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.
Serious Circumstances Threshold
Meaning
Statutory benchmarks in Chinese criminal law establish the point at which intellectual property infringements or business violations transition from civil disputes to criminal prosecution. Meeting the serious circumstances threshold triggers the involvement of the Public Security Bureau when the case exceeds administrative jurisdiction. This boundary ensures that minor violations are handled through administrative fines while major, organized infringements face jail sentences.
The threshold is defined by joint judicial interpretations from the Supreme People’s Court and the Supreme People’s Procuratorate.
Quantitative Measure
Infringement cases cross the line based on the total illegal revenue generated or the value of the seized counterfeit goods. For trademark infringement, the threshold is typically set at fifty thousand yuan of illegal gains or one hundred and fifty thousand yuan of sales revenue. For trade secret theft, the threshold is measured by the actual loss caused to the victim or the illegal gains of the infringer.
Law Enforcement
Once the monetary or volume standards are met, administrative agencies must transfer the case to the police. Police officers have broader powers, including the ability to detain suspects and seize financial records. Failure to transfer such cases can lead to internal disciplinary action.
Legal Outcome
Passing the threshold can lead to criminal trials and prison sentences of up to seven years for severe cases of trademark infringement or trade secret misappropriation. Companies can also face substantial criminal fines that are much higher than standard administrative penalties. The criminal record resulting from such a conviction can bar individuals from serving as corporate directors or holding key executive roles in the future, which effectively ends their professional careers in regulated sectors.