53 ASIAN LEGAL BUSINESS CHINA • 亚洲法律杂志-中国版 WWW.LEGALBUSINESSONLINE.COM/CHINA file civil infringement lawsuits in court to seek remedies even after the Customs issued a penalty decision to the infringer. For example, in Crocs v. Jinjiang Leipin International Trade Co., Ltd. and Ye Shaoling, the court held that the defendants were liable for infringement and should compensate the plaintiff’s loss based on the Customs’ seizure records3. Pursuant to statistics from the General Administration of Customs of China, in 2022, the Customs handled 64,600 cases, and seized 76.32 million suspected infringing products involving trademark rights, accounting for 97.93% of all goods seized.4 Advantages: Simple process and low cost; the procedure is often initiated by Customs based on their authority; administrative penalty decisions are often publicly disclosed on government websites, which serves as a deterrent to infringers. Disadvantages: Right holders cannot obtain monetary compensation from infringers in this way; statistical data shows that the majority of entities punished by the Customs are import and export agents rather than the actual producers or owners of counterfeit goods, which may have limited impacts on the real infringer behind; the penalty imposed shall depend on the value of goods seized, with the maximum being 30% of the goods’ value; in practice, penalty amounts are not high, usually around 10-15% of the goods’ value. 6. Civil Action with the Court A direct way to recover the right holders’ damages is to sue the infringer for trademark infringement. A civil infringement lawsuit could be filed in parallel to the administrative complaint or after the administrative penalty decision is arrived. For ongoing or imminent trademark infringements, right holders can request the court to order preliminary injunctions or property preservation. The compensation awarded usually is subject to the actual damages the right holder suffered, the infringer’s profits, and statutory damages (up to RMB 5 million). Where repeated and intentional infringements are found, right holders can also seek punitive damages up to 5 times of the actual damages. For example, in Vans v. Xuanwo, the court awarded 3 times punitive damages on grounds that the defendant engaged in repeated and intentional infringement of Vans’ trademarks, fully supporting Vans’ claim for a compensation amount of RMB 16 million.5 According to statistics released from the Supreme People’s Court, in 2022, courts at all levels accepted approximately 110,000 first-instance civil cases related to trademark. The settlement rate of first-instance IPrelated civil cases was 9.64% in 2022. Jiangsu courts granted punitive damages in 97 cases involving IP, a year-on-year increase of 21.25%. Shanghai Pudong Court supported punitive damages in 25 IP-related cases throughout the year. The Shenzhen Intermediate People’s Court applied punitive damages in 29 IP-related cases, with total damages amounting to RMB 169 million.6 Advantages: The right holders can recover certain amount of damage if they could prove the existence of infringement, which at least mitigate some of their losses. Disadvantages: Litigation procedures are relatively complex and time-consuming; right holders need to participate in the entire litigation process, submit evidence, attend hearings, etc., which is expensive; the burden of proof in civil litigation largely falls on the plaintiff, which can be difficult to build up the case. Even if the infringement is established, it’s often challenging for right holders to prove their actual losses. In cases where the infringer’s profits are not high, most right holders have to let the court decide a number by applying the statutory damages. 7. Alternative Dispute Resolution In practice, the litigants may also resort to neutral thirdparty organizations if they want to settle the dispute outside of court. These organizations include local intellectual property mediation centers, intellectual property dispute mediation committees, intellectual property rights protection centers under market supervision authorities, legal aid mediation centers, etc. 3 Crocs v. Jinjiang Leipin International Trade Co., Ltd. and Ye Shaoling, Fujian Jinjiang People’s Court (2022) Min 0582 Min Chu No. 3155. 4 General Administration of Customs of China’s Wechat Account, “Intellectual Property Protection by China Customs in 2022”, published on April 25, 2023, https://mp.weixin.qq.com/s/53QROUVF_1Je6hiL9cHL5Q 5 Vans v. Xuanwo, Zhejiang Ningbo Intermediate People’s Court (2021) Zhejiang 02 Min Chu No. 1866. 6 China Supreme People’s Court, “Intellectual Property Protection by Chinese Courts in 2022”, published on April 20, 2023, https://www.court.gov.cn/zixun-xiangqing-397082.html
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