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Determining Damages for Patent Infringement in China

Abstract

This article examines the determination of damages for patent infringement in China. Based on empirical data, Chinese judicial precedence and judicial interpretations, this article depicts how the size of damages for patent infringement is determined through three methods (the patentee’s actual loss, the infringer’s profits and reasonable royalties) and statutory damages in China. In particular, it makes a comparison between Chinese and German approaches. The comparison finds that Chinese courts have insisted on unrealistic standards of proof on the part of patentees for entitlement to the three methods. Therefore, this has relegated the patentees to statutory damages that are not designed to compensate their losses in most patent infringement trials. This article suggests easing the burdens of proof for the patentees under the three methods while strictly observing the restriction on recourse to statutory damages.

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Notes

  1. 1.

    Chinese Patent Law (专利法), adopted by the Standing Committee of the National People’s Congress on 12 March 1984. The law has been amended three times (1992, 2000 and 2008), and a fourth revision is now in process. Promulgated by the Standing Committee of National People’s Congress on 27 December 2008. A version in English is available at: http://english.sipo.gov.cn/laws/lawsregulations/201101/t20110119_566244.html. Accessed 3 December 2015.

  2. 2.

    Directive 2004/48/EC, Art. 13.

  3. 3.

    Federal Supreme Court (Dia-Rähmchen II), 1962 GRUR 509, 513; See also Schönknecht (2012), at 322.

  4. 4.

    See Harguth and Carlson (2011), at 214.

  5. 5.

    Benkard (2006) Sec. 139 (“Unterlassungs-und Schadensersatzanspruch”), No. 61; Schönknecht (2012), 316; Schulte (2008), Sec. 139, No. 81.

  6. 6.

    Chinese Patent Law, Art. 65 para. 1.

  7. 7.

    SPC’s Memorandum Of Meeting of Partial Courts on Intellectual Property Trial (最高人民法院关于全国部分法院知识产权审判工作座谈会纪要), Part 3.5.

  8. 8.

    Mediation may be requested both in front of administrative authorities and in court. See also Pattloch (2015).

  9. 9.

    CIELA is an online tool providing statistical analysis of IP administrative appeals, and civil infringement litigation proceedings in China. Until completion of this article, it provides statistics on Chinese IPR litigation covering 35 cities from 1 January 2006 until 8 December 2014. Available at: http://ciela.cn/Default.aspx?pageId=1&ppId=1&language=cn.

  10. 10.

    See IP Research Center of Zhongnan University of Economic and Law, “Empirical Study on Compensation for IP Infringement” (completed in 2012, as yet unpublished).

  11. 11.

    See supra note 9.

  12. 12.

    See supra note 10.

  13. 13.

    No. 3 of the “Outline of the National Intellectual Property Strategy (国家知识产权战略纲要)” indicates one of the emphases of the National IP Strategy is to “Strengthen IP Protection”, that is, “… to decrease cost for IPR protection, to increase cost for IPR infringement, and to effectively deter infringement acts”.

  14. 14.

    The Federal Trade Commission, “The Evolving IP Marketplace: Aligning Patent Notice and Remedies With Competition”, at 145.

  15. 15.

    Chinese Patent Law, Art. 2.

  16. 16.

    Chinese Patent Law, Art. 60.

  17. 17.

    Chinese Patent Law, Art. 68.

  18. 18.

    Chinese Tort Law (中华人民共和国侵权法), Arts. 6,15.

  19. 19.

    Chinese Patent Law (1985), Art. 60.

  20. 20.

    Chinese Patent Law, Art. 57.

  21. 21.

    Section III of “General Principles of the Chinese Civil Law (中华人民共和国民法通则)” is on civil remedies to infringement.

  22. 22.

    SPC’s Answers for Several Issues concerning the Trial of Patent Dispute Case (最高人民法院关于审理专利纠纷案件若干问题的解答) (1992), Art. 4.

  23. 23.

    See supra note 7.

  24. 24.

    Article 54 para. 1, Chinese Patent Law.

  25. 25.

    Pattloch T., supra note 8, at 342.

  26. 26.

    Provisions of the SPC on the Judicial Interpretation Work (最高人民法院发布关于司法解释工作的规定), (2007), Art. 5.

  27. 27.

    On 29 December 1992 the SPC firstly issued “SPC’s Answers for Several Issues concerning the Trial of Patent Dispute Case (最高人民法院关于审理专利纠纷案件若干问题的解答)”, it was abolished in 2001. On 19 December 2001 the SPC issued “SPC’s Several Regulations on Law Application in the Trial of Patent Dispute Case (最高人民法院关于审理专利纠纷案件适用法律问题的若干规定)”. See also Pattloch T., supra note 8, at 316.

  28. 28.

    Higher Courts of Chongqing and Heilongjiang have issued opinions on determining IPR damages, including specific guidance on how to apply the three methods and statutory damages. Higher Courts of Shanghai, Anhui, Zhejiang have given opinions on statutory damages for IPR infringement.

  29. 29.

    Widely admitted, the current judicial interpretation system is featured by creating law.

  30. 30.

    Some Provisions of the SPC on Evidence in Civil Procedures (最高人民法院关于民事诉讼证据的若干规定), (2001), Art. 2.

  31. 31.

    Ibid., Art. 50.

  32. 32.

    See Pattloch T., supra note 8, at 333.

  33. 33.

    See, e.g. German Federal Supreme Court (Tolbutamid), 1980 GRUR 841, 842, translated in 11 IIC 763, 764 (1980).

  34. 34.

    German Code of Civil Procedure, Sec. 287.

  35. 35.

    See Legal Daily (法制日报), at 3 (23 January 2015).

  36. 36.

    See Osterrieth (2015) at 127.

  37. 37.

    See supra note 15, Art. 46.

  38. 38.

    Song (2013).

  39. 39.

    See e.g. Chongqing Higher People’s Court’s Opinions for Several Issues on Compensation to IP Infringement (重庆市高级人民法院关于确定知识产权侵权损害) (2007) Arts. 3, 4(4).

  40. 40.

    SPC on Several Issues Concerning the Application of Law to the Trial of Patent Dispute Cases (最高人民法院关于审理专利纠纷案件适用法律问题的若干规定) (2015) Art. 20.

  41. 41.

    See supra note 41, Art. 4(1).

  42. 42.

    See Wu (2014), at 129.

  43. 43.

    See Shijiazhuang Intermediate People's Court (2001) Shi zhi chu zi No. 16.

  44. 44.

    See Schönknecht, supra note 3, at 313; Harguth and Carlson, supra note 4, at 216.

  45. 45.

    Civil Judgment of Beijing No. 1 Intermediate Court (2006), Yi zhong min chu zi No. 8857.

  46. 46.

    See Schönknecht, supra note 3, at 316.

  47. 47.

    German Federal Supreme Court (Gemeinkostenanteil), 2001 GRUR 329, 332, translated in 33 IIC 900, 904 (2002); German Federal Supreme Court (Steckverbindergehäuse), 2007 GRUR 431, 434; Kühnen and Geschke (2010), No. 1430, note 1685; Schönknecht supra note 3, at 317.

  48. 48.

    See supra note 10, p. 47.

  49. 49.

    See supra note 42, Art. 20.

  50. 50.

    Id.

  51. 51.

    German Federal Supreme Court, I ZR 322/02, GRUR 2006, 419, “Noblesse”.

  52. 52.

    Interpretation of the Supreme People's Court on Several Issues concerning the Application of Law in the Trial of Patent Infringement Dispute Cases (最高人民法院关于审理侵犯专利权纠纷案件应用法律若干问题的解释) (2009) Art. 16.

  53. 53.

    Id.

  54. 54.

    Zhejiang Provincial Higher People’s Court Civil Judgement (2005) Zhe min san zhong zi No. 150.

  55. 55.

    See Liu (2001) at 189.

  56. 56.

    See Marshall (2000) at 669; Schönknecht supra note 3, at 321.

  57. 57.

    See Table 1 of this paper; see also Müller-Stoy (2007), at 525.

  58. 58.

    German Federal Supreme Court (Dia-Rähmchen II), 1962 GRUR 509, 513; Schönknecht (2012, 322).

  59. 59.

    See Marshall supra note 57, at 669.

  60. 60.

    See supra note 41, Art. 15.

  61. 61.

    See Heilongjiang Higher People’s Court’s Guiding Opinions on Several Issues of IP Civil Trial (黑龙江省高级人民法院关于知识产权民事案件损害赔偿标准若干问题的指导意见) (2014) Art. 7.

  62. 62.

    See Regular Questions on Patent Agreements Notarization and Mortgage Registration (专利许可备案和质押登记常见问题) (2014).

  63. 63.

    See Notice of the SPC on Issuing the Opinions on Several Issues concerning Intellectual Property Trials Serving the Overall Objective under the Current Economic Situation (最高人民法院印发《关于当前经济形势下知识产权审判服务大局若干问题的意见》的通知) (2009) No. 16.

  64. 64.

    Id., see also supra note 41 Art. 15.

  65. 65.

    See SPC’s Several Regulations on Law Application in the Trial of Patent Dispute Case (最高人民法院关于审理专利纠纷案件适用法律问题的若干规定) (2015) Art. 21.

  66. 66.

    See supra note 63, Art. 7.

  67. 67.

    Id.

  68. 68.

    See supra note 7.

  69. 69.

    “Nominal damages” are minimal money damages awarded to an individual in an action where the person has not suffered any substantial injury or loss for which he or she must be compensated. See West's Encyclopedia of American Law, 2nd edn. 2008 The Gale Group.

  70. 70.

