Judicial Apportionment Models for Trade Secret Damages in PRC Intermediate IP Courts
PRC Intermediate IP Courts limit trade secret damages to net profits directly driven by proprietary secrets, deducting market, capital, and non-infringing inputs.
Infringer Profit Allocation
Meaning
Judicial assessment used to isolate the portion of a defendant’s earnings that directly resulted from the use of an unauthorized intellectual property. Proper infringer profit allocation prevents the unjust enrichment of a rights holder by excluding profits earned from the defendant’s own marketing efforts or other unrelated components. This principle is codified in the Supreme People’s Court rules on the trial of patent and trademark disputes.
Contribution Factor
Judges assign a percentage to the infringing technology based on its role in the final product’s market appeal.
Statutory Limit
The total damages award cannot exceed the verified net profit obtained through the sale of the infringing items. If the infringing part is a minor component of a complex machine, the award is scaled down to reflect only that part’s value. This ensures the remedy is proportional to the actual harm caused by the infringement.
Causality Determination
Evidence from consumer surveys or technical experts helps establish whether the infringing feature was the primary reason for the purchase. A feature that provides a secondary function receives a lower allocation than one that defines the product’s core utility. The court balances the technical contribution against the defendant’s own manufacturing efficiency and distribution power.