In the event that the intellectual property infringement that does not yet constitute a criminal case, it is undoubtedly economical and efficient for the right holder to resort to the market supervision departments to seek administrative protection. The market supervision departments determines whether infringement is constituted primarily pursuant to the Standards for Trade mark Examination and Trial and Criteria for Determining Trade mark Infringement.
Upon finding of infringement, it is therefore important to realise how these administrative penalties may be imposed by the market supervision departments pursuant to Article 57 of the Trade mark Law and Article 6 of the Anti-Unfair Competition Law, when the provisions are applicable to the circumstances. The article aims to highlight the overarching rationale behind these administrative penalties, so that right holders may use this as reference point.
On 15 July 2021, "Administrative Penalty Law (2021 Revision)" came into full force. This new law improves the benchmark system for administrative penalties (“the Benchmark”) to a new level.
The market supervision departments rely on some general principles when exercising their discretionary powers: the principle of legality, the principle of proportional justice, the principle of combining punishment and education, and the principle of comprehensive discretion. Market supervision departments can further develop and refine the applicable rules in view of all relevant circumstances such as facts of the case, the severity and the potential impacts. Specifically, this includes the consideration of the civil capacity of the parties, capacity for responsibilities, the absence or presence of subjective intention, degree of subjective malignancy, the value of property involved, the amount of income derived from unlawful acts, the length of unlawful conducts, the scale of the unlawful acts, the geographic range involved, whether the wrongdoer is a repeated offender, existence of any deplorable tactics for the unlawful acts, the harmful consequences of the unlawful acts, and the degree of social impact.
The administrative penalty can generally be divided into five levels: no administrative penalty, reduced administrative penalty, lenient administrative penalty, general administrative penalty, and enhanced administrative penalty. This is what they mean:
1. No administrative penalty: no penalty imposed because of specific violations excused by the law
2. Reduced administrative penalty: applicable when penalty type or penalty range is lower than the minimum level of the Benchmark
3.Lenient administrative penalty: penalty falls within the lighter and lesser type of the Benchmark or the lower range of the Benchmark
4. General Administrative penalty: penalty falls within the moderate type or range of the Benchmark
5. Enhanced administrative penalty: penalty falls within the heavier or involving a high number of types of the Benchmark or the higher range of the Benchmark
Market supervision departments commonly used 3 types of administrative penalties:
Most market supervision departments generally adopted the following formula in determining the range of fines:
1. Heavier Fine:
a. Upper Range: Maximum penalty in the Benchmark
b. Lower Range: [Y+（X-Y）×70%]
2. Moderate Fine:
a. Upper Range: [Y+（X-Y）×70%]
b. Lower Range: [Y+（X-Y）×30%]
c. Note: the fine will fall within the two numbers but do not include the Upper Range and Lower Range themselves.
3. Lighter Fine:
a. Upper Range: [Y+（X-Y）×30%]
b. Lower Range: Minimum penalty in the Benchmark
Where X is the maximum penalty in the Benchmark, Y is the minimum penalty in the Benchmark, and Y is taken to be zero when the minimum penalty is not stated.
Although the Benchmark is not the unmovable legal basis that is directly adopted by the market supervision departments, it is the basis for law enforcement towards grassroots.