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Disgorgement of Profits pp 407–428Cite as

The Disgorgement Damage System in Chinese Law

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Part of the book series: Ius Comparatum - Global Studies in Comparative Law ((GSCL,volume 8))

Abstract

The disgorgement damage or gain-based damage is a relatively new term in Chinese law. The disgorgement damage system was first introduced in China’s company law. It was later expanded to other topical laws including intellectual property, securities, torts and the contract law. We can also find cases where Chinese courts have cited rules or jurisprudential basis of disgorgement damage to recover the damage of the injured parties in some of their opinions. This reflects that such provisions have to some degree become an important instrument for private relief and compensation in practice in China. However, it is pity that the practice of the system has lagged behind the expression of the law itself. Also, we do not have a general theoretical legal basis for the system. Besides, existing rules in intellectual property, torts and securities law only assume a supplementary role. To fully develop the functions of Chinese disgorgement system, we need to have a general theoretical basis, establish an internal structure with rich layers, strengthen the criteria for proving the gains, and return to the idea of putting the parties at the center of the system, as required in private law.

The authors are grateful to Professor Hu Che for his assistance of this chapter.

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Notes

  1. 1.

    The Company Law of the People’s Republic of China was promulgated in 1993, and amended in 1999, 2004 and 2005. Unless acknowledged otherwise, quotations of all the statutes are from the latest version.

  2. 2.

    The Securities Law of People’s Republic of China was promulgated in 1998 and amended in 2004, 2005 and 2013.

  3. 3.

    The Copyright Law of the People’s Republic of China was promulgated in 1990, and amended in 2001 and 2010. The Patent Law of People’s Republic of China was promulgated in 1984, and amended in 1992, 2000 and 2008. The Trademark Law of People’s Republic of China was promulgated in 1982, and amended in 1993, 2001 and 2013.

  4. 4.

    The Tort Law of People’s Republic of China was promulgated in 2010.

  5. 5.

    The Law of the People’s Republic of China on Funds for Investment in Securities was promulgated in 2003 and amended in 2012.

  6. 6.

    Wenzhou Intermediate People’s Court (2006) Wenmingsanchuzi No. 135 Judgment.

  7. 7.

    Yan (2007).

  8. 8.

    Wang Junxia v. Kunming Cigarette Factory, Liaoning High People’s Court (2001) Liaominzhongzi No. 162 Judgment.

  9. 9.

    Quanzhou Intermediate People’s Court (2005) Quanminzhongzi No. 1178 Judgment.

  10. 10.

    Certainly, contrary judgments exit at the same time. Similar to details of the case of Wang Junxia and the case of Mo Shaocong, there are the case of the actor Hanxue, the case of the athlete Liu Xiang and the case of Zhang Bozhi. However, the method of disgorgement damages was not adopted. Even in the only case applying article 20 after the enforcement of the Tort Law – the case of Ren Dahua’ s right to portrait, the court held that the plaintiff fails to identify the actual loss. In addition, the court could not ascertain economic benefits for using Ren Dahua’s portrait. Therefore, the amount of compensation should be, on the basis of actual conditions, determined discretionally by the court. The court of first instance, considering the actual circumstances, ruled that Charoen Pokphand Group should pay 20 damages for the plaintiff. Thus the original judgment is not improper and shall be sustained. In other words, the court just discretionally determined the tort disgorgement damages according to infringer’s degree of fault, circumstances of infringing act, consequence and influence, without applying article 20, which is about the rule of infringer disgorgement damages. See Hainan Provincial People’s Court (2013) Qiongminsanzhongzi No. 59 Judgment.

  11. 11.

    Shanghai Fengxian District People’s Court (2013) Fengminsanchuzi No. 2190 Judgment.

  12. 12.

    Baoding Intermediate People’s Court (1998) Baoshijingerchuzi No. 85 Judgment.

  13. 13.

    See Shanghai No. 1 Intermediate People’s Court (2011) Huyizhongminsizhongzi No. 889 Judgment.

