringement civil dispute cases were randomly selected by the Guangzhou Intellectual Property Court for analysis. The proportion of statutory compensation found to be applicable was as high as 97%. The reasons for the excessively high proportion of statutory compensation can be attributed to "objective inability" and "subjective unwillingness". The so-called objective impossibility refers to the intangibility of intellectual property rights and the lack of evidence provided by the right holder, which makes it difficult to determine the loss of the right holder and the profit of the infringer. The so-called subjective reluctance refers to the right holder’s subjective unwillingness to apply the first three calculation methods to determine the amount of compensation based on litigation costs and other reasons.
1. Objective inability caused by the intangibility of intellectual property rights
The difficulty of compensation for intellectual property rights is a worldwide problem. It is not only difficult to determine compensation in trademark infringement cases, but also in patent and copyright infringement cases. Not only does our country’s judicial practice find it difficult, but foreign judicial practice also finds it difficult. In a sense, it is precisely because it is difficult to accurately calculate the losses of rights holders and the profits of infringers that the statutory compensation system has been established. However, the fundamental reason why compensation for intellectual property rights is difficult lies in the intangibility of intellectual property rights. Because of its intangibility, its value is difficult to evaluate and calculate. Because of intangibility, several intellectual property rights can be stored on a product carrier. Each intellectual property rights may contribute to product profits and are difficult to distinguish. For example, according to Article 16 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Patent Infringement Disputes, the people's court determines that the benefits obtained by the infringer due to the infringement shall be limited to the benefits obtained by the infringer due to the infringement of patent rights. ; Benefits arising from other rights shall be reasonably deducted. Another example is the New Balance trademark case. The first-instance court awarded compensation of 98 million yuan based on the profits from the infringing products. The second-instance court believed that in addition to the infringing trademarks, there were also legal trademarks on the accused products. The main thing that triggered consumers’ desire to buy was the higher reputation and products of the legal trademarks. The product was of good quality and the infringing trademark contributed less to the profit of the product, so the sentence was changed to 5 million yuan. Also because of its intangibility, an intellectual property may be infringed by several infringers at the same time, and the damage caused by these infringers to the right holder is also difficult to distinguish.
2. Objective failure caused by insufficient evidence provided by the right holder
About the loss of the right holder. To prove the loss of rights, the rights holder usually submits its own financial account books or a special audit report on the amount of the loss. Regarding the former, infringers often argue that the evidence is material produced unilaterally by the right holder and its authenticity cannot be determined. Regarding the latter, infringers often argue that the audit institution has no qualifications and is illegal, that the audit was unilaterally entrusted by the right holder, that the financial account books were unilaterally issued by the right holder and are untrue, and that the loss was caused by multiple reasons and lacked a causal relationship with the accused behavior. All of these can easily make it difficult to determine the actual losses of the right holder.
About the infringer’s profits. The financial account books profiting from infringement are in the hands of the infringer and cannot be obtained by the rights holder. Therefore, it is common to apply to the court for retrieval or evidence preservation. Due to the infringer's weak sense of the rule of law, he can delay or hide when he can; the court's manpower for evidence preservation is limited, and it is generally carried out by the handling judges and clerks; the court's punishment of behavior that hinders civil proceedings is conservative and lacks sufficient deterrence. force. The effect of evidence preservation adopted by the court is not ideal.
Trademark license fee. When a rights holder licenses a trademark to its own enterprise or associated enterprise, the infringer often pleads that there is an interest relationship between the two and cannot confirm the authenticity of the royalties. When the right holder licenses the license to non-related enterprises, the license contract is often not filed, or the right holder fails to submit proof of actual performance of the contract, making it difficult to prove the licensing fee standard.
3. Subjective reluctance of the right holder
For most cases in which the amount of the claim does not exceed the statutory upper limit of 3 million yuan in compensation, even if the court fully supports the plaintiff’s claim, it will still Within the discretion of the court, the rights holder believes that it is not necessary to provide evidence to prove its actual losses or the infringer’s profits at this time. For example, the Guangzhou Intellectual Property Court randomly selected 100 trademark civil dispute cases for analysis and found that the average claim amount claimed by the right holders was only 85,000 yuan.
In addition, due to the rights holder’s entrusted agent’s low personal quality and ability, the inability to investigate and collect evidence, the rights holder believes that it is uneconomical to produce evidence based on the analysis and calculation of litigation costs and benefits, etc., it is also easy for the rights holder to be unwilling to produce evidence. , requiring the court to directly apply statutory compensation.
(2) Legal provisions need to be further clarified
1. How to identify serious circumstances
According to Article 63, paragraph 1, of the current Trademark Law, malicious intent If the exclusive right to use a trademark is infringed and the circumstances are serious, statutory compensation may be applied. However, how to grasp the seriousness of the circumstances requires further exploration and summary in judicial practice, and the law also needs to be further clarified based on judicial practice.
