The punitive damages clauses and redistributes the burden of evidence collection are incorporated into the draft amendment to the Patent Law.

"In the case that the product has been ordered by the court for patent infringement, the subsequent production of the product by the infringer still uses our patented technology, and the company can only sue again."  In the face of competitor's knowing violation, the incorporated punitive damages system in the fourth amendment to the Patent Law is expected to solve the old problems of low compensation in patent litigation and difficulty in producing evidence.

The draft amendment to the Patent Law adjusted the amount of compensation for deliberate infringement to more than 1 time and less than 5 times, the statutory compensation amount was increased from 1 million CNY to 5 million CNY, and the relevant obligation of proof for infringers was stipulated.

Intentional infringement makes right holders often fall into "marathon" rights protection.  Solving this problem requires the infringer to pay a heavy price.  Gree Electric is one of the victims of deliberate infringement.  In 2015, Gree Electric discovered that a series of products produced and sold by an air-conditioning company were suspected of infringing its patent rights.  The company filed a lawsuit with the Guangzhou Intellectual Property Court.  The court ordered the defendant to immediately stop the infringement and compensate Gree Electric for economic losses 80 ten thousand CNY.

However, the court decision did not stop the infringer from infringing, and he continued to intensify his patent infringement.  Gree Electric subsequently sued the above-mentioned air-conditioning company to the court again.  The first and second-instance courts both held that after the court had judged that it constituted a patent infringement, the accused air-conditioning company still produced and sold infringing products in large quantities.  The nature of the infringement was serious and the infringement was malicious.  Obviously, the infringement should be stopped immediately, and Gree Electric should be compensated 40 million CNY for economic losses.

The provisions of the draft amendments to the Patent Law on the regulation of intentional infringements have incorporated confidence to companies like Gree Electric in protecting their patent rights.  According to Article 71 of the second review draft, if the circumstances are serious for intentional infringement of patent rights, the amount of compensation may be determined based on more than 1 time and less than 5 times the determined amount.  If it is difficult to determine the loss of the right holder, the benefits obtained by the infringer, and the patent license fee, the people's court can determine the compensation of less than 5 million CNY based on factors such as the type of patent right, the nature of the infringement and the circumstances.

Failure to produce evidence makes the infringer often feel lucky in litigation, believing that the right holder has no evidence and he is not responsible for the infringement.

In patent litigation, many right holders face the dilemma of not being able to access the location of the infringing product to collect evidence, and not being able to grasp the sales and sales of the infringing product.  In order to solve this problem, Article 71 of the second review draft of the Draft Amendment to the Patent Law stipulates that in order to determine the amount of compensation, the court has tried its best to provide evidence and the account books and information related to the infringement are mainly in the hands of the infringer, the infringer may be ordered to provide account books and materials related to the infringement; if the infringer does not provide or provide false account books and materials, the court may refer to the claims of the right holder and the evidence provided to determine the amount of compensation.

"This clause is mainly to solve the problem of difficulty in producing evidence in patent litigation. If the above clause is implemented, the court can determine the defendant’s infringement profit based on the plaintiff’s claim and the evidence in the case, which greatly reduces the difficulty of the patentee’s proof of evidence, to help solving pain points that are difficult to provide evidence in patent litigation.

At present, patent litigation in China follows the principle of "who asserts, who presents evidence".  Plaintiffs often find it difficult to provide evidence and often have insufficient power.  If this clause is implemented, it will greatly reduce the burden of proof of the patentee as the plaintiff of patent infringement cases, effectively solve the problem of the defendant's slack or false proof in patent litigation, and effectively improve the trial level and effectiveness of patent litigation cases.

Low compensation and difficulty in producing evidence... The related problems that China has been facing in patent litigation are expected to be solved with the fourth revision of the Patent Law.  The system of punitive damages is expected to become a "tight spell" against intentional infringement and a "booster" to promote technological innovation.

                                         From CNIPA

 July 22nd, 2020