Damages in civil cases are usually limited to the losses suffered by the plaintiff, which is the principle of "filling in" that is often applied in the field of civil compensation. As far as compensation for intellectual property infringement is concerned, the rule of "determining the amount of compensation according to the infringer's profits from infringement" flashes the shadow of the principle of "filling in", the logic of which is that the infringer should have taken the initiative to seek authorization from the right holder, and the benefits obtained without authorization should be compensated to the right holder for its losses as the right holder. It should be noted that in today's intensified market competition and frequent frictions in intellectual property rights, cases with a subject amount of tens of millions or even hundreds of millions of yuan are not uncommon. Since the statutory compensation stipulated in the four major intellectual property rights (Patent Law, Trademark Law, Copyright Law, and Anti-Unfair Competition Law) is only 5 million yuan, there are very few cases in which the court has determined compensation of more than 5 million yuan, and it is obvious that the loss of the right holder cannot be compensated in cases where the infringement is serious. In practice, in order to increase the amount of damages, the right holder often advocates that the amount of compensation be determined according to the infringer's infringement profits, which can be simply summarized as the following formula:
Profit from infringement = sales of infringing products, profit margin of infringing products, and contribution rate of intellectual property rights.
It can be seen that the sales of infringing products play a crucial role in the profit of infringement, and this article focuses on the method of determining the sales of infringing products in judicial practice in intellectual property infringement litigation.
Article 14 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Trademark Dispute Cases provides that the benefits obtained from infringement as provided for in the first paragraph of Article 63 of the Trademark Law may be calculated on the basis of the product of the sales volume of the infringing goods and the unit profit of the goods;If the unit profit of the commodity cannot be ascertained, it shall be calculated according to the unit profit of the registered trademark commodity.
Paragraph 2 of Article 20 of the Several Provisions of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Patent Dispute Cases provides that the benefits obtained by the infringer as a result of infringement as provided for in Article 65 of the Patent Law may be calculated on the basis of the product obtained by multiplying the total number of infringing products sold on the market by multiplying the reasonable profits of each infringing product. The benefits obtained by the infringer as a result of the infringement are generally calculated according to the business profits of the infringer, and for the infringer who is entirely engaged in infringement, it can be calculated according to the sales profits.
Article 24 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Dispute Cases over Copyright provides that the actual losses of the right holder may be calculated on the basis of the product of the reduction in the distribution of copies caused by the infringement of the right holder or the sales volume of the infringing copies and the profits of the right holder from the distribution of the copies. Where it is difficult to determine the amount of reduction in distribution, it is to be determined in accordance with the market sales volume of infringing copies.
Article 13 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Trademark Dispute Cases provides that when the people's court determines the infringer's liability for compensation in accordance with the provisions of Article 63, Paragraph 1 of the Trademark Law, it may calculate the amount of compensation according to the calculation method chosen by the right holder.
1.It is determined according to the sales volume and evaluation number displayed in the infringer**: for example, in the (2015) Jing Zhi Min Chu Zi No. 1677 Civil Judgment, the total number of infringing products sold through "Tmall"** was confirmed to be 10,446. With regard to the unit price of the alleged infringing product, since there is evidence that the product will be sold, the court has the discretion to confirm that the original price of the product and the product sold each account for 50 of the total sales, that is, the average unit price of the product is 35 yuan.
For another example, in the (2018) Su 01 Min Chu No. 3207 Civil Judgment, according to the plaintiff's statistics based on the number of product reviews in the store as the sales volume, the total sales of the allegedly infringing products sold by the above stores reached 76153888$8. According to the data obtained from the e-commerce platform, the total sales of the Sophia Life Appliances ***, formerly known as Xiaomi Life Official, opened by the defendant Zhongshan Pentium Company on Jingdong.com, was 1383654666 yuan;The total sales volume of the Beves Pentium Electrical Appliance Official Store (formerly known as the Xiaomi Life Official Store) opened by the defendant SAO Company on **.com was 649920167 yuan.
Comparing the results of the plaintiff's calculation based on the number of reviews with the data obtained, it can be seen that the sales volume and sales calculated based on the number of reviews are not accurate and are much lower than the actual sales volume and sales, because some consumers did not leave comments after the transaction, so this part of the transaction was not reflected in the store's reviews. It can be inferred from this that the total amount of the alleged infringing products actually sold by the above stores exceeds 761538888 yuan, even if only the difference between the sales data of the two stores is added, the total sales amount will reach 83157636 yuan.
2.According to the ** sales data obtained from the e-commerce platform: for example, in the (2019) Su Min Zhong No. 1316 Civil Judgment, the court of second instance determined that the total sales of the 23 ** companies involved in the case were 61158213$3. The specific calculation is as follows:
2.1.Regarding the sales of 4 directly-operated stores: the sales of Sophia Life Appliances on JD.com, formerly known as Xiaomi Life Official*** and Beves Pentium Appliances Official Store (formerly known as Xiaomi Life Official Store) on JD.com, are subject to the data obtained by the court of first instance from the e-commerce platform, and the sales of the two stores are 1383654666 yuan, 649920167 yuan. Jingdong.com's "Xiaomi Life Mijia Store" and the "Xiaomi Life Official ***" on the No. 1 store are calculated according to the number of reviews, and the sales are 76,679 yuan and 9,353,000 yuan respectively. The total sales of the above four directly operated stores are 29765427$3.
2.2.About the sales of 19 dealers: calculated by multiplying the number of reviews by the unit price, the total is 52321310 yuan, and the calculation is 31392786 yuan according to the 6% discount.
