In a final judgment dated 22 December 2025, the Intellectual Property Tribunal of China’s Supreme People’s Court (SPC) held that an infringer who was held liable once, and then organized the same infringing activity through other persons and companies, can be found to have infringed intentionally and seriously. It therefore applied punitive damages. Because the rights holder had no evidence of its losses, the infringer’s profits or a license fee, the court used the damages awarded in the earlier judgment (RMB 300,000) as the base for the multiplier. It applied a four-fold punitive multiplier, producing RMB 1.5 million in damages, plus RMB 50,000 in reasonable expenses: RMB 1.55 million in total. The first-instance court had awarded RMB 800,000 and refused punitive damages.

The ruling applies existing law (Article 1185 of the Civil Code and Article 71 of the Patent Law). Its value lies in how it handles proof of the damages base in a repeat-infringement setting. It is a fact-specific decision, not a rule that applies automatically.

The rights holder is a German company that owns an invention patent for a luggage “intermediate board” held in place by adjustable straps (filed 23 September 2008, granted 19 September 2012).

The first case. In 2016 the rights holder sued an individually owned luggage factory, wholly owned by Li Mougang, in the Guangzhou Intellectual Property Court. In judgment (2016) Yue 73 Min Chu No. 288 (8 September 2016), the court held the factory liable and awarded RMB 300,000 for economic loss and reasonable expenses combined, with any shortfall payable from Li’s personal assets. The rights holder had claimed RMB 1 million plus RMB 100,000 in expenses. The Guangdong High Court upheld the judgment on appeal in February 2017. The first case also recorded a written undertaking, issued by the factory on 31 October 2015, to stop producing and selling the infringing products.

The second case. In late 2021 and early 2022, the rights holder made notarized purchases of luggage from two online stores. One was the “DXX” flagship store on Tmall, run by Zhuhai Weimou Luggage Co., whose shareholders are Li Mougang (also its legal representative) and his wife Liao Mouyan. The other was a store on 1688 run by Zhongshan Junmou Luggage Co., whose registered sole shareholder and legal representative is Cai Moujin. In the Junmou purchase, the payee was Li’s personal account. The luggage carried trademarks registered by Liao (personally, and through a Hong Kong company she owned that had been renamed in 2017). The parties agreed that all accused products used the same technical solution.

The rights holder alleged that Li and Liao actually controlled Junmou and that Cai’s registered capital had never been paid in. These were allegations; the court did not make findings on them in those terms. It found that Li, Liao and Junmou jointly made and sold the products, and that Li, Liao and Weimou jointly offered and sold them. It found no sufficient evidence of an infringement claim against Cai personally.

First instance (Guangzhou IP Court, (2023) Yue 73 Zhi Min Chu No. 2047, 11 June 2025). The court found infringement but refused punitive damages and awarded RMB 800,000 (RMB 750,000 plus RMB 50,000 expenses). Li and Liao were jointly liable for that amount, Junmou up to RMB 300,000, Weimou up to RMB 200,000, and Cai bore supplementary liability for Junmou’s debt.

Second instance (SPC IP Tribunal, (2025) Zui Gao Fa Zhi Min Zhong No. 598, 22 December 2025). No new evidence was submitted. The SPC upheld infringement of claims 1–3 and 5–9 (the parties agreed claim 4 was not infringed) and reversed on punitive damages.

Intent and seriousness. The SPC reasoned in two steps. First, Li kept committing the same infringement after the earlier judgment had found his sole proprietorship liable, and made him personally answerable for any shortfall; this made the conduct intentional and serious. Second, after that judgment Li organized Liao, Junmou and Weimou to carry out the infringement jointly. The court relied on the couple’s marriage, their joint investment in Weimou, the use of the same trademarks across the products, and Li’s collection of Junmou’s sales proceeds.

The damages base. The rights holder had no evidence of its losses, the infringer’s profits or license fees. The court noted that the earlier RMB 300,000 had not separated reasonable expenses from damages, but held that, given the intentional conduct and the circumstances, it could still be used as the base. It said it could have applied five times the base, but because the claim was RMB 1.5 million, it applied four times, producing a total of RMB 1.5 million, which it awarded in full. It also upheld RMB 50,000 in reasonable expenses.

Allocation of liability. Li and Liao are jointly liable for RMB 1.55 million. Junmou is liable up to RMB 1.05 million and Weimou up to RMB 700,000 (the figures the rights holder requested on appeal). On Cai, the SPC said that under Article 23(3) of the Company Law a sole shareholder who cannot prove separation of personal and company assets should bear joint liability. But because the first-instance court had imposed only supplementary liability and the rights holder had not appealed that point, the SPC left it unchanged.

The judgment also says it will be suspended or terminated at the enforcement stage if all the infringed claims are later declared invalid.

The published commentary (written by the presiding judge and a judicial assistant, and stated to reflect the authors’ views) explains the choice of base: it is reasonable to infer that an infringer who infringes again gains more than the earlier award, otherwise it would not do so. That inference was drawn in a case where the evidence tied the new entities to the same individual (marriage, shared trademarks, payments into his personal account), and where there was no direct evidence of loss or profit.

The decision is encouraging for rights holders who have already won once. It does not follow that every re-registration or restructuring will support punitive damages. The court relied on specific proof that the earlier infringer personally organized the later conduct.

1. Keep the earlier judgment and its evidence file. A prior award can be pleaded as the base when direct proof of loss, profit or license fee is unavailable.

2. Build the link between the old and new entities early. In this case the link rested on family ties, shared trademarks, joint investment and who received the money. Corporate records, trademark filings, store operators and payment records are the usual sources.

3. Plead intent and seriousness with facts, not labels. Here the court looked at what the infringer did after the first judgment and how he organized others.

4. Mind the procedural points. The rights holder here received a four-fold multiplier, not the maximum, because it had asked for RMB 1.5 million. A claim should be pitched with the five-fold ceiling in mind. A point not appealed may stay as decided, as happened with Cai’s supplementary liability.

5. Remember validity risk. The damages award is conditional on the patent claims surviving any invalidation challenge.

For foreign companies that work with Chinese manufacturers or licensees, the practical lesson is about governance. Arrangements in which one controlling person runs several entities, shares trademarks among them and receives company money in a personal account can be treated by a court as a single organized operation. If a counterparty has a prior infringement judgment, that history may carry into its later entities. Companies should review such arrangements in their own supply chains, and document ownership and licensing clearly.