    See supra note 41, Art. 17; see also Anhui Provincial High People's Court’s Guidance Opinions on The Application of Statutory Damages in Trademark, Copyright and Patent Infringement Trials (安徽省高级人民法院关于审理商标、专利、著作权侵权纠纷案件适用法定赔偿的指导意见) (2005) Art. 3.

  71. 71.

    See Jiangsu Higher People's Court’s Guidance Opinions on the Application of Pre-Established Damages (江苏省高级人民法院关于知识产权损害赔偿适用定额赔偿办法若干问题的指导意见) (2013) Art. 6.

  72. 72.

    See Shanghai Higher People’s Court’s Guidance Opinions for Several Issues on Determining the Amount of Compensation in Applying the Statutory Damages (上海市高级人民法院关于知识产权侵权纠纷中适用法定赔偿方法确定. 赔偿数额的若干问题的意见) (2010) Art. 1(2).

  73. 73.

    See The Federal Trade Commission, supra note 16, at 145.

  74. 74.

    See SPC's Opinion on Several Issues Concerning the Thorough Implementation of the Nation’s Intellectual Property Strategy (最高人民法院关于贯彻实施国家知识产权战略若干问题的意见) (2009) Art. 16.

  75. 75.

    See Hammel (2011) at 316.

  76. 76.

    See, e.g. Weinstein and Fernandez (2004), pp. 233, 227–240: “Having a set of laws in compliance with TRIPs does not guarantee their efficient implementation”; Mccabe (2010) pp. 1–29: “despite the United States’ continued efforts and China’s enactment of intellectual property laws, many still perceive China as one of the largest infringing countries in the world”.

  77. 77.

    See supra note 65.

  78. 78.

    To be noted that the “preponderance of evidence” might lower the burden and might not serve to the deterrent function of statutory damages.

  79. 79.

    See Guangdong Higher People’s Court’s Summary of Forum on Exploring Judicial Evidence Regimes to Tackle the Compensation Difficulty to in IPR Infringement (广东高级人民法院关于探索完善司法证据制度破解知识产权侵权损害赔偿难的调研报告).

  80. 80.

    At a press conference held on 22 October 2013, JIN Kesheng (金克胜), the vice-president of the court of IP of the SPC, explained the differences between “discretionary damages” and “statutory damages”, available at: http://www.chinacourt.org/article/detail/2013/10/id/1110984.shtml.

  81. 81.

    See Legal Daily (法制日报), at 3 (23 January 2015).

  82. 82.

    See Explanation for Draft Amendment to Chinese Patent Law (关于中华人民共和国专利法修改草案征求意见稿的说明) (2015).

  83. 83.

    See SPC’s Relevant Regulations on Chinese Civil Procedural Law (最高人民法院关于民事诉讼证据的若干规定) Art. 75; Chinese Trademark Law (中华人民共和国商标法) Art. 63.3.

  84. 84.

    See Draft Amendment to Chinese Patent Law for the fourth amendment (关于中华人民共和国专利法修改草案征求意见稿) (1 April 2015) Art. 61.3.

  85. 85.

    Civil Judgment of Shandong Provincial Higher People’s Court (2007), Lu min san zhong zi No. 38.

  86. 86.

    See supra note 86, Art. 61.3.

  87. 87.

    See Draft Amendment to Chinese Patent Law for the fourth amendment (关于中华人民共和国专利法修改草案征求意见稿) (2 December 2015) Art. 68.

  88. 88.

    See supra note 81.

  89. 89.

    Civil Judgment of Guangdong Higher People’s Court, (2008) Yue Gao Fa Min San Zhong Zi No. 261.

  90. 90.

    Civil Judgment of Beijing No. 1 Intermediate Court (2010) Yi Zhong Min Chu Zi No. 5449.

  91. 91.

    Civil Judgment of Guangdong Higher People’s Court (2004) Yue Gao Fa Min San Zhong Zi No. 307.

  92. 92.

    BGBI.I S. 1191. See also Harguth supra note 4, at 213.

  93. 93.

    Id.

  94. 94.

    “Principle of fulfillment” indicates that civil damages should equivalent to the actual losses of right holders. See Explanation for Draft Amendment to Chinese Patent Law for the fourth amendment (关于中华人民共和国专利法修改草案征求意见稿的说明) part.4.

  95. 95.

    See Chinese Patent Law Art. 65 para. 2.

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Correspondence to Jingjing Hu.

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This article was completed during a scholarship stay at the Max Planck Institute for Innovation and Competition, Munich, Germany. The author would like to thank Dr. Thomas Jaeger for his supervision; Dr. Viola Prifti for kindly proofreading this article; Dr. Sujitha Subramanian, Vikas Kathuria and Florian Paschold for their kind help and suggestions.

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Hu, J. Determining Damages for Patent Infringement in China. IIC 47, 5–27 (2016). https://doi.org/10.1007/s40319-015-0442-9

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Keywords

  • Compensation
  • Three methods
  • Statutory damages
  • Burdens of proof