The illegal business turnover is an important basis for administrative penalties in trademark infringement cases, but the current law does not have a clear definition of the concept of illegal business turnover or specific calculation methods. To clarify and refine the rules for calculating the illegal business turnover, strengthen the guidance of trademark administrative law enforcement, unify enforcement standards, and protect the legitimate rights and interests of trademark owners, the China National Intellectual Property Administration and the State Market Regulatory Administration jointly issued the "Measures for Calculating the illegal business turnover in Trademark Infringement Cases" on October 30, 2024.

The "Measures" systematically sort out and summarize the valuable experience and practices in calculating the illegal business turnover for trademark infringement cases over the years, consisting of nineteen articles in total. It made detailed provisions on definition of illegal business turnover, general standards for calculation of illegal business turnover, calculation standards for complex infringement scenarios, handling of cases where the actual illegal business turnover cannot be verified, special circumstances under which the gains should not be included in the illegal business turnover, calculation methods of illegal business turnover for cases transferred from criminal procedure to administrative procedure. It resolves a series of disputes and outstanding problems, provides specific guidelines for trademark enforcement agencies to calculate the illegal business turnover, and contributes to creating a transparent and highly predictable intellectual property protection environment.

The following is the full text of the “ Measures ”:

Measures for Calculating the Illegal Business Turnover in Trademark Infringement Cases

Article 1: In order to promote strict, standardized, impartial, and civil law enforcement in trademark infringement cases, protect the legitimate rights and interests of business entities, and foster a fair competitive market environment, the Measures formulated in accordance with the "Trademark Law of the People's Republic of China," the "Implementation Regulations of the Trademark Law of the People's Republic of China", and other relevant laws and regulations.

Article 2: In the process of handling trademark infringement cases, the Measures shall be applied when the actions of the parties involved have been determined to constitute trademark infringement.

Article 3: The calculareasonability, objectivity and fairness.tion of the illegal business turnover should be conducted in adherence to the principle of legality, 

Article 4: The illegal business turnover refers to the total value of the infringing goods involved in the trademark infringement acts carried out by the parties or the business income generated due to the infringement.

Article 5: The value of infringing goods that have been sold shall be calculated based on the actual selling price.

The value of infringing goods that have not yet been sold shall be calculated based on the identified average actual selling price of the infringing goods; if the average actual selling price cannot be identified, it shall be calculated based on the listed price of the infringing goods.

If the actual selling price cannot be identified or if the infringing goods have no price tag, it shall be calculated based on the mid-market price of the infringed goods during the period of infringement.

For goods that have been manufactured but have not yet been affixed with the infringing trademark, if there is concrete and sufficient evidence to prove that the goods will infringe upon the exclusive rights of another party’s registered trademark, their value shall be included in the illegal business turnover.

Article 6: The mid-market price of the infringed goods shall be determined based on the retail guided-price published by the infringed party for the same type of product. If there is no published guided price, the following methods shall be used to determine it:

(1) If there are multiple merchants in the market selling the same type of infringed product, the retail prices of some of these merchants should be sampled, and the average of them should be used to determine the mid-market price; if there is only one merchant selling the product, the retail price of that merchant shall be used to determine the mid-market price.  

(2) If there are no sales of the same type of infringed product in the market, the mid-market price of the same type of infringed product previously sold in the market shall be used to determine it, or the mid-market price of similar infringed products sold in the market that are identical or similar to the infringing product in terms of function, use, main materials, design, configuration, etc., shall be used to determine it.

If it is difficult to determine the mid-market price according to the preceding provisions, it may be determined after appraisal by a price determination agency.

The statements of the parties and the mid-market price of the infringed product provided by the trademark owner may be used as a reference after being checked with other related evidence and verified.

If the parties have objections to the calculation results of the mid-market price of the infringed product, they shall provide evidence to prove.

Article 7: In processing and contracting operations that include both labor and materials, if the goods that infringe upon the exclusive right to use a registered trademark are used, the illegal business turnover shall be calculated based on the actual selling price of the infringing goods; if the infringing goods are not priced independently, the illegal business turnover shall be calculated according to their value proportion in the processing and contracting operations; if the value proportion cannot be distinguished, the illegal business turnover shall be calculated based on the mid-market price of the goods being infringed.

Article 8: Where the goods given free of charge infringe upon another party’s exclusive right to use a registered trademark, the illegal business turnover shall be calculated according to the actual purchase price or manufacturing cost of the gift. If the actual purchase price or manufacturing cost of the gift cannot be determined, or if the gift is a non-standard commodity, the illegal business turnover shall be calculated according to the listed price or the mid-market price of the infringing goods.

Article 9: Where the refurbished goods infringe upon another party's exclusive right to use a registered trademark, the illegal business turnover shall be calculated based on the overall value of the infringing goods.

Where the refurbished goods themselves do not infringe upon another party’s exclusive right to use a registered trademark, and only their parts or accessories infringe upon another party’s exclusive right to use a registered trademark, the illegal business turnover shall be calculated based on the value of the infringing parts or accessories. 

Article 10: For infringements as stipulated in Article 57(4) of the Trademark Law, the illegal business turnover shall be calculated based on the actual selling price of the infringing marks.

Article 11: Where a person deliberately facilitating infringement upon another party's exclusive right to use a registered trademark, the illegal business turnover shall be calculated based on the income obtained from assisting the infringement; if there is no income, it shall be dealt with as if there is no illegal business turnover. 

Article 12: If leased goods infringe upon another party's exclusive right to use a registered trademark, the illegal business turnover shall be calculated based on the leasing income.

Article 13: Where the exclusive right to use a registered trademark of another party is infringed in advertising and the infringing goods cannot be verified, it shall be dealt with as if there is no illegal business turnover.

Article 14: If the trademark licensor and the licensee jointly infringe upon another party's exclusive right to use a registered trademark, the illegal business turnover shall be calculated in accordance with the provisions of Articles 5 and 6 of these Measures.

Where the trademark licensor assists the licensee in infringing upon another party’s exclusive right to use a registered trademark, the illegal business turnover shall be calculated according to the license income. Where the trademark is licensed for use free of charge, it shall be handled as if there is no illegal business turnover.

Article 15: If the actual illegal business turnover cannot be verified according to the provisions above, it shall be treated as having no illegal business turnover. If only a part of the illegal business turnover can be verified, it shall be dealt with based on the verified illegal business turnover.

Article 16: If the parties provide sufficient evidence to prove that the sales volume of infringing goods has been increased through false sales methods such as order brushing, such amounts shall not be included in the illegal business turnover.

Article 17: For cases transferred from criminal procedure to administrative procedure, if there is a discrepancy between the administrative authority and the public security organs in the determination of the illegal business turnover, it may be determined according to the investigation by the administrative authority in accordance with the provisions of the Measures.

Article 18: The Measures shall be interpreted by the China National Intellectual Property Administration and the State Market Regulatory Administration.

Article 19: The Measures shall come into force on the date of promulgation.