3.According to the data of the financial statements submitted by the infringer: for example, in the (2017) Yue 73 Min Chu No. 2163 Civil Judgment, the defendant Anhui Newman Company submitted the data of its balance sheet and income statement, according to the income statement, its total sales of Kabo from January 2014 to March 2019 were 3704617171 yuan. Anhui Newman's self-admitted sales have exceeded the sum of the No. 101 appraisal and customs data, which is reasonable.
For another example, in (2017) Jing 0102 Min Chu No. 2431, the defendant in the original trial, COSCO Footwear Co., Ltd., provided annual financial data to calculate the profits obtained by the defendant in the original trial for infringement.
4.For example, in the (2021) Hu 73 Zhi Min Chu No. 612 Civil Judgment, the court of first instance obtained the following materials from the Ningbo Yinzhou District Taxation Bureau of the State Administration of Taxation (hereinafter referred to as the Yinzhou Taxation Bureau): From September 19, 2016 to November 19, 2021, the name of the seller was "Ningbo Jingcheng Automobile Industry*** or the taxpayer identification number "91330212758880400F", and the name of the goods included"Mirror drive", specifications include "JCDES-22118" invoices, billing records, statistical tables or ledgers.
The content of the reply letter from the Yinzhou Taxation Bureau to this court is Excel** containing the invoice information of "JCDES-22118", which includes the invoice date, code, invoice number, commodity name, quantity, unit price, and amount. According to the content of the above-mentioned ** materials, the total sales amount excluding tax of the mirror driver product with the model "JCDES-22118" was 119,320,67749 yuan, including tax sales amount total 137,549,258$20. In the end, the court of first instance used the tax-included sales amount as the basis for calculating the profits from the infringement.
For another example, in the (2015) Su Zhong Zhi Min Chu Zi No. 00201 Civil Judgment, the court of first instance, based on the application of Snail Company, obtained from the State Taxation Bureau of Chengdu High-tech Industrial Development Zone, Sichuan Province on July 13, 2016 to the State Taxation Bureau of Chengdu High-tech Industrial Development Zone, Sichuan Province, the list of the issuance of special VAT invoices and the list of certification of special VAT invoices between Tianxiang Company and iQiyi Company from July 2015 to July 2016, and calculated the infringer's infringement profits (illegal gains) based on the data of the invoice issuance.
5.For example, in the (2016) Jing 73 Min Chu No. 277 Civil Judgment, the court of first instance published and printed 952,700 copies of the allegedly infringing dictionaries from September 30, 2012 to September 30, 2016, totaling 20310160 yuan, according to the information statistics table of the "Power of Attorney for Printing of Partially Alleged Infringing Dictionaries" filed by the Beijing Municipal Bureau of Press, Publication, Radio, Film and Television.
6.It is determined according to the sales volume recorded in the penalty decision of the administrative organ: for example, in the (2020) Zhe 03 Min Zhong No. 161 Civil Judgment, the price of the ** shoes on sale provided by Adidas is 189 yuan to 1799 yuan. The court of second instance decided to select the unit price of 189 yuan pairs of ** shoes, which was the most unfavorable to Adidas, as the basis for calculation. Zhengbang company for the production and sale of shoe uppers that infringe the trademark rights of Adidas company has been seized by the administrative authorities three times and received administrative penalties, of which the third time seized 6050 pairs of uppers, Zhengbang company stated that these uppers will be sold to Russia and the price is 5 yuan pairs, it can be seen that these uppers have been in a saleable state, will cause the loss of sales of Adidas company's ** shoes, should be counted as sales.
7.For example, in the (2018) Su 05 Min Chu No. 115 Civil Judgment, Coconut Xiangyuan Company admitted that the sales amount of the infringing products between March 1, 2015 and August 31, 2015 amounted to 32356012 yuan, because the infringement of Coconut Xiangyuan Company was still ongoing in this case, with reference to the sales amount from March 1, 2015 to August 31, 2015, the total sales amount as of the date of ** was more than 22 million yuan, considering the daily production capacity of Garuda Company and the sales network of Coconut Xiangyuan Company throughout the country, the total amount of estimation did not exceed a reasonable range.
For another example, in the (2017) Jing 73 Min Zhong No. 1991 Civil Judgment, the court of second instance relied on the sales 16646526 volume of COSCO Shoes Company on Tmall, **.com, and Jingdong recognized by both parties8 yuan and the number of possible sales of the allegedly infringing goods under the three appellants' self-admission in the second instance, it is determined that the total sales of the allegedly infringing goods sold by the three appellants in 2015 and 2016 were 18 million yuan.
According to common sense, the account books and materials related to the infringement are usually in the hands of the infringer, and as long as the infringer is willing to take the initiative to provide them, it is not difficult to obtain the sales of the infringing products. In practice, there are two major obstacles for the infringer to adduce evidence: 1. Due to the large sales data of the infringing products, the infringer's voluntary submission will lead to the need to bear the corresponding amount of infringement compensation, and the infringer is unwilling to provide it out of avoidance of liability or luck. 2. Even if the infringer has provided financial data related to the sales of the infringing product, but the data provided is untrue, and there is a willingness and realistic possibility to do low, the court generally does not easily determine it. Therefore, the determination of the sales volume of the infringing product is the result of a multi-party evidence game, and the stronger the credibility of the evidence, the more likely it is to be recognized by the court.
Author: Wang Guiming, lawyer, partner of the law firm, has been practicing intellectual property for 20 years.