On April 20, 2026, China’s Supreme People’s Court released the Interpretation on the Application of Punitive Damages in the Trial of Civil Disputes Involving Intellectual Property Infringement (关于审理侵害知识产权民事纠纷案件适用惩罚性赔偿的解释) effective May 1, 2026. The Interpretation clarifies the criteria for determining intent, clarifies base figure calculations for damages, and clarifies how to calculate the punitive damages multiplier.
A translation follows. The original text is available here (Chinese only).
Interpretation on the Application of Punitive Damages in the Trial of Civil Disputes Involving Intellectual Property Infringement
(Adopted at the 1972nd meeting of the Judicial Committee of the Supreme People’s Court on April 7, 2026, and effective from May 1, 2026)
In order to punish serious infringements of intellectual property rights in accordance with the law and strictly implement the punitive damages system for intellectual property rights, this interpretation is formulated in accordance with the relevant provisions of the Civil Code of the People’s Republic of China, the Copyright Law of the People’s Republic of China, the Trademark Law of the People’s Republic of China, the Patent Law of the People’s Republic of China, the Anti-Unfair Competition Law of the People’s Republic of China, the Seed Law of the People’s Republic of China, the Civil Procedure Law of the People’s Republic of China, and other relevant laws, and in light of judicial practice.
Article 1. If a plaintiff claims that the defendant intentionally infringed upon its legally enjoyed intellectual property rights and the circumstances were serious, and requests that the defendant be ordered to bear punitive damages, the people’s court shall hear the case in accordance with the law.
Article 2 If the plaintiff requests punitive damages, he/she shall provide a clear amount of damages, the method of calculation, and the facts and reasons on which the claim is based.
Article 3. If the plaintiff adds a claim for punitive damages before the conclusion of the first-instance court debate, the People’s Court shall permit it. If a claim for punitive damages is added during the second instance, the People’s Court may conduct mediation based on the principle of voluntariness of the parties; if mediation fails, it shall not be supported.
Article 4 If a plaintiff requests compensation for losses but not punitive damages in an intellectual property infringement lawsuit, and still fails to request them after being informed by the People’s Court, and subsequently files a separate lawsuit seeking punitive damages based on the same infringement facts after the conclusion of the previous lawsuit, the People’s Court shall not accept the case.
Article 5. If a plaintiff requests punitive damages against a defendant for intentional unfair competition other than the infringement of trade secrets, the people’s court shall not support such a request, unless otherwise provided by law.
Article 6. In determining intent to infringe intellectual property rights, the people’s court shall comprehensively consider factors such as the type of intellectual property object, the status of the rights and its reputation, and the relationship between the defendant and the plaintiff or interested parties.
If a defendant falls under any of the following circumstances, the People’s Court may determine that the defendant had the intent to infringe intellectual property rights, unless the party provides contrary evidence sufficient to refute this:
(i) The infringing act continues even after being effectively notified by the plaintiff or interested party;
(ii) The defendant or its legal representative or manager is the legal representative, manager or actual controller of the plaintiff or interested party, and knows or should know about the infringed intellectual property rights;
(iii) Having a labor, service, cooperation, licensing, distribution, agency, or representative relationship with the plaintiff or interested party, and having come into contact with the infringed intellectual property rights based on the aforementioned relationship;
(iv) There has been business dealings or negotiations with the plaintiff or interested parties to reach a contract, and the infringed intellectual property rights have been accessed based on the aforementioned relationship;
(v) Engaging in acts of piracy, counterfeiting registered trademarks, or counterfeiting others’ patents;
(vi) After reaching a settlement with the plaintiff and agreeing to cease the infringing act, the plaintiff commits the same or similar infringing act again;
(vii) Concealing actual control relationships by establishing affiliated companies, changing legal representatives or controlling shareholders, or establishing companies under false names, or signing disclaimers to evade legal liability for infringing on intellectual property rights involved in the case;
(viii) Other circumstances that can be considered intentional.
Article 7 When determining the seriousness of intellectual property infringement, the people’s court shall comprehensively consider factors such as the means and frequency of infringement, the duration, geographical scope, scale and consequences of the infringement, and the infringer’s awareness and basic attitude towards the infringement.
The People’s Court shall deem the circumstances serious if the defendant falls under any of the following circumstances:
(i) After being administratively punished or ordered by the court to bear legal responsibility for infringement, the offender commits the same or similar infringement again;
(ii) Refusing to comply with the preservation order without justifiable reason;
(iii) Forging, destroying, or concealing evidence of infringement;
(iv) Those who engage in intellectual property infringement as their main business or whose main source of profit is from infringement;
(v) Where the infringement has resulted in substantial profits or has caused serious damage to the rights holder’s goodwill, market share, etc.;
(vi) The tortious act harms or may harm national interests or the public interest;
(vii) Other circumstances that should be deemed serious.
Article 8 When determining the amount of punitive damages, the People’s Court shall, in accordance with relevant laws, use the plaintiff’s actual losses, the defendant’s illegal gains, or the profits obtained from the infringement as the calculation base. The calculation base shall not include reasonable expenses paid by the plaintiff to stop the infringement. Where the law provides otherwise, its provisions shall prevail.
If the actual amount of loss, the amount of illegal gains, and the profits obtained from the infringement are all difficult to calculate, the people’s court shall, in accordance with the law, reasonably determine the calculation basis for the amount of punitive damages by referring to the licensing fee.
The statutory amount of damages cannot be used as the basis for calculating punitive damages.
Article 9. When the defendant’s illegal gains or profits from infringement are used as the basis for calculating punitive damages, operating profits may be used as a reference. If the defendant’s business is infringing intellectual property rights, sales profits may be used as a reference. If the profit margin cannot be determined, it may be calculated by referring to the average profit margin of the same period and industry published by statistical departments, industry associations, etc., or the profit margin of the rights holder.
Article 10 If a people’s court, in accordance with the law, orders a defendant to provide accounting books, materials, etc., related to the tortious act that it possesses, and the defendant refuses to provide them without justifiable reason or provides false accounting books, materials, etc., the people’s court may, in accordance with the plaintiff’s claims and the evidence on file, determine the base for calculating the amount of punitive damages. If the circumstances constitute those stipulated in Article 114 of the Civil Procedure Law, legal liability shall be pursued in accordance with the law. Where the law provides otherwise, its provisions shall prevail.
Article 11 When determining the multiple of punitive damages, the people’s court shall comprehensively consider factors such as the degree of the defendant’s subjective fault and the severity of the tortious act. The multiple of punitive damages shall be determined within the statutory range and may not necessarily be an integer.
Article 12 The total amount of damages determined by the People’s Court using punitive damages shall not exceed five times the base amount used for calculation. Reasonable expenses paid by the right holder to stop the infringement shall be calculated separately from this total amount.
Article 13 If a fine or penalty has already been imposed for the same tort and the penalty has been fully executed, the people’s court shall take this into consideration when determining the multiple of punitive damages.
Article 14 This interpretation shall come into effect on May 1, 2026.
Upon the implementation of this interpretation, the “Interpretation of the Supreme People’s Court on the Application of Punitive Damages in the Trial of Civil Cases Involving Infringement of Intellectual Property Rights” (法释〔2021〕4号) shall be repealed simultaneously.
For cases where a final judgment has been rendered before the implementation of this interpretation, if a party applies for retrial or a retrial is ordered under the trial supervision procedure after the implementation of this interpretation, this interpretation shall not apply.
