China National Intellectual Property Administration (CNIPA) and the State Administration for Market Regulation recently released “Measures for Calculating Illegal Business Profit in Trademark Infringement Cases.” The guidelines provide detailed definitions and measurements for determining the amount of illegal business operations in trademark infringement cases and instructions for handling complex infringement situations. This offers specific operational guidance for trademark enforcement authorities.

Article 1: These measures are formulated based on the Trademark Law, its Implementation Regulations, and other relevant laws and regulations.

Article 2: These measures apply when a party's actions are recognized as trademark infringement by trademark administrative enforcement departments while handling trademark infringement cases.

Article 3: The calculation method of illegal business profit should follow the principles of legality, reasonableness, objectivity, and fairness.

Article 4: Illegal business profit refers to the total value of infringing goods or the revenue from infringing services involved in trademark infringement.

Article 5: The value is calculated based on the actual sale price for infringing goods already sold.

For unsold infringing goods, the value is calculated based on the average actual sale price of the identified infringing goods; if the actual average sale price cannot be determined, the listed price of the infringing goods is used.

If neither the actual sale price nor a listed price for the infringing goods is available, the market median price of the infringed goods is used.

For goods manufactured but not yet marked with the infringing trademark, if sufficient evidence proves that the goods will infringe the exclusive trademark right of others, their value should be included in the illegal business profit.

Article 6: The market median price of the infringed products is determined by the official retail price published by the trademark holder for the same products. If no official retail price is available, it is defined as follows:

1.     If multiple sellers offer the same infringed product in the same market, an average of the retail prices from a sample of these sellers is used to determine the market median price; if only one seller offers the product, the retail price of that seller is used.

2.     If no such infringed products are available in the market, the market median price of the same products previously sold is used, or the price of similar products with the same function, purpose, primary materials, design, or configuration is used.

If the above methods fail to determine the market median price, a pricing certification agency may decide, or the trademark enforcement department may decide in favor of the trademark holder according to the above principles.

Statements by the parties or the market median price of the infringed product provided by the trademark holder, if verified as accurate after examining other related evidence, may be used as a reference.

If a party disputes the calculation of the market median price of the infringed product, they must provide evidence.

Article 7:

If, in the case of a processing and contracting business involving all materials and labor, the contractor uses goods that infringe the exclusive trademark right of others, the illegal business profit shall be calculated according to the actual sales price of the infringing goods; if the infringing goods are not priced separately, the illegal business profit shall be calculated according to the proportion of their value in the processing and contracting business activities involving all materials and labor; if the proportion of value cannot be determined, the illegal business profit shall be calculated according to the median market price of the infringed goods.

Article 8: If goods are given away for free and infringe the exclusive trademark rights of others, the illegal business profit is calculated based on the actual purchase price or manufacturing cost of the goods; if these cannot be determined or if the goods are off-standard products, the market median price of the infringed goods are used.

Article 9: If refurbished goods infringe the exclusive trademark rights of others, the illegal business profit is calculated based on the total value of the infringing goods.

If only parts or components of refurbished goods infringe the exclusive trademark rights of others, the illegal business profit is calculated based on the value of the infringing parts or components.

Article 10: For infringing activities under Article 57(4) of the Trademark Law, the illegal business profit is calculated based on the actual sale price of the infringing mark.

Article 11: For parties who intentionally provide conditions facilitating the infringement of others' exclusive trademark rights, the illegal business profit is calculated based on the income obtained from assisting the infringement; if no income is received, the party is treated as having no illegal business profit.

Article 12: If goods infringing others' exclusive trademark rights are rented out, the illegal business profit is calculated based on the rental income.

Article 13: In cases where infringement of exclusive trademark rights occurs in advertising and unable to verify infringing goods, it is treated as having no illegal business profit.

Article 14: For cases where the licensor and licensee jointly infringe others' exclusive trademark rights, the illegal business profit is calculated under Articles 5 and 6 of these measures.

If a trademark licensor helps a licensee to infringe others' exclusive trademark rights, the illegal business profit shall be calculated based on the licensing income. If the trademark is licensed free of charge, it shall be treated as if there is no illegal business profit.

Article 15: If the actual illegal business profit cannot be determined under the above provisions, it is treated as having no illegal business profit. If only part of the illegal business profit can be determined, it is treated according to the determined illegal business profit.

Article 16: If a party provides sufficient evidence proving that sales quantities were increased through false sales practices such as fake orders, these sales amounts are excluded from the illegal business profit.

Article 17:

If, in trademark infringement cases transferring from Criminal Organs to Administrative Agencies for enforcement coordination, the administrative agencies and the Criminal Organs have inconsistent determinations on the amount of illegal business volume, they may decide to follow the provisions of these Measures based on the investigation by the administrative agencies.

Article 18:

The State Intellectual Property Office and the State Administration for Market Regulation interpret these Measures.

Article 19: These measures come into effect on the date of their promulgation.