In February 2023, the SPC issued a case determining that the infringer (appellee) sold the same infringing product again after a settlement with the patentee (appellant), subjectively having the intention of infringement, and the circumstances of infringement were serious, which met the applicable conditions for punitive damages for intellectual property infringement, and the punitive damages were determined by using the amount of compensation agreed in the previous Settlement Agreement between the two parties as the basis for calculation.

The appellant is the patentee of the invention patent No. 01125315.0, entitled "reverse ground planer" (hereinafter referred to as the Patent). Before this case, the appellant had filed a lawsuit with the court of first instance (hereinafter referred to as the "previous case") for the appellee's sale of the same infringing product, and in that case the two parties reached a settlement agreement on May 13, 2021, in which the appellee promised to stop the infringement and compensated the appellant for economic losses and reasonable expenses totaling CNY 30,000; then the appellant requested to withdraw the lawsuit and the court approved the withdrawal of the lawsuit on June 11, 2021. After the previous case was withdrawn, the appellant proved through notarization and evidence collection that the appellee sold the infringing products again on July 1, 2021, so the appellant filed a lawsuit again. In this case, the appellant claimed that the appellee constituted repeated infringement, had the intention of infringement and the circumstances were serious, and thus requested punitive damages.

After hearing, the court of first instance held that the infringing product fell within the scope of protection of the Patent, but although the appellee had the intention of infringement, it did not reach the seriousness of the circumstances and thus did not meet the conditions for applying punitive damages, so the statutory damages were applied to determine the amount of compensation, that is, CNY 8,000 for economic losses and CNY 2,000 for reasonable expenses for rights protection, a total of CNY 10,000. Dissatisfied with the first-instance judgement, the appellant appealed to the SPC, claiming that the amount of damages awarded in the first instance was too low and that punitive damages should be imposed on the appellee, and requesting that the awarded total amount of economic losses and reasonable expenses should be changed to CNY 10, 000 or the case should be remanded for a new trial.

After hearing, the SPC held that when determining whether punitive damages should be imposed on the appellee, the court should examine whether the appellee had subjective intention of infringement and whether circumstances of the infringement were serious. After experiencing the previous case, the appellee knew that the appellant was the right holder of the Patent, and also knew that its sale of the infringing product infringed the Patent, but after making a commitment to stop the infringement and paying compensation in the previous case, it still sold the infringing product again, and thus the appellee had the intention of infringement and constituted repeated infringement, which falls under "other circumstances that can be determined as serious" as stipulated in Article 4 of the Interpretation of the Supreme People's Court on the Application of Punitive Damages in the Trial of Civil Cases Involving Intellectual Property Infringement, and thus should bear punitive damages. Regarding the amount of compensation, neither of the parties provided evidence to prove the actual losses caused by the infringement, or the infringement profits, or the patent royalties that can be used for reference, etc. Considering that the appellee committed infringement again within less than two months after reaching the Settlement Agreement in the previous case, the duration of the infringement was short, the infringement profits were limited, and the Patent expired on August 10, 2021, etc., the SPC used the amount of compensation agreed in the Settlement Agreement of the previous case as the basis for calculation and determined that the appellee shall bear liability for punitive damages. To sum up, the SPC amended the first-instance judgment and ordered the appellee to compensate the appellant for economic losses and reasonable expenses incurred for stopping the infringement, totaling CNY 60,000.

This case has certain reference significance on how to apply punitive damages in intellectual property cases. The SPC’s ruling demonstrates the people’s courts’ judicial inclination to severely punish intentional repeated infringement, helps promote the core socialist values of integrity and rule of law, and also helps to stimulate social innovation through strict protection of intellectual property rights.

Details of the case may be found at the following link: