China’s new patent law awards damages up to 5 times losses

China’s new patent law awards damages up to 5 times losses

With higher cap than US, Beijing to spur tech advances and foreign investment

BEIJING — China will strengthen intellectual property protections next year, raising the cap on damages from patent infringement to five times the holder’s loss — higher than the three times in the U.S. and other advanced economies.

Self-reliant technological development is one of the Chinese Communist Party’s objectives under its next five-year plan, running from 2021 to 2025. By establishing tougher protections for intellectual property, Beijing is trying to encourage research into cutting-edge technology at home.

The higher damages are also aimed at encouraging foreign investment in Chinese technology. While China’s economy has grown dramatically over the years, the country has frequently come under fire internationally over trade secret and copyright infringement. The issue has contributed to tensions with the U.S.

Under the tougher patent law that takes effect in June 2021, serious, intentional violations will face damages of up to five times the amount of the loss to the patent holder. Current law only states that penalties are to be determined based either on the loss suffered by the holder or the gains reaped by the infringer.

The U.S., South Korea and Taiwan cap such penalties at three times the loss to the patent holder, while Japan and Europe do not award punitive damages for patent infringement at all. China had also set a three-times cap in the original draft of the amendment but ultimately adopted a tougher penalty to signal its commitment to the issue.