In cases involving both criminal and civil aspects of trademark counterfeiting, some rights holders choose to file civil lawsuits for trademark infringement seeking damages after the conclusion of the criminal case. This article discusses the crucial issues of jurisdiction and compensation in these subsequent civil cases.

 

1. Jurisdiction

Generally, the criminal and civil litigation in cases involving both aspects is handled by the same trial team. However, after the conclusion of the criminal case, the jurisdiction of the subsequent civil lawsuit is not necessarily under the court handling the criminal case. The reason is that the jurisdictional scope of the court in trademark counterfeiting criminal cases is broader than in civil cases. One common difference is the use of "place of online purchase and delivery" and "domicile of the rights holder" as jurisdictional points.

 

(1) Criminal Jurisdiction: The Place of Online Purchase and Delivery and The Rights Holder’s Domicile.

 

According to the "Opinions on Several Issues Concerning the Application of Law in Handling Criminal Cases of Infringement of Intellectual Property," the place of online purchase and delivery and the domicile of the trademark rights holder can be considered the place where the criminal result occurred, thereby determining jurisdiction.

 

The Jiangxi Provincial People's Procuratorate's 2021 Typical Cases for the Protection of Intellectual Property [1] argues that the criminal act of selling counterfeit goods with fake registered trademarks through online platforms has a wide-reaching impact. Individuals in the sales chain are often scattered across the country. As long as a consumer in a certain area purchases infringing goods locally, that place can be considered the location where the criminal result occurred, and thus, it has jurisdiction.

 

Cases such as (2019) Lu 01 Criminal Final 463, and (2017) Zhe 0521 Criminal Initial 252, both affirm that the domicile of the trademark rights holder can be considered the place where the rights holder suffered actual harm, determining the jurisdiction of the case based on this.

 

(2) Civil Jurisdiction: The Place of Online Purchase and Delivery and The Rights Holder’s Domicile Cannot be Used as Jurisdictional Grounds

 

It is generally not a contentious matter that the use of the place of online purchase and delivery and the domicile of the rights holder cannot serve as jurisdictional points in civil cases of trademark infringement.

 

In the Supreme People's Court's Civil Adjudication No. 9 of 2020, the Supreme Court pointed out that while, according to the Civil Procedure Law and its relevant judicial interpretations, the place where the infringement occurred includes the domicile of the aggrieved party, according to the "Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in Hearing Civil Cases of Infringement of Trademark Rights," Article 6, in cases of infringement of trademark rights, only the place where the infringement act is committed or the domicile of the defendant can be used as a basis for determining jurisdiction. Therefore, the "place of online purchase and delivery" and the "domicile of the rights holder" as the place where the infringement occurred are excluded from jurisdictional considerations.

 

Moreover, to avoid parties arbitrarily creating jurisdictional points, leading to uncertainty in jurisdiction, the Supreme People's Court made it clear in Civil Adjudication Final No. 107 of 2016 that the place of online shopping delivery is not suitable as a jurisdictional basis for intellectual property infringement actions.

Therefore, the jurisdiction of subsequent civil litigation in trademark counterfeiting cases is not affected by criminal cases and should still be determined based on the judicial interpretations of trademark civil disputes mentioned above.

 

2. Compensation Amount

(1) Civil Compensation After Paying Criminal Fines

As trademark counterfeiting criminal cases often involve imposing fines on the defendant based on the illegal gains, defendants in subsequent civil cases often use the argument that they have already paid fines, and therefore, they should not bear or should bear less civil compensation liability. This defense is challenging to support because criminal liability and civil liability should be independently evaluated. Criminal liability fines are paid to the state treasury and not to the rights holder. If the payment of the fine affected the calculation of the amount of civil compensation, it would be unfair to the rights holder and not conducive to the protection of intellectual property. Therefore, criminal liability fines do not affect the determination of the amount of civil compensation or serve as a consideration in determining the amount. [2]

 

(2) Basis for Applying Punitive Damages

According to the "Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in Hearing Civil Cases of Infringement of Intellectual Property," Articles 3 and 4, the consideration factors for applying punitive damages include whether the defendant has engaged in counterfeiting registered trademarks and whether the infringement gains are substantial. Defendants who have already constituted the crime of counterfeiting registered trademarks often have higher profits from infringement. Therefore, there is a basis for applying punitive damages in subsequent civil cases. (Cases such as (2021) Hu 0115 Civil Initial 19128 apply punitive damages.)

 

(3) Determination of Compensation

If punitive damages are applicable, there needs to be a clear calculation method to determine the compensation. However, the determination of the compensation does not necessarily have to reference the "illegal business amount" or "illegal gains" used for conviction and sentencing in criminal cases.

 

Firstly, according to Article 12 of the "Interpretation of Several Issues Concerning the Application of Law in Handling Criminal Cases of Infringement of Intellectual Property," the "illegal business amount" includes the value of manufacturing, storing, transporting, and selling infringing products. Its calculation standard is different from the calculation method of "infringement gains" in civil cases. Therefore, the criminal amount cannot be simply used as the compensation standard in civil cases.

 

Secondly, apart from infringement gains, compensation in civil cases of trademark infringement can still be calculated based on the rights holder's losses or licensing fees. This calculation method is not reflected in criminal cases.

 

Lastly, the evidence standards differ between criminal and civil cases. Parts of criminal cases where no determination is made or where the crime is not established may still constitute infringement in civil cases. Therefore, the compensation cannot be simply based on the criminal amount but needs to be recalculated based on the evidence fixed in criminal cases or other evidence provided by the plaintiff.

 

(4) Investigative Costs in Criminal Cases Can Be Reasonably Supported as Expenses

In some criminal cases, trademark rights holders participate in investigations and incur relevant investigative costs. This portion of the costs can be reasonably claimed as expenses in civil cases. In the case (2021) Hu 0115 Civil Initial 19128, the court acknowledged that the trademark rights holder objectively participated in investigations, evidence collection, and authentication related to the infringement facts of the case. Consequently, the court reasonably supported the claims for some investigative costs.

 

 

[1] http://www.jx.jcy.gov.cn/jwzn/wsfbt/202105/t20210510_3237626.shtml

[2] Issue 126 | Bearing Civil Infringement Liability After Criminal Punishment in Criminal-Civil Hybrid Cases.