Business Question 

“The statutory damages cap has been raised to RMB 5,000,000 — does that mean enforcement will now bring in more compensation?” This is probably the single most easily oversimplified, and most easily misread, change in this revision.

When companies see this figure, the first instinct is often: damages just went up, so enforcement is now more worthwhile. But that reading skips over a critical fact: RMB 5,000,000 is never money a company receives automatically — it is the ceiling a court falls back on only when the rights holder cannot establish actual loss, the infringer's profit, or a reasonable multiple of the licensing fee. What the new Law genuinely raises is the court's room for discretion, not any exemption from the rights holder's burden of proof. Evidence has not become less important — it has become more important than before. This installment sets out to explain how a high-damages outcome is actually built, and which cases genuinely warrant the resources to pursue one.

  Legal Update 

Chapter VIII (Articles 71 through 81) governs the protection of the exclusive right to use a registered trademark. What truly drives this installment's subject is Article 77's systemic recalibration of how damages are calculated.

The amount of compensation is first determined, in sequence, by the rights holder's actual loss, the infringer's profit, or a reasonable multiple of the trademark licensing fee; for intentional infringement involving serious circumstances, punitive damages of one to five times the amount determined by the above methods may be applied; where the rights holder has made its best efforts to produce evidence and the account books and materials relating to the infringement are mainly in the infringer's possession, the court may order the infringer to produce them, and if the infringer refuses or produces false materials, the court may determine the damages based on the rights holder's claims and evidence; where none of the above methods can be determined, the court awards statutory damages of up to RMB 5,000,000 based on the circumstances of the infringement — this is where the RMB 5,000,000 figure actually comes from, and the conditions under which it applies. It sits last in the calculation sequence, not first.

Two related background changes are worth a brief mention. Article 72 expands the scope of infringing conduct to include intentionally facilitating another person's infringement of a registered trademark; under specific facts, a third party that provides facilitating conditions for infringement — such as warehousing and logistics providers, packaging and printing services, or network service providers — may also fall within the scope of liability for facilitating infringement — this broadens the range of parties a rights holder may potentially pursue in certain circumstances, but whether facilitating-infringement liability actually attaches still depends on a case-by-case assessment of factors such as subjective knowledge and whether reasonable duties of care were observed; it cannot simply be equated with “a platform is automatically liable because it exists.” Article 81 newly regulates malicious and fabricated litigation, a reminder that a higher damages cap does not mean a weak case can be repackaged as a high-damages case — the underlying rights, the facts of infringement, and the damages claim still need to be genuine, restrained, and capable of proof.

  Practical Analysis 

The calculation sequence under Article 77 conveys a core judgment: statutory damages will continue to be the path actually applied in a large share of trademark infringement cases, but for a case with genuine potential for high damages, a rights holder should not treat it as the path to rely on first. For most cases, raising the RMB 5,000,000 cap does not directly translate into automatically doubled damages — it expands the room a court has to exercise discretion once every other method has failed. Whether that room gets used to its full extent still depends on whether the rights holder can clearly lay out the circumstances of the infringement and its impact on the market.

What genuinely warrants a company's attention is Article 77's provision shifting the burden of proof, which we consider the single most practically valuable adjustment to the damages regime in this revision — arguably more significant than the RMB 5,000,000 figure itself. In trademark infringement litigation, the core difficulty rights holders have long faced has never been a lack of statutory calculation methods — it has been that the infringer's actual sales figures, profit margins, inventory, and account books sit entirely in the infringer's hands. Even when a rights holder is confident the infringer's profits are substantial, it has historically been very difficult to obtain the evidence to prove it. The new Law allows a court, where the rights holder has made its best efforts to produce evidence and the relevant account books are mainly held by the infringer, to order the infringer to produce them — and where the infringer refuses or produces false materials, the court may determine damages directly based on the rights holder's claims and evidence. This rule, at its core, redistributes the cost of information asymmetry in litigation. In the past, that cost fell almost entirely on the rights holder; under the new Law, the consequence of an evidentiary gap now shifts, in part, onto an infringer who refuses to cooperate or supplies false materials. That shift matters more to a rights holder's litigation strategy than the RMB 5,000,000 figure itself.

  Practical Impact 

Once this calculation logic is understood, what a rights holder genuinely needs to do is not wait passively for a court to apply statutory damages, but proactively build an evidentiary chain capable of supporting the “infringer's profit” method of calculation — the key is not that the rights holder must prove the infringer's entire profit from the outset, but that it first reaches the threshold of having made its best efforts, giving the court grounds to shift the burden of proof.

