Research On The Premises And Function Of The Application Of Punitive Damages In ‘Buying Fake On Purpose’

Since 1993, Law of the PRC on the Protection of the Rights and Interests of Consumers introduced articles of punitive damages. But the articles of punitive damages didn’t work well for the reason that courts hold conservative attitude in practice. Besides, theoretical controversies still existed. At the same time, consumers’ right-protecting consciousness was still weak. Punitive damages was introduced to punish operators who sell fake goods and prevent illegal behaviors. It was also introduced to educate other operators and encourage consumers to struggle for their rights. For decades, punitive damages didn’t work well. It played a symbolic role.Even after the guiding case Sun Yinshan, questions around the Law of the PRC on the Protection of the Rights and Interests of Consumers and the application of the punitive damages still haven’t been solved thoroughly.Case Sun Yinshan happened more than ten years later than Case Wang Hai. They are both typical cases for ‘buying fake on purpose’ and have nearly the same case outline. But their verdicts are quite different. After analyzing the typical cases we can define the concept of ‘buying fake on purpose’. ‘Buying fake on purpose’ referred to in this article means buying fake to claim for punitive compensation. It usually happened in supermarkets, shopping malls and other public places where products are displayed for customers to select freely. Requests for punitive damages were rejected in most Wang Hai cases. But Sun Yinshan’s request was supported. The change of the sentences actually reflects the change of the attitude of our courts on using punitive damages in ‘buying fake on purpose’. But the application of punitive damages involves series of questions.We can’t put purposed fake-buyers out of the range of consumers only because they are buying products for compensation. We can’t analyze single consumer’s purpose to judge if he has consumer identity. For the cost is too high and there is no need to do this. ‘Buying fake on purpose’ has the same happening-places and exchanging-ways as common shopping. Purposed fake-buyers should also gainconsumer identity. The fact that purposed fake-buyers are far weaker than sellers will not be changed radically in the knowing-fake condition. Their unequal status has essential differences from the equal status in big deal business. Gaining consumer identity is the premise of the application of punitive damages in ‘buying fake on purpose’.According to the general principles of civil law, one party should fall in misunderstanding and then make exchanges. But the cognizance of fraud in Law of the PRC on the Protection of the Rights and Interests of Consumers is different. Fraud means specific types of behaviors there. Consumers’ misunderstanding is not needed.That is to say, buyers’ clear understanding of fake goods can’t prevent sellers from being considered as deceivers.There are many active functions in the application of punitive damages in‘buying fake on purpose’. Firstly, it can encourage private execution of market order.Consumers can boycott fake goods together with the government. Secondly, it can eliminate consumer’s dissatisfaction. The contradictions between consumers and the business operators can be effectively solved. Thirdly, it can promote the vitality of both consumers and business operators. The two parties can restrict each other as well as promote each other.Punitive damages in the current Law of the PRC on the Protection of the Rights and Interests of Consumers are still a little conservative. There are still defects in the following several aspects. Firstly, the amount of punitive compensation is set too low.When the defects of products are hard to find and three compensation is low, business operators would like to continue their illegal behaviors rather than correct the wrongdoings. Secondly, there is no distinguish between intent and negligence. Intent and negligence have significantly different degree of evil. Intend or negligence determines the degree of necessity to apply punitive damages for the purpose of containment. Thirdly, there is no uncapped punitive damages. The lack of uncapped punitive damages leads to severely damage of the function of the Law of the PRC on the Protection of the Rights and Interests of Consumers on reversing illegal behaviors and deterring potential offenders.Several changes should be made step by step in the following several aspects.Firstly, there should be appropriate increase in multiples of punitive damages.Secondly, there should be a clear distinction between intend and negligence. Thirdly,uncapped punitive damages should be set under certain conditions.