  14. 14.

    See Yan (2011).

  15. 15.

    Wang (2011), 280.

  16. 16.

    See Yan (2011).

  17. 17.

    Sun (2011).

  18. 18.

    Chen and Zhao (2013).

  19. 19.

    See Louis Vuitton Malletier v Xiongyan and others, Sichuan Provincial People’s Court (2013) Chuanminzhongzi No. 579 Judgment.

  20. 20.

    Shanghai Second Intermediate People’s Court (2012) Huerzhongminsizhongzi No. 261 Judgment.

  21. 21.

    Beijing First Intermediate People’s Court (2010) Yizhongminzhongzi No. 10249 Judgment.

  22. 22.

    Shenyang People’s Intermediate People’s Court (2007) Shenminsizhichuzi No. 76 Judgment.

  23. 23.

    Shenyang People’s Intermediate People’s Court (2007) Shenminzizhichuzi No. 76 Judgment.

  24. 24.

    Shanghai High People’s Court (2012) Hugaominerzhongzi No. 5 Judgment.

  25. 25.

    Shanghai First Intermediate People’s Court (2005) Huyizhongminerzhongzi No. 2194 Judgment.

  26. 26.

    See American Law Institute (2011), §39, ‘Profit From Opportunistic Breach’, §51, ‘Enrichment By Misconduct; Disgorgement; Accounting’ and §53, ‘Use Value; Proceeds; Consequential Gains’.

  27. 27.

    Wagner (2006), 96 et seq.

  28. 28.

    Sun (2009), 12.

  29. 29.

    Hefei High-Tech Development Zone People’s Court (2003) Hegaoxingminyichuzi No. 137, Judgment.

  30. 30.

    Liu (2013), 80.

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List of Cases

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  • Louis Vuitton Malletier v Xiongyan and others, Sichuan Provincial People’s Court (2013) Chuanminzhongzi No. 579 Judgment

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  • Loulan Store Co., Ltd, Shanghai v Fengxian Property Co. Ltd. Shanghai, Shanghai Fengxian District People’s Court (2013) Fengminsanchuzi No. 2190 Judgment

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  • MCC Quantai (Beijing) Engineering and Technology Corporation v Cong Aiming and other, Beijing First Intermediate People’s Court (2010) Yizhongminzhongzi No. 10249 Judgment

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  • Mo Shaocong v Quanzhou Xinhuadu Co., Quanzhou Intermediate People’s Court (2005) Quanminzhongzi No. 1178 Judgment

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  • NGS Supermarket Group Co., Ltd. v Shanghai Yitana Travel Products Co., Ltd., Shanghai first Intermediate People’s Court (2005) Huyizhongminerzhongzi No. 2194 Judgment

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  • Ren Dahua v Charoen Pokphand Group, Hainan Provincial People’s Court (2013) Qiongminsanzhongzi No. 59 Judgment

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  • Shanghai Mingtai Investment Development Co., Ltd. and others v Ye Yuequn, Shanghai High People’s Court (2012) Hugaominerzhongzi No. 5 Judgment

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Authors and Affiliations

  1. College of Comparative Law, China University of Political Science and Law, Beijing, China

    Xiang Gao (Dean and Professor of Law) & Chengwei Liu

Authors
  1. Xiang Gao
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  2. Chengwei Liu
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Correspondence to Xiang Gao .

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Editors and Affiliations

  1. Molengraaff Institute for Private Law, University of Utrecht, Utrecht, The Netherlands

    Ewoud Hondius

  2. Lehrstuhl für Bürgerliches Recht Medizinrecht, IPR und Rechtsvergleichung, University of Göttingen, Göttingen, Germany

    André Janssen

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Gao, X., Liu, C. (2015). The Disgorgement Damage System in Chinese Law. In: Hondius, E., Janssen, A. (eds) Disgorgement of Profits. Ius Comparatum - Global Studies in Comparative Law, vol 8. Springer, Cham. https://doi.org/10.1007/978-3-319-18759-4_22

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