How are damages calculated in Chinese IP litigation, and when do punitive damages apply?

Under the current law the calculation follows a set order.

Damages are fixed first by the rights holder's actual loss; where that is hard to establish, by the infringer's profits from the infringement; where neither can be established, by a reasonable multiple of a licensing fee; and where that too is hard to establish, the court sets a figure within the statutory range. Punitive damages apply where the infringement was intentional and the circumstances serious. They are calculated as a multiple — one to five times — of the amount determined by the methods above.

 

Two points matter in practice.

Obstruction of proof. Where the rights holder has done all it reasonably can to produce evidence but the account books and records relating to the infringement are held by the infringer, the court may order the infringer to produce them. If the infringer does not produce them, or produces falsified material, the court may determine the damages by reference to the rights holder's own case and evidence. That is why establishing the scale of sales early — through notarized purchases, seller back-end data from platforms, or administrative penalty decisions — matters so much.

Reasonable expenses. Attorney fees, notarization fees, appraisal fees and investigation costs can all be claimed alongside damages, provided complete supporting documentation has been kept.