The introduction of a punitive damages system for intellectual property rights violation has won huge acclaim among industry insiders after Premier Li Keqiang proposed the move in his Government Work Report for the year. Such punitive damages would involve compensation that exceeds the plaintiff's actual loss, creating a greater deterrence against such violations.

The current compensatory damages system, aims only to cover the losses of the rights owners. "We will see that the strong protection of property rights and the fluid flow of production enable a significant increase in market dynamism and public creativity," Premier Li said in his report.

Zhou Qiang, head of the Supreme People's Court, said in his work report that the judicial authorities will use the punitive damages system in future trials to resolve the problem that rights violation incurs low costs while defending IP rights brings about high costs. Courts nationwide have heard about 683,000 IP-related cases over the past five years. And observer said that the compensation in lawsuits involving IP infringement has been rising gradually in the past two years, after the Beijing Intellectual Property Court - the country's first dedicated IP court - decided to sharply increase compensation in 2016.

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