In a decision handed down by the Supreme People's Court of China (SPC) on February 7, 2023, the SPC ruled that the plaintiff patent owner was entitled to punitive damages when the defendant sold the infringing product after a settlement was reached in a previous case to cease infringement. Jin XX sued Baijia and Zhengzhou Baifa Trading Co., Ltd. business department of Hardware, Electrical, Labor Insurance, and Building Materials for infringement of invention patent CN1131364 for "Reverse Planer". On appeal to the SPC, the SPC ruled that Bajia resold the same infringing product after a settlement was reached, and therefore there was intentional serious infringement, which is consistent with applicable punitive damages. Punitive damages were calculated based on the amount paid in the previous settlement agreement.

The Court of First Instance ruled that the alleged infringing product fell within the protection of the patent law at issue in this case. Although Baijia intentionally violated, it did not correspond to the seriousness of the circumstances and did not meet the conditions for imposing punitive sanctions. The Jia Business Department compensated Jinx for 8,000 RMB in economic damages and 2,000 yuan in reasonable defense costs, totaling 10,000 RMB. Jinx filed an appeal.

After making a commitment to stop the infringement and paying compensation in the previous case, Bajia continued to sell the alleged infringing product. This shows an intent to infringe and constitutes repeated infringement, which falls under the “Other Circumstances That Can Be Determined as Serious Circumstances” as stipulated in Article 4 of the Interpretation of the Supreme People’s Court on the Application of Punitive Compensation in the Trial of Civil Cases of Infringement of Intellectual Property Rights. Bajia should therefore bear the responsibility for punitive damages.

Per Article 4 of the Interpretation, to determine if circumstances are serious, Courts “shall comprehensively consider the infringement methods and frequency, the duration, geographical scope, scale, and consequences of the infringement, and the infringer’s actions in the lawsuit.”