China ‘s SAMR Advises on Calculation of the Business Revenue in Trademark Infringement Cases
Published 8 November 2024
Fei Dang
On October 30, 2024, the State Administration for Market Regulation (SAMR) and the China National Intellectual Property Administration (CNIPA) co-issued the Measures for Calculating Illegal Business Revenue in Trademark Infringement Cases (the Measures).
The Measures contains 19 provisions and includes key points, but are not limited to, as follows:
The Measures is applied to trademark infringement that is recognized by the trademark administrative enforcement departments during the handling of a trademark infringement case, and the “illegal business revenue” herein refers to “the total value of the infringing goods involved in the trademark infringement committed by the party or the business income generated by the infringement.”
According to the Measures, the value of sold infringing goods shall be calculated based on the actual sales price, whereas those of the unsold shall be calculated on the average price of the identified sold infringing goods; in case the said average price cannot be identified, it shall be based on the price tag of the infringing goods. If no actual price can be identified or there is no price tag, it shall be calculated on the middle of the market price of the infringing goods during the infringement. Further, for goods that have been manufactured but not yet attached to the infringing registered trademark, if there is solid and sufficient evidence to prove that such goods will infringe others’ exclusive rights to the registered trademark, the value of which shall be included in the amount of illegal business revenue.
Regarding the calculation of the published guiding sales price, the Measures provides methods as follows to calculate: 1) if the market has more than one merchant sell the same kind of the infringed products, it shall sample a number of merchants of the retail price and take the average to determine the middle market price; it there is only one merchant, it shall use the merchant's retail price to determine the middle market price; 2) if the market does not have the same kind of infringed products for sale, it shall determine with the middle price of the previous market sales of the same kind of infringed products, or the middle price of the same kind of infringed products that are the same or similar in the function, use, the main materials, design, configuration, and other aspects sold in the market. In case it is hard to determine the market middle price based on the above, it can be determined upon confirmation by the price determination organization.
The Measures also specifies the calculation of the illegal business revenue under some specific circumstances. For instance, in the case of using goods that are infringing registered trademark during a processing contract that includes contractor and materials, it shall calculate in accordance with the actual sales price of the infringing goods; where the infringing goods are not independently priced, their value shall be calculated in accordance with the proportion of the value of the infringing goods in the processing contract that includes the contractor and materials, and where it is not possible to differentiate between the proportions of the value of the infringing goods, it shall be calculated in accordance with the middle price of the infringed goods.
In case of free gifted goods that are infringing registered trademarks, the illegal business revenue shall be calculated based on the actual purchasing price or the manufacturing cost of the gifted goods; if either price mentioned could not be determined or the gifted goods are not standard goods, it shall be calculated based on the tag price or the middle price of the infringed goods.
[Comment]
The Measures provides a detailed guide on how to calculate the illegal business revenue in trademark infringement cases, which will become the basis for the administrative punishment in a trademark administrative protection case. It does not only define the concept of the illegal business revenue but also specifies both the regular standard calculation and special standard calculation. The former includes the calculations of the sold goods, the unsold goods, the middle prices, etc., whereas the latter includes the calculations under the circumstances of contract work, gifts, refurbishment, renting, publicity, licensing, etc. Such measures will be helpful to fill in the blank regarding the calculation of the illegal business revenue and provide a unified and predictable guide in practice. The Measures has come into effect since its issuance date of October 30, 2024.
The Measures contains 19 provisions and includes key points, but are not limited to, as follows:
The Measures is applied to trademark infringement that is recognized by the trademark administrative enforcement departments during the handling of a trademark infringement case, and the “illegal business revenue” herein refers to “the total value of the infringing goods involved in the trademark infringement committed by the party or the business income generated by the infringement.”
According to the Measures, the value of sold infringing goods shall be calculated based on the actual sales price, whereas those of the unsold shall be calculated on the average price of the identified sold infringing goods; in case the said average price cannot be identified, it shall be based on the price tag of the infringing goods. If no actual price can be identified or there is no price tag, it shall be calculated on the middle of the market price of the infringing goods during the infringement. Further, for goods that have been manufactured but not yet attached to the infringing registered trademark, if there is solid and sufficient evidence to prove that such goods will infringe others’ exclusive rights to the registered trademark, the value of which shall be included in the amount of illegal business revenue.
Regarding the calculation of the published guiding sales price, the Measures provides methods as follows to calculate: 1) if the market has more than one merchant sell the same kind of the infringed products, it shall sample a number of merchants of the retail price and take the average to determine the middle market price; it there is only one merchant, it shall use the merchant's retail price to determine the middle market price; 2) if the market does not have the same kind of infringed products for sale, it shall determine with the middle price of the previous market sales of the same kind of infringed products, or the middle price of the same kind of infringed products that are the same or similar in the function, use, the main materials, design, configuration, and other aspects sold in the market. In case it is hard to determine the market middle price based on the above, it can be determined upon confirmation by the price determination organization.
The Measures also specifies the calculation of the illegal business revenue under some specific circumstances. For instance, in the case of using goods that are infringing registered trademark during a processing contract that includes contractor and materials, it shall calculate in accordance with the actual sales price of the infringing goods; where the infringing goods are not independently priced, their value shall be calculated in accordance with the proportion of the value of the infringing goods in the processing contract that includes the contractor and materials, and where it is not possible to differentiate between the proportions of the value of the infringing goods, it shall be calculated in accordance with the middle price of the infringed goods.
In case of free gifted goods that are infringing registered trademarks, the illegal business revenue shall be calculated based on the actual purchasing price or the manufacturing cost of the gifted goods; if either price mentioned could not be determined or the gifted goods are not standard goods, it shall be calculated based on the tag price or the middle price of the infringed goods.
[Comment]
The Measures provides a detailed guide on how to calculate the illegal business revenue in trademark infringement cases, which will become the basis for the administrative punishment in a trademark administrative protection case. It does not only define the concept of the illegal business revenue but also specifies both the regular standard calculation and special standard calculation. The former includes the calculations of the sold goods, the unsold goods, the middle prices, etc., whereas the latter includes the calculations under the circumstances of contract work, gifts, refurbishment, renting, publicity, licensing, etc. Such measures will be helpful to fill in the blank regarding the calculation of the illegal business revenue and provide a unified and predictable guide in practice. The Measures has come into effect since its issuance date of October 30, 2024.