In practice, this typically unfolds in two steps. First, the rights holder builds a preliminary framework establishing the scale of the infringement through peripheral evidence: e-commerce listing pages, sales figures, review counts, how long the store has been operating, combined with livestream sales records, customer service correspondence, logistics information, and business registration details for related stores. No single piece of this evidence may precisely quantify the infringer's profit on its own, but taken together, it is enough to show the court that the rights holder has exhausted the evidence reasonably available to it — which is precisely the threshold that triggers the shift in the burden of proof. Second, on that basis, the rights holder can formally request that the court order the infringer to produce complete sales and financial account books; once the infringer refuses, or the materials it produces are plainly unreliable, the court may determine damages directly based on the peripheral evidence and reasonable claims the rights holder has already presented — a path that, in practice, tends to yield a more solid and persuasive damages outcome than simply hoping for the statutory cap.

It is worth emphasizing that high-damages cases typically rest on two legs: one is establishing a solid base figure — the infringer's profit or the rights holder's actual loss; the other is proving, on top of that base, that the infringement was intentional and the circumstances serious, in order to secure punitive damages of one to five times that base. The second leg is often overlooked by rights holders, but its leverage can be greater — for the same base figure, whether punitive damages can be layered on top may change the final award by several multiples. Proving intent and serious circumstances typically requires evidence that the infringer continued despite a prior warning or complaint, or has a record of repeated infringement — and this is precisely the kind of evidence that overlaps heavily with the criteria for deciding whether a case is worth the investment in the first place.

This is also why, when a company encounters a suspected infringement, the first thing it genuinely needs to do is not rush to litigate, but assess whether the case warrants a systematic investment of resources. Whether a case has this kind of potential can usually be judged along several dimensions: how long the infringement has persisted, whether the sales scale is significant, whether the infringer shows signs of organized, multi-platform operation, and whether the infringer continued despite a prior warning or complaint — these same dimensions not only determine how solid the evidentiary foundation is for the “infringer's profit” path, but also tend to be the core material for proving intent and serious circumstances in pursuit of punitive damages. Cases like this are usually worth the investment of systematically fixing evidence and pursuing both the burden-shift and the punitive-damages paths together; for smaller-scale, scattered infringement where evidence itself is hard to gather, that level of investment may not be worthwhile, and an outcome within the statutory damages range may already be a reasonably fair expectation. In other words, a high-damages outcome is not something achieved only once litigation begins — it is, to a significant degree, already determined at the stage of case selection and evidence fixing.

  GreRoyalt Observation 

In handling trademark infringement damages matters, we have consistently observed that what genuinely determines the final damages awarded in a case has never been the statutory cap, but the extent to which the rights holder had already built a record of evidence — of its own loss and the infringer's profit — before litigation even began. Many rights holders, upon discovering infringement, instinctively rush to file suit and stop the conduct quickly, without simultaneously and systematically gathering the peripheral evidence needed to support a damages claim — only realizing, once the case reaches the evidentiary stage, that what they have on hand falls short of triggering a shift in the burden of proof, and settling, by default, for an outcome within the statutory range.

We also believe the real signal the new Law sends on damages is not that compensation has gone up, but that a high-damages case is not built at the hearing — it is, to a substantial degree, already decided at the stage of spotting the lead, selecting the target, and fixing the evidence. That judgment may be worth more to a brand owner's enforcement strategy than the RMB 5,000,000 figure itself.

  Points to Consider 

?  Upon discovering infringement, did the company immediately begin gathering peripheral evidence — platform listing pages, sales figures, review counts, livestream records, logistics leads, and the like — or was evidence-gathering left until litigation was already underway?

?  For a larger-scale case where the infringer's profit may be substantial, has the company evaluated whether e-commerce platform data and sales channel information can be used to build a preliminary evidentiary framework sufficient to support a shift in the burden of proof?

?  When considering a claim for punitive damages, has the company prepared to prove the infringer's subjective intent and the seriousness of the circumstances — such as repeated infringement or continuing infringement despite a prior warning — rather than simply proving that infringement occurred?

In the next installment: “Facing Preemptive Trademark Registration Abroad: How Can Reputation in China Be Converted Into Enforcement Evidence?” — examining the mechanism for domestic confirmation of well-known trademark status in overseas trademark cases, and how international brands should understand and respond to the risks and opportunities of China's trademark system as they expand abroad.

This article is provided for general informational purposes only and does not constitute legal advice for any specific matter. Please consult qualified counsel regarding your particular circumstances.