When an IP infringement has yet to constitute a criminal case , it is undoubtedly economical and efficient for the right holder to seek administrative protection from the market supervision departments. The departments determine whether infringement fulfils the criteria under the Standards for Trade Mark Examination and Trial and Criteria for Determining Trade Mark Infringement.
To understand the effectiveness of these penalties, it is important to realise how these administrative penalties may be imposed by the market supervision departments as stated in the Article 57 of the Trade Mark Law and Article 6 of the Anti-Unfair Competition Law. This article aims to highlight the overarching rationale behind these administrative penalties, so that right holders may use this as a reference point.
On 15 July 2021, "Administrative Penalty Law (2021 Revision)" came into full force. This new law improves the benchmark system in relation to administrative penalties (“the Benchmark”).
The market supervision departments rely on general principles when they exercise their discretionary powers: the principle of legality, the principle of proportional justice, the principle of combining punishment and education, and the principle of comprehensive discretion. Market supervision departments can further develop and refine the applicable rules in view of all relevant circumstances such as the facts of the case, the severity of infringement and the potential impacts. Specifically, this includes the consideration of the civil capacities of the parties, capacities for responsibilities, presence of subjective intention, degree of subjective malignancy, value of property involved, amount of income derived, length and scale of the unlawful acts, geographic regions involved, whether the wrongdoer is a repeated offender, existence of any deplorable tactics, harmful consequences of the unlawful acts, and degree of social impact.
The administrative penalty can generally be divided into five levels: no administrative penalty, reduced administrative penalty, lenient administrative penalty, general administrative penalty, and enhanced administrative penalty. This is what they mean:
Market supervision departments commonly used 3 types of administrative penalty:
Most market supervision departments generally adopted the following formula in determining the range of fines:
Where X is the maximum penalty in the Benchmark, Y is the minimum penalty in the Benchmark, and Y is taken to be zero when the minimum penalty is not stated.
Although the Benchmark is not the immovable legal basis that would be directly adopted by the market supervision departments, it is the basis when law enforcement takes action towards the grassroots.