China
Answer ... The judicial remedies that are available to a patent holder include the following:
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Temporary injunction: Article 101 of the Civil Procedure Law stipulates a behaviour preservation system which is similar to a temporary injunction. A court may issue a ruling on behaviour preservation if failure to apply immediately for preservation would result in irreparable damage to a party’s legitimate rights and interests. The judicial interpretation of the Supreme People’s Court further sets out four conditions for approving a ruling on behaviour preservation:
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- emergency;
- right stability;
- right balance; and
- the risk of irreparable damage.
- The provision of a guarantee is also a prerequisite for the application and maintenance of a behaviour preservation order.
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Permanent injunction: In most cases in which patent infringement is established, a court will order the cessation of the infringement. The judgment is similar to a permanent injunction. However, in certain circumstances, the court may not order the defendant to cease the relevant behaviour but rather to pay corresponding reasonable expenses – for example, where:
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- due to national and public interest considerations, cessation of the relevant behaviour would cause an imbalance in the interests between the parties; or
- cessation of the behaviour is not possible.
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Economic compensation: According to the Patent Law, the amount of compensation for infringement of a patent right will be determined on the basis of:
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- the actual losses incurred by the patent holder as a result of the infringement; or
- the gains which the infringer has obtained from the infringement.
- If it is difficult to determine the losses incurred by the patent holder or the gains obtained by the infringer, an amount will be reasonably determined by reference to a multiple of royalties for the patent. In case of the intentional infringement of a patent right, if the circumstances are serious, the amount of compensation may be set at between one and five times the amount determined in accordance with the above methods. If it is difficult to determine the losses incurred by the patent holder, the gains obtained by the infringer and the royalty for the patent, the people’s court may:
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- take into account other factors such as the type of patent and the nature and particulars of the infringement; and
- award compensation of between RMB 30,000 and RMB 5 million. The compensation should also include the reasonable expenses that the patent holder has incurred in stopping the infringement.
- In short, there are five ways to determine compensation for damages under Chinese law:
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- the actual losses of the patent holder;
- the gains obtained by the infringer from the infringement;
- a reasonable multiple of royalties for the patent;
- legal compensation; and
- punitive compensation, which is applicable only to cases that involve intentional and serious infringements of patent rights.
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Other remedies: In some cases, a court may also order remedies such as:
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- the destruction of infringing products; and
- the destruction of moulds used manufacture the infringing product, etc.
China
Answer ... The current Patent Law, which took effect on 1 June 2021, provides for punitive compensation. Article 71 provides as follows:
the amount of compensation for infringement of a patent right shall be determined on the basis of the actual losses incurred to a right holder as a result of the infringement or the gains which an infringer has obtained from the infringement. If it is difficult to determine the losses incurred to the right holder or the gains obtained by the infringer, an amount shall be reasonably determined by reference to the multiple of the royalties for this patent. In case of intentional infringement of a patent right, if the circumstance is serious, the amount of compensation may be determined not less than one time but not more than five times the amount determined in accordance with the above method.
According to the judicial interpretation of the Supreme People’s Court on punitive compensation, two elements must be met in order to award punitive compensation, as follows:
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Intentional infringement: In determining whether infringement was intentional, the court will usually take into account factors such as:
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- the type of intellectual property infringed;
- the state of the patent rights;
- the popularity of the relevant product; and
- the relationship between the defendant and the plaintiff or interested parties.
- For example, in any of the following circumstances, infringement is usually considered intentional:
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- The defendant continues to infringe after being notified or warned by the plaintiff or an interested party;
- The defendant or its legal representative or manager is the legal representative, manager or actual controller of the plaintiff or an interested party;
- The defendant and the plaintiff or an interested party have entered into labour, service, cooperation, licensing, distribution, agency or representative relations, or similar, under which they have access to the infringed patent; or
- The defendant has business dealings with the plaintiff or an interested party, or has negotiated with them for the purpose of entering into a contract, and has had access to the patent as a result.
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Serious infringement: In determining whether an infringement is serious, the court will usually take into account factors such as:
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- the means and frequency of infringement;
- the duration, geographical scope, scale and consequences of the infringement; and
- the behaviour of the infringer.
- For example, the following will be considered to constitute serious infringement:
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- The infringer reoffends after receiving an administrative penalty due to infringement or being held liable for infringement by a court;
- The infringer forges, destroys or conceals evidence of infringement;
- The infringer refuses to comply with a preservation ruling; or
- The infringer gains significantly from the infringement or the patent holder suffers great damage as a result of the infringement.
China
Answer ... Where punitive compensation is available: In a patent infringement suit where the court considers that punitive compensation is available, in determining the amount of punitive compensation to award, it will consider:
- the amount of the plaintiff’s actual losses; and
- the amount of the defendant’s illegal gains or benefits gained from the infringement.
This calculation base does not include reasonable expenses paid by the plaintiff to stop the infringement.
If it is difficult to calculate the amount of actual losses, the amount of illegal gains and the benefits gained from infringement, the court may reasonably determine the amount according to law by reference to a multiple of royalties for the patent.
The calculation base for punitive compensation does not include statutory compensation. Generally speaking, where a statutory compensation standard is used to determine the amount of compensation for damages for patent infringement, a fault factor is considered directly in the process of determining the amount of statutory compensation and the punitive compensation system is no longer applicable.
The multiple is determined based on two subjective and objective factors:
- the degree of the defendant’s fault (subjective); and
- the severity of the infringement (objective), which is assessed mainly according to the loss(es) caused by the infringement and the impact of the infringement.
Where punitive compensation is not available: In determining the amount of fair and reasonable compensation derived from actual losses or infringement, the court may, on the basis of certain facts and data, assess at its discretion other factors according to the details of the case. The amount of compensation determined according to the above methods may not be limited by the maximum or minimum amount of statutory compensation.
The following factors should be taken into account when assessing the benefits gained from infringement:
- the nature of the infringement;
- the value of the infringing product and the profits made from the infringement;
- the subjective intention of the infringer and the circumstances of the infringement;
- the total amount of compensation obtained by the patent holder and reasonable expenses paid by the patent holder to protect its rights in associated cases; and
- the economic status of the area in which the infringer is located and the operational status of the infringer itself.