The Supreme People’s Court of China has issued a new judicial interpretation on punitive damages in intellectual property cases, formally titled the Interpretation of the Supreme People’s Court on the Application of Punitive Damages in the Trial of Civil Cases Involving Intellectual Property Infringement (the “Interpretation”), which came into effect on May 1, 2026.
(1)Clarification of the Preconditions for Application
The Interpretation further refines the analytical framework for determining the prerequisites for punitive damages, namely, “intentionality + serious circumstances”, thereby enhancing overall predictability.
For example, circumstances such as continuing infringement after receiving an infringement notice, prior commercial cooperation or licensing contacts, and repeated infringement are more likely to support a finding of “intentionality.” Meanwhile, repeated infringement, concealment of evidence, and engaging in infringement as a regular business are expressly identified as “serious circumstances.” As a result, adjudication standards have become clearer, and the application of punitive damages has become more predictable.
(2)A More Structured Damages Calculation System
The Interpretation clarifies the mechanism for calculating damages. The calculation base must be determined from one of the following:
actual losses;
infringer’s profits; or multiples of licensing fees.
It expressly excludes the possibility of using statutory damages as the calculation base. If the calculation base cannot be established through evidence, a claim for punitive damages cannot be supported.
Regarding the multiplier, courts may determine a multiplier ranging from 1 to 5 times (including noninteger multiples).
The final damages amount consists of:
calculation base × multiplier + reasonable enforcement expenses.
As a result, damages have become more calculable, while evidentiary requirements have significantly increased.
(3)Enhanced Burden of Proof
The Interpretation strengthens evidentiary obligations and information disclosure mechanisms. After the plaintiff has completed its preliminary burden of proof, the court may require the defendant to submit account books, records, and other materials related to the infringing activities.
If the defendant refuses to provide such materials or provides false information, the court may determine the calculation base for punitive damages according to the plaintiff’s claims and the available evidence.
In addition, where administrative fines or criminal fines for the same infringing activity have already been imposed and fully executed, the court shall take such circumstances into account when determining the multiplier for punitive damages.
As a result, companies lacking compliance records or refusing to disclose information may face significantly higher litigation risks and substantial damages exposure.