In December 2011, the Deputy Director of the State Intellectual
Property Office of the P.R.C. expressed that China would in the
near future promote amendments to the Patent Law, the Trademark Law
and the Copyright Law of the P.R.C. as well as associated
regulations, increase the amount of fines, and conduct research on
applying punitive damage awards to profit-generating intentional
infringement and counterfeiting acts. This suggests that
punitive damage awards may be adopted into China's intellectual
property (IP) protection framework.
Liability for infringement can be compensatory or punitive,
depending on the purpose of the compensation to be granted.
According to the current Patent Law, Trademark Law and Copyright
Law of the P.R.C., the amount of compensation is determined by the
basis of compensation and is calculated in accordance with the
actual losses suffered by the rights owner or the benefits obtained
by the infringer (and by reference to the reasonable multiples of
the royalties in a patent infringement case), and while neither of
the two elements could be determined, a People's Court can
award a statutory compensation amount within the scope provided by
In judicial practice, it is difficult to prevent IP
infringements conclusively and to effectively protect the interests
of the rights owner due to the intangible and public
characteristics of IP rights. Therefore, it is proposed that
punitive liability is necessary to protect IP rights in addition to
compensatory liability. However, as the protection of IP
rights is by its very nature the protection of a limited monopoly,
a balance should be struck between the interests of the rights
owner and those of the public. Therefore, conditional
punitive damage awards, such as those against the infringers who
intentionally and seriously infringe the rights owners' IP
rights, are best suited to establish this balance.
The statutory damages provided in China's current system of
IP protection, though mainly aimed at compensating the losses of
the rights owner, is also considered as having a punitive
nature. However, such punitive damages are limited to some
extent. For example, the laws stipulate that the amount of
statutory damages shall be given subject to a certain amount or
multiples and the People's Court shall consider elements such
as the subjective intention of the infringers when granting
Undoubtedly, the application of punitive damages awards will be
good for fighting against IP infringement and safeguarding the
rights and interests of IP rights owners. However, it will
take some time to have this new measure applied in consideration of
the consistency of the legal system, determination of a reasonable
scope of application as well as the balance between rights of the
IP owners and the public interest.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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