Q3.How can rights holders take advantage of these increased damages?
【Celia Y. Li】
In order to obtain more compensation in an infringement lawsuit, the rights holder should pay attention to collecting the day-to-day profits records ，which can be valuable proof of actual loss due to the infringement. Proof of the infringer’s profit obtained through infringing activities is also important, which could be revealed through a well organized investigation, even it can be extremely difficult sometimes.
In addition, because to the new Trademark Law adds “non-use for three consecutive years” as a defense against compensation claims, it is crucial to collect and retain proof of use of your mark in the Chinese Market.
Furthermore, in trademark proceedings, the Warning Letter will be take very important in the determination of “bad-faith”, which could provide the rights holder significant help in claiming punitive damages pursuant to Article 63.
Q4.Does the trade mark law make it easier to get evidence to support damages claims? If so, what are they and how can rights holders use these provisions?
【Celia Y. Li】
No law can make it easier to get supporting evidence in any proceedings in China. Instead, Instead, Article 63(3) of the new Trademark Law rearranges the burden of proof when determining compensation, which lessens the burden on the plaintiff and transfer them partially to the defendant’s side if certain specified requirements are satisfied.
The Chinese civil law system does not have a discovery process. Therefore, it can be difficult for claimants to obtain proof of the extent or scope of the defendant’s sales, the amount of its profit and the plaintiff’s loss.
This issue is addressed to a certain extent in the New Trademark Law by allowing for the courts to order infringers to produce books of account and records in situations where the claimants are unable to obtain sufficient evidence by its own efforts under Article 63(2) .In addition, if the defendant refuses to provide books of account or provides falsified records, the court may make a decision in reference to the evidence submitted by the Plaintiff.
In this case, pre-litigation investigation will be much more important in proving both the defendant’s profit and plaintiff’s efforts at obtaining such evidence.
Getting evidence can be incredibly difficult given that the burden of proof is largely placed on the plaintiff, however, with the new amendments, the court will be able to play a larger role in requiring production of evidence by the defendant in order to determine damages. Where a defendant refuses to comply, the courts are given a chance to even the playing field by giving more weight to the plaintiff’s claimed damages. Further, the courts will continue to assist in pre-litigation evidence preservation, which also helps relieve the extreme difficulties plaintiffs often face in evidence production.
Q5.Are there any provisions in the new Trademark Law that deal with repeat offenders? How can rights holders take advantage of these provisions?
【Celia Y. Li】
Under the old trademark law, the Administration of Industry and Commerce (AIC) could only impose fines of no more than three times the illegal operation amount. In cases where the amount cannot be determined, the fine could not be over RMB100,000 ($16,000).
The new Trademark Law grants the AIC a right to issue a more severe punishment against infringers. Article 60 stipulates that the AIC has the right to impose fines of no more than five times the illegal operation amount where the amount is over RMB50,000. In cases where the amount is less than RMB50,000 or cannot be determined, the fine is capped at RMB250,000.
More significantly, an infringer who has been punished by the relevant AIC twice within 5 years will receive heavier punishment.
Even though the right holder cannot obtain any compensation from an AIC action, the favorable administrative decision issued by AIC will be considered as very solid evidence in the related judicial proceedings. Furthermore, decisions against repeat offenders may act as a nuclear weapon in proving the infringer’s bad faith, which may lead to a punitive damages judgement.