2. Whether punitive damages can be applied when determining the amount of compensation based on the evidence obstruction system
Article 63, paragraph 2, of the current Trademark Law stipulates the evidence obstruction system. This paragraph stipulates that in order to determine the amount of compensation, the people's court may order the infringer to provide account books and materials related to the infringement when the right holder has tried his best to provide evidence and the account books and materials related to the infringement are mainly in the possession of the infringer; If the infringer fails to provide or provides false account books or information, the people's court may determine the amount of compensation with reference to the rights holder's claims and the evidence provided. From the structural analysis of the separation of this paragraph from the punitive damages clause, and from the literal understanding of this paragraph that stipulates that the people's court can determine the amount of compensation with reference to the claim of the right holder and the evidence provided, it seems that the penalty of more than one time and less than three times cannot be applied sexual compensation.
However, this paragraph is actually a presumption that the infringer will gain from the infringement when he hinders the production of evidence. For example, Article 27 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Patent Rights Infringement Disputes (II) clearly stipulates that if the actual losses suffered by the right holder due to infringement are difficult to determine, the People's Court shall follow the Patent Law The provisions of paragraph 1 of Article 65 require the right holder to provide evidence of the benefits obtained by the infringer due to the infringement; after the right holder has provided preliminary evidence of the benefits obtained by the infringer, the account books and materials related to the patent infringement behavior If the infringer is mainly in the possession of the infringer, the People's Court may order the infringer to provide the account books and information; if the infringer refuses to provide the account books or information without justifiable reasons or provides false account books or information, the People's Court may order the infringer to provide the account books or information based on the right holder's claims and the evidence provided. Determine the benefits gained by the infringer as a result of the infringement. In this case, when it is not appropriate to fully support the rights holder's claim based on the rights holder's claims and the evidence provided, it seems that the presumed profits from infringement will be used as the basis, and more than double the amount will be applied to malicious infringement and serious acts. There is room for punitive damages up to three times. For example, if the rights holder claims compensation of 1 million yuan, the court will infer that the infringer made a profit of 200,000 yuan based on the rights holder's claim and evidence. However, due to the malicious infringement and the seriousness of the circumstances, the court decided to apply triple punitive damages, and finally ordered the infringer to compensate the infringer 600,000 yuan.
IV. Some Suggestions
Unlike the compensatory function of the principle of compensation, the principle of punitive damages has the function of punishment and deterrence. In real life, malicious infringement, repeated infringement, large-scale infringement, etc. are not uncommon. For this kind of serious infringement, it is not enough to just compensate the rights holder for the loss. It can even be said to be a disguised indulgence of the infringement. Applying punitive damages only to statutory damages is only scratching the surface. Only by applying punitive damages ranging from one time to three times can we effectively combat infringement and prevent its recurrence. However, data from the Guangzhou Intellectual Property Court in the past two years show that punitive damages of more than one time and less than three times have not been truly applied. It can be said that punitive damages mean that it is not easy to love you. In order to implement the punitive damages system and give full play to its punitive deterrent effect on serious infringements, the following suggestions are made based on the analysis of the above reasons:
(1) Objectively speaking, for some claims the amount does not exceed In cases involving the upper limit of statutory compensation, especially relatively simple cases where the claim amount does not exceed 500,000 yuan, the court will comprehensively consider factors such as the popularity of the trademark, the nature of the infringement, the subjective fault of the infringer, reasonable expenses and other factors, and the plaintiff can or can basically be satisfied through statutory compensation. claims can completely solve practical problems. Therefore, there is no need to force the application of punitive damages of more than one time and not more than three times in these simple cases.
(2) Rights holders should strengthen their awareness of evidence, improve their ability to produce evidence, and strive to prove their actual losses and the amount of trademark licensing fees. For example, to prove actual losses, try to collect relevant financial data stored in government agencies or authoritative departments, such as data submitted to the tax department, data submitted to the securities issuing unit, etc.
These evidences have high probative power and are easily admissible by the court. Another example is the trademark license fee. The rights holder must be prepared for a rainy day, record the license contract, and keep the payment voucher for the license fee.
(3) The court should increase the punishment of acts that hinder civil proceedings, ensure the smooth implementation of evidence preservation, and lay a good foundation for effectively identifying the infringer's profits. For those who obstruct the preservation of evidence in the court, in addition to applying the evidence obstruction system to rule against the defendant, they should also strictly comply with the relevant provisions of the Civil Procedure Law, take fines, detention and other compulsory measures against the defendant or relevant responsible persons, and pursue criminal liability if necessary.
(4) The Supreme People's Court should clarify the serious circumstances in Article 63, Paragraph 1 of the Trademark Law as soon as possible based on the judicial practice in various places. At the same time, it should be made clear that when the court determines that the infringer has profited based on the evidence obstruction system of Article 63, Paragraph 2 of the Trademark Law, punitive damages of not less than one time but not more than three times may be applied.