Infringer Profit Apportionment

Accounting Standard

Calculating gross commercial revenue requires auditing sales receipts, tax filings and corporate account registers covering the entire duration of active infringement. Forensic accountants determine net profits by subtracting legitimate manufacturing costs, direct labor expenses, transport costs and applicable business taxes from total gross revenue. Auditing standards require verifying reported costs against physical inventory logs and supplier invoices.

Unsubstantiated expense claims made by the infringing enterprise are disallowed from profit reduction calculations. Audited accounts from state-certified public accounting firms carry high evidentiary weight during judicial review of contested manufacturing margins.

Deduction Boundary

Operating expenses are deductible only when directly linked to the production and sale of infringing goods. Fixed factory overhead, administrative salaries and corporate marketing budgets cannot be deducted if overall manufacturing capacity remained unchanged during the infringement period. Corporate tax payments made on illegal gains do not reduce the net profit pool subject to judicial disgorgement.

Unlawful acts cannot yield tax-deductible operational deductions under Chinese judicial guidelines.

Judicial Execution

Courts combine forensic accounting reports with technical expert testimony to assign final numerical apportionment ratios. When precise financial segregation is prevented by missing accounting records, judges rely on industry average profit rates or statutory presumption benchmarks. Final damage determinations multiply audited net profit by the technical or commercial contribution percentage of the infringed asset.

Partial disgorgement protects basic corporate capital while penalizing the specific economic exploitation of protected rights.