Is apportionment of profits a fair system for rights holders?

By Julie Luo and George Chan

Recent case law has highlighted a flaw in the method for calculating damages for trademark infringement, which could leave brand owners operating in good faith dangerously vulnerable to bad-faith trademark owners

The issue of bad-faith trademark applications is a perennial problem for brand owners operating in China. However, the stakes increase significantly when a bad-faith trademark owner sues a legitimate brand owner for trademark infringement, while claiming for the disgorgement of profits. In China, when calculating damages for trademark infringement based on an account of profits, the courts tend to take an all-or-nothing approach, which means that all profits from the sale of infringing goods could be appropriated by a bad-faith trademark owner.

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Issue 71