Calculating Trade Secret Damages in Chinese Courts
Chinese courts calculate trade secret damages through actual losses, infringer profits, or license multiples, applying apportionment and punitive multipliers up to five times base losses.
Interim Injunction Undertakings
Meaning
Formal promise made by a plaintiff to the court guarantees compensation to the defendant if a preliminary injunction is later found to be unjustified. Chinese intellectual property litigation frequently requires interim injunction undertakings to protect defendants from commercial losses caused by premature sales bans. The court conditions the granting of the injunction on the provision of this commitment.
This mechanism prevents plaintiffs from abusing preliminary relief to disrupt competitor operations.
Indemnity Obligation
Financial compensation becomes payable when the trial court rules that the preliminary injunction should not have been granted. The interim injunction undertakings create a binding liability for the plaintiff to cover lost profits, storage fees, and legal expenses incurred by the defendant. This obligation survives even if the plaintiff withdraws the main lawsuit.
Security Deposit
Cash deposits or bank guarantees must accompany the written commitment to ensure the availability of funds for potential damages. Chinese courts require the value of the asset freeze or the security under the interim injunction undertakings to correspond directly to the defendant’s projected monthly losses. If the plaintiff fails to provide adequate security, the tribunal rejects the application for preliminary relief.
This deposit remains frozen until the final judgment on the merits of the case.
Court Assessment
Judges evaluate the balance of hardship and the strength of the claim before accepting the security. The interim injunction undertakings minimize the financial risk of judicial errors during the pre-trial phase. This assessment helps maintain market stability during intense patent disputes.